SCHEDULE 14C
(RULE 14C-101)
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[X] Definitive Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
In Vivo Medical Diagnostics, Inc.
------------------------------------------------
(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the Appropriate Box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which the transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
IN VIVO MEDICAL DIAGNOSTICS, INC.
The Green House, Beechwood Business Park North, Inverness, Scotland IV2 3BL
INFORMATION STATEMENT
PURSUANT TO SECTION 14
OF THE SECURITIES EXCHANGE ACT OF 1934
AND REGULATION 14C AND SCHEDULE 14C THEREUNDER
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE NOT REQUESTED TO SEND US A PROXY
Inverness, Scotland
March 17, 2005
This information statement has been mailed on or about March 17, 2005 to
the stockholders of record on March 5, 2005 (the "Record Date") of In Vivo
Medical Diagnostics, Inc., a Colorado corporation (the "Company") in connection
with certain actions to be taken by the written consent by the stockholders
holding a majority of the capital stock of the Company, dated as of February 28,
2005. The actions to be taken pursuant to the written consent shall be taken on
or about April 6, 2005, 20 days after the mailing of this information statement.
THIS IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER
MEETING WILL BE HELD TO CONSIDER ANY MATTER WHICH WILL BE DESCRIBED HEREIN.
By Order of the Board of Directors,
/s/ John Fuller
-------------------------------------
John Fuller
President and Chief Executive Officer
2
NOTICE OF ACTION TO BE TAKEN PURSUANT TO THE WRITTEN CONSENT OF STOCKHOLDERS
HOLDING A MAJORITY OF THE OUTSTANDING CAPITAL STOCK IN LIEU OF A SPECIAL MEETING
OF THE STOCKHOLDERS, DATED FEBRUARY 28, 2005
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the following action will be taken pursuant to
a written consent of a stockholders holding a majority of the outstanding
capital stock of the Company dated February 28, 2005, in lieu of a special
meeting of the stockholders. Such action will be taken on or about April 6,
2005:
1. To Amend the Company's Articles of Incorporation, as amended, to change
the Company's name from In Vivo Medical Diagnostics, Inc. to In Veritas Medical
Diagnostics, Inc.
2. To Amend the Company's Articles of Incorporation, as amended, to
increase the number of authorized common stock, par value $.001 per share (the
"Common Stock"), of the Company from 100,000,000 to 500,000,000.
3. To Adopt the 2005 Stock Incentive Plan.
OUTSTANDING SHARES AND VOTING RIGHTS
As of the Record Date, the Company's authorized capitalization consisted of
100,000,000 shares of Common Stock, of which 51,677,282 shares were issued and
outstanding as of the Record Date, and 50,000,000 shares of preferred stock of
which 34,343,662 were issued and outstanding as of the Record Date. Holders of
Common Stock of the Company have no preemptive rights to acquire or subscribe to
any of the additional shares of Common Stock.
Each share of common stock entitles its holder to one vote on each matter
submitted to the stockholders and each holder of the 4% preferred stock (the
"Preferred Stock") is entitled to vote on an "as converted" basis. However,
because stockholders holding at least a majority of the voting rights of all
outstanding shares of capital stock as at the Record Date have voted in favor of
the foregoing proposals by resolution dated January 26, 2005; and having
sufficient voting power to approve such proposals through their ownership of
capital stock, no other stockholder consents will be solicited in connection
with this Information Statement. Abacus Trust Company holds 19,328,381 shares of
the Preferred Stock, Rodney Jackson holds 6,392,695 shares of the Preferred
Stock, the HEMP Trustees Limited holds 12,878,873 shares of Common Stock, Victor
Kaminski holds 2,504,190 shares of Common Stock and The Rubin Family Irrevocable
Trust holds 4,674,541 shares of Common Stock (together, the "Majority
Stockholders"). Combined, they hold 45,778,680 votes out of a 86,020,944
possible votes on each matter submitted to the stockholders The Majority
Stockholders are the stockholders who will have voted in favor of the foregoing
proposals by resolution dated February 28, 2005.
Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as
amended, the proposals will not be adopted until a date at least 20 days after
the date on which this Information Statement has been mailed to the
stockholders. The Company anticipates that the actions contemplated herein will
be effected on or about the close of business on April 6, 2005.
The Company has asked brokers and other custodians, nominees and
fiduciaries to forward this Information Statement to the beneficial owners of
the Common Stock held of record by such persons and will reimburse such persons
for out-of-pocket expenses incurred in forwarding such material.
3
This Information Statement will serve as written notice to stockholders
pursuant to the Corporation Code of the State of Colorado.
Interests of Certain Persons in or Opposition to Matters to be Acted Upon
No officer or director will receive any direct or indirect benefit from the
Company's proposed amendments. No officer or director or any person has notified
the Company that it intends to oppose the Company's amendments to its Articles
of Incorporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 15, 2005, the number of and percent
of the Company's common stock beneficially owned by
o all directors and nominees, naming them,
o our executive officers,
o our directors and executive officers as a group, without naming them,
and
o persons or groups known by us to own beneficially 5% or more of our
Common Stock or our Preferred Stock having voting rights:
The percentages in the table have been calculated on the basis of treating
as outstanding for a particular person, all shares of our capital stock
outstanding on March 15, 2005 and all shares of our common stock issuable to
that person in the event of the exercise of outstanding options and other
derivative securities owned by that person which are exercisable within 60 days
of March 15, 2005. Presently, there are no options or derivative securities
outstanding. Percentage ownership gives pro forma effect to the conversion of
all 34,343,662 outstanding shares of 4% preferred stock into common stock.
Except as otherwise indicated, the persons listed below have sole voting and
investment power with respect to all shares of our capital stock owned by them.
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
Name and address of owner Title of Class Capacity with Company Number of Shares Percentage of
Beneficially Owned (1) Class
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
Abacus Trust Company 4% Preferred Stock 19,328,381 22.5%
Limited (2)
Sixty Circular Road,
2nd Floor
Douglas, Isle of Man
IM1 1SA
United Kingdom
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
Rodney Philip 4% Preferred Stock 6,392,695 7.4%
Jackson
33, The Chesters
Argyle Road
Southport
Merseyside
England PR9 9LG
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
HEMP Trustees Limited Common Stock 12,878,873 15.0%
10 Foster Lane
London, England
EC2V 6HR
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
Rubin Family Common 4,674,541 5.4%
Irrevocable Stock
Stock Trust (3)
25 Highland Boulevard
Dix Hills, New York 11730
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
4
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
Name and address of owner Title of Class Capacity with Company Number of Shares Percentage of
Beneficially Owned (1) Class
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
John Fuller Common CEO, President and 6,537,486 7.6%
(4) Stock Director
Easter Shian, Glen
Quaich
Amulree, Perthshire
Scotland PH8 0DB
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
Brian Cameron Common COO and Director 6,513,336 7.6%
(5) Stock
Campbell Cairns,
Craigellachie
Aberlour, Banffshire
Scotland AB38 95L
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
Bernard Turner Common Chief Financial 0 *
The Manor House Stock Officer and Director
Field Lane, Appleton
Warrington, Cheshire,
United Kingdom
WA4 5JR
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
Graham Cooper Common Chairman of the Board 0 *
Rock Cottage Stock
Finsthwaite
Cumbria
United Kingdom
LA12 8BH
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
David Barnes Common Director 100,000 *
108 Village Square #327 Stock
Somers, NY 10589
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
All Officers and 13,150,822 15.3%
Directors As a Group
(5 persons)
- ----------------------------- --------------------- ----------------------- -------------------------- ---------------
* less than 1%
- ----------------------------
(1) This column represents the total number of votes each named shareholder is
entitled to vote upon matters presented to the shareholders for a vote.
(2) Consists of shares of 4% voting preferred stock, convertible on or after
October 31, 2005 into 19,328,381 shares of common stock. Abacus Trust
Company Limited is acting as trustee for the Westek Limited Employee Trust.
Graham Cooper, Chairman of our Board of Directors, and Bernard Turner, our
Chief Financial Officer and a director, are beneficiaries of the Westek
Limited Employee Trust.
(3) Excludes an aggregate of 2,785,310 shares of common stock owned by Andrew
Rubin, Lynda Rubin and Lisa Diaz, the children of Robert M. Rubin and by
the grandchild of Robert M. Rubin, the settlor of the Rubin Family
Irrevocable Stock Trust. Robert Rubin disclaims beneficial interest in the
shares owned by the Rubin Family Irrevocable Stock Trust or by his children
and grandchild.
(4) Consists of (i) 6,439,437 shares held by the Hall Effect Medical Products
Employee Benefit Trust as to which Mr. Fuller holds options to purchase,
and (ii) 98,050 shares issued to Mr. Fuller in consideration of his
cancellation of certain obligations owed to him by HET and Jopejo.
(5) Consists of (i) 6,439,436 shares held by the Hall Effect Medical Products
Employee Benefit Trust as to which Mr. Cameron holds options to purchase,
and (ii) 73,899 shares issued to Mr. Cameron in consideration of his
cancellation of certain obligations owed to him by HET and Jopejo.
- ----------------------------
AMENDMENTS TO THE ARTICLES OF INCORPORATION
On February 28, 2005, the stockholders holding a majority of the capital
stock of the Company approved an amendment to the Company's Articles of
Incorporation, as amended, to change the Company's name from In Vivo Medical
Diagnostics, Inc. to In Veritas Medical Diagnostics, Inc and to increase the
number of authorized shares of Common Stock from 100,000,000 to 500,000,000. The
Board believes that the increase in authorized common shares would provide the
Company with greater flexibility with respect to the Company's capital structure
for such purposes as additional equity financing and stock based acquisitions.
CHANGE OF THE COMPANY'S NAME
The amendment to the Company's Articles of Incorporation, as amended, will
change the Company's name from In Vivo Medical Diagnostics, Inc. to In Veritas
Medical Diagnostics, Inc. The Company is changing its name to In Veritas Medical
Diagnostics, Inc. The Company believes that the name change would be in the best
interests of the Company. The name change will become effective when the
Amendment to the Articles of Incorporation is filed with the Secretary of State
of the State of Colorado. The Company intends to file the Amended Certificate
promptly after the stockholders approve the name change at which time the
Company will also change its name on the Over-The-Counter Bulletin Board.
INCREASE IN AUTHORIZED COMMON STOCK
The terms of the additional shares of Common Stock will be identical to
those of the currently outstanding shares of Common Stock. However, because
holders of Common Stock have no preemptive rights to purchase or subscribe for
any unissued stock of the Company, the issuance of additional shares of Common
Stock will reduce the current stockholders' percentage ownership interest in the
total outstanding shares of Common Stock. This amendment and the creation of
additional shares of authorized common stock will not alter the current number
of issued shares. The relative rights and limitations of the shares of Common
Stock will remain unchanged under this amendment.
As of the Record Date, a total of 51,677,282 shares of the Company's
currently authorized 100,000,000 shares of Common Stock are issued and
outstanding. The increase in the number of authorized but unissued shares of
Common Stock would enable the Company, without further stockholder approval, to
issue shares from time to time as may be required for proper business purposes,
such as raising additional capital for ongoing operations, business and asset
acquisitions, stock splits and dividends, present and future employee benefit
programs and other corporate purposes.
The proposed increase in the authorized number of shares of Common Stock
could have a number of effects on the Company's stockholders depending upon the
exact nature and circumstances of any actual issuances of authorized but
unissued shares. The increase could have an anti-takeover effect, in that
additional shares could be issued (within the limits imposed by applicable law)
in one or more transactions that could make a change in control or takeover of
the Company more difficult. For example, additional shares could be issued by
the Company so as to dilute the stock ownership or voting rights of persons
seeking to obtain control of the Company, even if the persons seeking to obtain
control of the Company offer an above-market premium that is favored by a
majority of the independent shareholders. Similarly, the issuance of additional
shares to certain persons allied with the Company's management could have the
effect of making it more difficult to remove the Company's current management by
diluting the stock ownership or voting rights of persons seeking to cause such
removal. The Company does not have any other provisions in its articles or
incorporation, by-laws, employment agreements, credit agreements or any other
documents that have material anti-takeover consequences. Additionally, the
Company has no plans or proposals to adopt other provisions or enter into other
arrangements that may have material anti-takeover consequences. The Board of
Directors is not aware of any attempt, or contemplated attempt, to acquire
control of the Company, and this proposal is not being presented with the intent
that it be utilized as a type of anti-takeover device.
6
APPROVAL OF THE 2005 STOCK INCENTIVE PLAN
General
- -------
The 2005 Stock Incentive Plan ("2005 Incentive Plan"), attached hereto as
Exhibit B, was adopted and approved by the Board of Directors and was approved
by the stockholders holding a majority of the capital stock of the Company. The
Board of Directors has initially reserved 21,434,788 shares of Common Stock for
issuance under the 2005 Incentive Plan. The following is a summary of principal
features of the 2005 Incentive Plan. The summary, however, does not purport to
be a complete description of all the provisions of the 2005 Incentive Plan.
Under the Plan, options may be granted which are intended to qualify as
Incentive Stock Options ("ISOs") under Section 422 of the Internal Revenue Code
of 1986 (the "Code") or which are not ("Non-ISOs") intended to qualify as
Incentive Stock Options thereunder.
The 2005 Incentive Plan and the right of participants to make purchases
thereunder are intended to qualify as an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). The
2005 Incentive Plan is not a qualified deferred compensation plan under Section
401(a) of the Internal Revenue Code and is not subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA").
Purpose
- -------
The primary purpose of the 2005 Incentive Plan is to attract and retain the
best available personnel for the Company in order to promote the success of the
Company's business and to facilitate the ownership of the Company's stock by
employees. In the event that the 2005 Incentive Plan is not adopted the Company
may have considerable difficulty in attracting and retaining qualified
personnel, officers, directors and consultants.
Administration
- --------------
The 2005 Incentive Plan, when approved, will be administered by the
Company's Board of Directors, as the Board of Directors may be composed from
time to time. All questions of interpretation of the 2005 Incentive Plan are
determined by the Board, and its decisions are final and binding upon all
participants. Any determination by a majority of the members of the Board of
Directors at any meeting, or by written consent in lieu of a meeting, shall be
deemed to have been made by the whole Board of Directors.
Notwithstanding the foregoing, the Board of Directors may at any time, or
from time to time, appoint a committee (the "Committee") of at least two members
of the Board of Directors, and delegate to the Committee the authority of the
Board of Directors to administer the Plan. Upon such appointment and delegation,
the Committee shall have all the powers, privileges and duties of the Board of
Directors, and shall be substituted for the Board of Directors, in the
administration of the Plan, subject to certain limitations.
Members of the Board of Directors who are eligible employees are permitted
to participate in the 2005 Incentive Plan, provided that any such eligible
member may not vote on any matter affecting the administration of the 2005
Incentive Plan or the grant of any option pursuant to it, or serve on a
committee appointed to administer the 2005 Incentive Plan. In the event that any
member of the Board of Directors is at any time not a "disinterested person", as
defined in Rule 16b-3(c)(3)(i) promulgated pursuant to the Securities Exchange
Act of 1934, the Plan shall not be administered by the Board of Directors, and
may only by administered by a Committee, all the members of which are
disinterested persons, as so defined.
Eligibility
- -----------
Under the 2005 Incentive Plan, options may be granted to key employees,
officers, directors or consultants of the Company, as provided in the 2005
Incentive Plan.
7
Terms of Options
- ----------------
The term of each Option granted under the Plan shall be contained in a
stock option agreement between the Optionee and the Company and such terms shall
be determined by the Board of Directors consistent with the provisions of the
Plan, including the following:
(a) PURCHASE PRICE. The purchase price of the Common Shares subject to each
ISO shall not be less than the fair market value (as set forth in the 2005
Incentive Plan), or in the case of the grant of an ISO to a Principal
Stockholder, not less that 110% of fair market value of such Common Shares at
the time such Option is granted. The purchase price of the Common Shares subject
to each Non-ISO shall be determined at the time such Option is granted, but in
no case less than 85% of the fair market value of such Common Shares at the time
such Option is granted.
(b) VESTING. The dates on which each Option (or portion thereof) shall be
exercisable and the conditions precedent to such exercise, if any, shall be
fixed by the Board of Directors, in its discretion, at the time such Option is
granted.
(c) EXPIRATION. The expiration of each Option shall be fixed by the Board
of Directors, in its discretion, at the time such Option is granted; however,
unless otherwise determined by the Board of Directors at the time such Option is
granted, an Option shall be exercisable for ten (10) years after the date on
which it was granted (the "Grant Date"). Each Option shall be subject to earlier
termination as expressly provided in the 2005 Incentive Plan or as determined by
the Board of Directors, in its discretion, at the time such Option is granted.
(d) TRANSFERABILITY. No Option shall be transferable, except by will or the
laws of descent and distribution, and any Option may be exercised during the
lifetime of the Optionee only by him. No Option granted under the Plan shall be
subject to execution, attachment or other process.
(e) OPTION ADJUSTMENTS. The aggregate number and class of shares as to
which Options may be granted under the Plan, the number and class shares covered
by each outstanding Option and the exercise price per share thereof (but not the
total price), and all such Options, shall each be proportionately adjusted for
any increase decrease in the number of issued Common Shares resulting from
split-up spin-off or consolidation of shares or any like Capital adjustment or
the payment of any stock dividend.
Except as otherwise provided in the 2005 Incentive Plan, any Option granted
hereunder shall terminate in the event of a merger, consolidation, acquisition
of property or stock, separation, reorganization or liquidation of the Company.
However, the Optionee shall have the right immediately prior to any such
transaction to exercise his Option in whole or in part notwithstanding any
otherwise applicable vesting requirements.
(f) TERMINATION, MODIFICATION AND AMENDMENT. The 2005 Incentive Plan (but
not Options previously granted under the Plan) shall terminate ten (10) years
from the earlier of the date of its adoption by the Board of Directors or the
date on which the Plan is approved by the affirmative vote of the holders of a
majority of the outstanding shares of capital stock of the Company entitled to
vote thereon, and no Option shall be granted after termination of the Plan.
Subject to certain restrictions, the Plan may at any time be terminated and from
time to time be modified or amended by the affirmative vote of the holders of a
majority of the outstanding shares of the capital stock of the Company present,
or represented, and entitled to vote at a meeting duly held in accordance with
the applicable laws of the State of Colorado
8
Federal Income Tax Aspects of the 2005 Incentive Plan
- -----------------------------------------------------
THE FOLLOWING IS A BRIEF SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON THE PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE PURCHASE OF SHARES
UNDER THE 2005 INCENTIVE PLAN. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE AND
DOES NOT ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES TO TAXPAYERS WITH SPECIAL
TAX STATUS. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE PROVISIONS OF THE
INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
PARTICIPANT MAY RESIDE, AND DOES NOT DISCUSS ESTATE, GIFT OR OTHER TAX
CONSEQUENCES OTHER THAN INCOME TAX CONSEQUENCES. THE COMPANY ADVISES EACH
PARTICIPANT TO CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES
OF PARTICIPATION IN THE 2005 INCENTIVE PLAN AND FOR REFERENCE TO APPLICABLE
PROVISIONS OF THE CODE.
The 2005 Incentive Plan and the right of participants to make purchases
thereunder are intended to qualify under the provisions of Sections 421, 422 and
423 of the Code. Under these provisions, no income will be recognized by a
participant prior to disposition of shares acquired under the 2005 Incentive
Plan.
If the shares are sold or otherwise disposed of (including by way of gift)
more than two years after the first day of the offering period during which
shares were purchased, a participant will recognize as ordinary income at the
time of such disposition the lesser of (a) the excess of the fair market value
of the shares at the time of such disposition over the purchase price of the
shares or (b) 15% of the fair market value of the shares on the first day of the
offering period. Any further gain or loss upon such disposition will be treated
as long-term capital gain or loss. If the shares are sold for a sale price less
than the purchase price, there is no ordinary income and the participant has a
capital loss for the difference.
If the shares are sold or otherwise disposed of (including by way of gift)
before the expiration of the two-year holding period described above, the excess
of the fair market value of the shares on the purchase date over the purchase
price will be treated as ordinary income to the participant. This excess will
constitute ordinary income in the year of sale or other disposition even if no
gain is realized on the sale or a gift of the shares is made. The balance of any
gain or loss will be treated as capital gain or loss and will be treated as
long-term capital gain or loss if the shares have been held more than one year.
In the case of a participant who is subject to Section 16(b) of the
Exchange Act, the purchase date for purposes of calculating such participant's
compensation income and beginning of the capital gain holding period may be
deferred for up to six months under certain circumstances. Such individuals
should consult with their personal tax advisors prior to buying or selling
shares under the 2005 Incentive Plan.
The ordinary income reported under the rules described above, added to the
actual purchase price of the shares, determines the tax basis of the shares for
the purpose of determining capital gain or loss on a sale or exchange of the
shares.
The Company is entitled to a deduction for amounts taxed as ordinary income
to a participant only to the extent that ordinary income must be reported upon
disposition of shares by the participant before the expiration of the two-year
holding period described above.
Restrictions on Resale
- ----------------------
Certain officers and directors of the Company may be deemed to be
"affiliates" of the Company as that term is defined under the Securities Act.
The Common Stock acquired under the 2005 Incentive Plan by an affiliate may be
reoffered or resold only pursuant to an effective registration statement or
pursuant to Rule 144 under the Securities Act or another exemption from the
registration requirements of the Securities Act.
9
Forward-Looking Statements and Information
This Information Statement includes forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. You can identify our forward-looking statements by the words "expects,"
"projects," "believes," "anticipates," "intends," "plans," "predicts,"
"estimates" and similar expressions.
The forward-looking statements are based on management's current
expectations, estimates and projections about us. The Company cautions you that
these statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that we cannot predict. In addition, the Company
has based many of these forward-looking statements on assumptions about future
events that may prove to be inaccurate. Accordingly, actual outcomes and results
may differ materially from what the Company has expressed or forecast in the
forward-looking statements.
You should rely only on the information the Company has provided in this
Information Statement. The Company has not authorized any person to provide
information other than that provided herein. The Company has not authorized
anyone to provide you with different information. You should not assume that the
information in this Information Statement is accurate as of any date other than
the date on the front of the document.
Where You Can Find More Information About the Company
The Company files annual, quarterly and current reports, proxy statements and
other information with the SEC. You can read and copy any materials that the
Company files with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You can obtain information about the
operation of the SEC's Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains a Web site that contains information we
file electronically with the SEC, which you can access over the Internet at
http://www.sec.gov. Copies of these materials may also be obtained by mail from
the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates.
By Order of the Board of Directors,
/s/ John Fuller
-------------------------------------
John Fuller
President and Chief Executive Officer
Inverness, Scotland
March 17, 2005
10
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO AMENDMENT OF
ARTICLES OF INCORPORATION
OF
IN VIVO MEDICAL DIAGNOSTICS, INC.
The undersigned, being the President and Chief Executive Officer of IN VIVO
MEDICAL DIAGNOSTICS, INC., a corporation existing under the laws of the State of
Colorado, does hereby certify under the seal of the said corporation as follows:
1. The articles of incorporation of the Corporation are hereby amended by
replacing Article I, in its entirety, with the following:
"Article I. Name. The name of the Corporation is In Veritas Medical
Diagnostics, Inc."
2. The articles of incorporation of the Corporation are hereby amended by
replacing Article II, Section 1 in its entirety, with the following:
"Article II. Section 1. Authorized Capital. The total number of shares of
all classes which the Corporation shall have authority to issue is 550,000,000
of which 50,000,000 shall be preferred stock, $.001 par value per share and
500,000,000 of which shall be common stock, $.001 par value per share, and the
designations, preferences, limitations and relative rights of the shares of each
class are as follows:"
3. The amendment of the articles of incorporation herein certified has been
duly adopted by the unanimous written consent of the Corporation's Board of
Directors and a majority of the Corporation's stockholders in accordance with
the provisions of Section 17-107-104 of the General Corporation Law of the State
of Colorado.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate of Amendment of the Corporation's Articles
of Incorporation, as amended, to be signed by John Fuller, its President and
Chief Executive Officer, this 17th day of March, 2005.
IN VIVO MEDICAL DIAGNOSTICS, INC.
By: /s/ John Fuller
---------------------------------
John Fuller, President and Chief
Executive Officer
11
IN VIVO MEDICAL DIAGNOSTICS, INC. 2005 INCENTIVE
STOCK PLAN
================================================================================
THIS IN VIVO MEDICAL DIAGNOSTICS, INC. 2005 INCENTIVE STOCK PLAN (the
"Plan") is designed to retain directors, executives and selected employees and
consultants and reward them for making major contributions to the success of the
Company. These objectives are accomplished by making long-term incentive awards
under the Plan thereby providing Participants with a proprietary interest in the
growth and performance of the Company.
1. Definitions.
(a) "Board" - The Board of Directors of the Company.
(b) "Code" - The Internal Revenue Code of 1986, as amended from time to
time.
(c) "Committee" - The Compensation Committee of the Company's Board, or
such other committee of the Board that is designated by the Board to
administer the Plan, composed of not less than two members of the
Board all of whom are disinterested persons, as contemplated by Rule
16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(d) "Company" - IN VIVO MEDICAL DIAGNOSTICS, INC. and its subsidiaries
including subsidiaries of subsidiaries.
(e) "Exchange Act" - The Securities Exchange Act of 1934, as amended from
time to time.
(f) "Fair Market Value" - The fair market value of the Company's issued
and outstanding Stock as determined in good faith by the Board or
Committee.
(g) "Grant" - The grant of any form of stock option, stock award, or stock
purchase offer, whether granted singly, in combination or in tandem,
to a Participant pursuant to such terms, conditions and limitations as
the Committee may establish in order to fulfill the objectives of the
Plan.
(h) "Grant Agreement" - An agreement between the Company and a Participant
that sets forth the terms, conditions and limitations applicable to a
Grant.
(i) "Option" - Either an Incentive Stock Option, in accordance with
Section 422 of Code, or a Nonstatutory Option, to purchase the
Company's Stock that may be awarded to a Participant under the Plan. A
Participant who receives an award of an Option shall be referred to as
an "Optionee."
(j) "Participant" - A director, officer, employee or consultant of the
Company to whom an Award has been made under the Plan.
(k) "Restricted Stock Purchase Offer" - A Grant of the right to purchase a
specified number of shares of Stock pursuant to a written agreement
issued under the Plan.
(l) "Securities Act" - The Securities Act of 1933, as amended from time to
time.
12
(m) "Stock" - Authorized and issued or unissued shares of common stock of
the Company.
(n) "Stock Award" - A Grant made under the Plan in stock or denominated in
units of stock for which the Participant is not obligated to pay
additional consideration.
2. Administration. The Plan shall be administered by the Board; provided,
however, that the Board may delegate such administration to the Committee.
Subject to the provisions of the Plan, the Board and/or the Committee shall
have authority to (a) grant, in its discretion, Incentive Stock Options in
accordance with Section 422 of the Code, or Nonstatutory Options, Stock
Awards or Restricted Stock Purchase Offers; (b) determine in good faith the
fair market value of the Stock covered by any Grant; (c) determine which
eligible persons shall receive Grants and the number of shares,
restrictions, terms and conditions to be included in such Grants; (d)
construe and interpret the Plan; (e) promulgate, amend and rescind rules
and regulations relating to its administration, and correct defects,
omissions and inconsistencies in the Plan or any Grant; (f) consistent with
the Plan and with the consent of the Participant, as appropriate, amend any
outstanding Grant or amend the exercise date or dates thereof; (g)
determine the duration and purpose of leaves of absence which may be
granted to Participants without constituting termination of their
employment for the purpose of the Plan or any Grant; and (h) make all other
determinations necessary or advisable for the Plan's administration. The
interpretation and construction by the Board of any provisions of the Plan
or selection of Participants shall be conclusive and final. No member of
the Board or the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any Grant made thereunder.
3. Eligibility.
(a) General: The persons who shall be eligible to receive Grants shall be
directors, officers, employees or consultants to the Company. The term
consultant shall mean any person, other than an employee, who is
engaged by the Company to render services and is compensated for such
services. An Optionee may hold more than one Option. Any issuance of a
Grant to an officer or director of the Company subsequent to the first
registration of any of the securities of the Company under the
Exchange Act shall comply with the requirements of Rule 16b-3.
(b) Incentive Stock Options: Incentive Stock Options may only be issued to
employees of the Company. Incentive Stock Options may be granted to
officers or directors, provided they are also employees of the
Company. Payment of a director's fee shall not be sufficient to
constitute employment by the Company.
The Company shall not grant an Incentive Stock Option under the
Plan to any employee if such Grant would result in such employee
holding the right to exercise for the first time in any one calendar
year, under all Incentive Stock Options granted under the Plan or any
other plan maintained by the Company, with respect to shares of Stock
having an aggregate fair market value, determined as of the date of
the Option is granted, in excess of $100,000. Should it be determined
that an Incentive Stock Option granted under the Plan exceeds such
maximum for any reason other than a failure in good faith to value the
Stock subject to such option, the excess portion of such option shall
be considered a Nonstatutory Option. To the extent the employee holds
two (2) or more such Options which become exercisable for the first
time in the same calendar year, the foregoing limitation on the
exercisability of such Option as Incentive Stock Options under the
Federal tax laws shall be applied on the basis of the order in which
such Options are granted. If, for any reason, an entire Option does
not qualify as an Incentive Stock Option by reason of exceeding such
maximum, such Option shall be considered a Nonstatutory Option.
13
(c) Nonstatutory Option: The provisions of the foregoing Section 3(b)
shall not apply to any Option designated as a "Nonstatutory Option" or
which sets forth the intention of the parties that the Option be a
Nonstatutory Option.
(d) Stock Awards and Restricted Stock Purchase Offers: The provisions of
this Section 3 shall not apply to any Stock Award or Restricted Stock
Purchase Offer under the Plan.
4. Stock.
(a) Authorized Stock: Stock subject to Grants may be either unissued or
reacquired Stock.
(b) Number of Shares: Subject to adjustment as provided in Section 5(i) of
the Plan, the total number of shares of Stock which may be purchased
or granted directly by Options, Stock Awards or Restricted Stock
Purchase Offers, or purchased indirectly through exercise of Options
granted under the Plan shall not exceed Twenty One Million Four
Hundred Thirty Four Thousand Seven Hundred Eighty-Eight (21,434,788).
If any Grant shall for any reason terminate or expire, any shares
allocated thereto but remaining unpurchased upon such expiration or
termination shall again be available for Grants with respect thereto
under the Plan as though no Grant had previously occurred with respect
to such shares. Any shares of Stock issued pursuant to a Grant and
repurchased pursuant to the terms thereof shall be available for
future Grants as though not previously covered by a Grant.
(c) Reservation of Shares: The Company shall reserve and keep available at
all times during the term of the Plan such number of shares as shall
be sufficient to satisfy the requirements of the Plan. If, after
reasonable efforts, which efforts shall not include the registration
of the Plan or Grants under the Securities Act, the Company is unable
to obtain authority from any applicable regulatory body, which
authorization is deemed necessary by legal counsel for the Company for
the lawful issuance of shares hereunder, the Company shall be relieved
of any liability with respect to its failure to issue and sell the
shares for which such requisite authority was so deemed necessary
unless and until such authority is obtained.
(d) Application of Funds: The proceeds received by the Company from the
sale of Stock pursuant to the exercise of Options or rights under
Stock Purchase Agreements will be used for general corporate purposes.
(e) No Obligation to Exercise: The issuance of a Grant shall impose no
obligation upon the Participant to exercise any rights under such
Grant.
5. Terms and Conditions of Options. Options granted hereunder shall be
evidenced by agreements between the Company and the respective Optionees,
in such form and substance as the Board or Committee shall from time to
time approve. The form of Incentive Stock Option Agreement attached hereto
as Exhibit A and the three forms of a Nonstatutory Stock Option Agreement
for employees, for directors and for consultants, attached hereto as
Exhibit B-1, Exhibit B-2 and Exhibit B-3, respectively, shall be deemed to
be approved by the Board. Option agreements need not be identical, and in
each case may include such provisions as the Board or Committee may
determine, but all such agreements shall be subject to and limited by the
following terms and conditions:
14
(a) Number of Shares: Each Option shall state the number of shares to
which it pertains.
(b) Exercise Price: Each Option shall state the exercise price, which
shall be determined as follows:
(i) Any Incentive Stock Option granted to a person who at the time
the Option is granted owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power or value of all
classes of stock of the Company ("Ten Percent Holder") shall have
an exercise price of no less than 110% of the Fair Market Value
of the Stock as of the date of grant; and
(ii) Incentive Stock Options granted to a person who at the time the
Option is granted is not a Ten Percent Holder shall have an
exercise price of no less than 100% of the Fair Market Value of
the Stock as of the date of grant.
For the purposes of this Section 5(b), the Fair Market Value
shall be as determined by the Board in good faith, which determination
shall be conclusive and binding; provided however, that if there is a
public market for such Stock, the Fair Market Value per share shall be
the average of the bid and asked prices (or the closing price if such
stock is listed on the NASDAQ National Market System or Small Cap Issue
Market) on the date of grant of the Option, or if listed on a stock
exchange, the closing price on such exchange on such date of grant.
(c) Medium and Time of Payment: The exercise price shall become
immediately due upon exercise of the Option and shall be paid in
cash or check made payable to the Company. Should the Company's
outstanding Stock be registered under Section 12(g) of the
Exchange Act at the time the Option is exercised, then the
exercise price may also be paid as follows:
(i) in shares of Stock held by the Optionee for the requisite
period necessary to avoid a charge to the Company's earnings
for financial reporting purposes and valued at Fair Market
Value on the exercise date, or
(ii) through a special sale and remittance procedure pursuant to
which the Optionee shall concurrently provide irrevocable
written instructions (a) to a Company designated brokerage
firm to effect the immediate sale of the purchased shares
and remit to the Company, out of the sale proceeds available
on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares
plus all applicable Federal, state and local income and
employment taxes required to be withheld by the Company by
reason of such purchase and (b) to the Company to deliver
the certificates for the purchased shares directly to such
brokerage firm in order to complete the sale transaction.
At the discretion of the Board, exercisable either at the time of
Option grant or of Option exercise, the exercise price may also be
paid (i) by Optionee's delivery of a promissory note in form and
substance satisfactory to the Company and permissible under applicable
securities rules and bearing interest at a rate determined by the
Board in its sole discretion, but in no event less than the minimum
rate of interest required to avoid the imputation of compensation
income to the Optionee under the Federal tax laws, or (ii) in such
other form of consideration permitted by the State of Colorado
corporations law as may be acceptable to the Board.
15
(d) Term and Exercise of Options: Any Option granted to an employee of the
Company shall become exercisable over a period of no longer than five
(5) years, and no less than twenty percent (20%) of the shares covered
thereby shall become exercisable annually. No Option shall be
exercisable, in whole or in part, prior to one (1) year from the date
it is granted unless the Board shall specifically determine otherwise,
as provided herein. In no event shall any Option be exercisable after
the expiration of ten (10) years from the date it is granted, and no
Incentive Stock Option granted to a Ten Percent Holder shall, by its
terms, be exercisable after the expiration of five (5) years from the
date of the Option. Unless otherwise specified by the Board or the
Committee in the resolution authorizing such Option, the date of grant
of an Option shall be deemed to be the date upon which the Board or
the Committee authorizes the granting of such Option.
Each Option shall be exercisable to the nearest whole share, in
installments or otherwise, as the respective Option agreements may
provide. During the lifetime of an Optionee, the Option shall be
exercisable only by the Optionee and shall not be assignable or
transferable by the Optionee, and no other person shall acquire any
rights therein. To the extent not exercised, installments (if more
than one) shall accumulate, but shall be exercisable, in whole or in
part, only during the period for exercise as stated in the Option
agreement, whether or not other installments are then exercisable.
(e) Termination of Status as Employee, Consultant or Director: If
Optionee's status as an employee shall terminate for any reason other
than Optionee's disability or death, then Optionee (or if the Optionee
shall die after such termination, but prior to exercise, Optionee's
personal representative or the person entitled to succeed to the
Option) shall have the right to exercise the portions of any of
Optionee's Incentive Stock Options which were exercisable as of the
date of such termination, in whole or in part, not less than 30 days
nor more than three (3) months after such termination (or, in the
event of "termination for good cause" as that term is defined in
Colorado case law related thereto, or by the terms of the Plan or the
Option Agreement or an employment agreement, the Option shall
automatically terminate as of the termination of employment as to all
shares covered by the Option).
With respect to Nonstatutory Options granted to employees,
directors or consultants, the Board may specify such period for
exercise, not less than 30 days (except that in the case of
"termination for cause" or removal of a director, the Option shall
automatically terminate as of the termination of employment or
services as to shares covered by the Option, following termination of
employment or services as the Board deems reasonable and appropriate.
The Option may be exercised only with respect to installments that the
Optionee could have exercised at the date of termination of employment
or services. Nothing contained herein or in any Option granted
pursuant hereto shall be construed to affect or restrict in any way
the right of the Company to terminate the employment or services of an
Optionee with or without cause.
(f) Disability of Optionee: If an Optionee is disabled (within the meaning
of Section 22(e)(3) of the Code) at the time of termination, the three
(3) month period set forth in Section 5(e) shall be a period, as
determined by the Board and set forth in the Option, of not less than
six months nor more than one year after such termination.
16
(g) Death of Optionee: If an Optionee dies while employed by, engaged as a
consultant to, or serving as a Director of the Company, the portion of
such Optionee's Option which was exercisable at the date of death may
be exercised, in whole or in part, by the estate of the decedent or by
a person succeeding to the right to exercise such Option at any time
within (i) a period, as determined by the Board and set forth in the
Option, of not less than six (6) months nor more than one (1) year
after Optionee's death, which period shall not be more, in the case of
a Nonstatutory Option, than the period for exercise following
termination of employment or services, or (ii) during the remaining
term of the Option, whichever is the lesser. The Option may be so
exercised only with respect to installments exercisable at the time of
Optionee's death and not previously exercised by the Optionee.
(h) Nontransferability of Option: No Option shall be transferable by the
Optionee, except by will or by the laws of descent and distribution.
(i) Recapitalization: Subject to any required action of shareholders, the
number of shares of Stock covered by each outstanding Option, and the
exercise price per share thereof set forth in each such Option, shall
be proportionately adjusted for any increase or decrease in the number
of issued shares of Stock of the Company resulting from a stock split,
stock dividend, combination, subdivision or reclassification of
shares, or the payment of a stock dividend, or any other increase or
decrease in the number of such shares affected without receipt of
consideration by the Company; provided, however, the conversion of any
convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration" by the Company.
In the event of a proposed dissolution or liquidation of the
Company, a merger or consolidation in which the Company is not the
surviving entity, or a sale of all or substantially all of the assets
or capital stock of the Company (collectively, a "Reorganization"),
unless otherwise provided by the Board, this Option shall terminate
immediately prior to such date as is determined by the Board, which
date shall be no later than the consummation of such Reorganization.
In such event, if the entity which shall be the surviving entity does
not tender to Optionee an offer, for which it has no obligation to do
so, to substitute for any unexercised Option a stock option or capital
stock of such surviving of such surviving entity, as applicable, which
on an equitable basis shall provide the Optionee with substantially
the same economic benefit as such unexercised Option, then the Board
may grant to such Optionee, in its sole and absolute discretion and
without obligation, the right for a period commencing thirty (30) days
prior to and ending immediately prior to the date determined by the
Board pursuant hereto for termination of the Option or during the
remaining term of the Option, whichever is the lesser, to exercise any
unexpired Option or Options without regard to the installment
provisions of Paragraph 6(d) of the Plan; provided, that any such
right granted shall be granted to all Optionees not receiving an offer
to receive substitute options on a consistent basis, and provided
further, that any such exercise shall be subject to the consummation
of such Reorganization.
Subject to any required action of shareholders, if the Company
shall be the surviving entity in any merger or consolidation, each
outstanding Option thereafter shall pertain to and apply to the
securities to which a holder of shares of Stock equal to the shares
subject to the Option would have been entitled by reason of such
merger or consolidation.
17
In the event of a change in the Stock of the Company as presently
constituted, which is limited to a change of all of its authorized
shares without par value into the same number of shares with a par
value, the shares resulting from any such change shall be deemed to be
the Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the
Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided in this Section 5(i), the
Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of
shares of stock of any class, and the number or price of shares of
Stock subject to any Option shall not be affected by, and no
adjustment shall be made by reason of, any dissolution, liquidation,
merger, consolidation or sale of assets or capital stock, or any issue
by the Company of shares of stock of any class or securities
convertible into shares of stock of any class.
The Grant of an Option pursuant to the Plan shall not affect in
any way the right or power of the Company to make any adjustments,
reclassifications, reorganizations or changes in its capital or
business structure or to merge, consolidate, dissolve, or liquidate or
to sell or transfer all or any part of its business or assets.
(j) Rights as a Shareholder: An Optionee shall have no rights as a
shareholder with respect to any shares covered by an Option until the
effective date of the issuance of the shares following exercise of
such Option by Optionee. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date
is prior to the date such stock certificate is issued, except as
expressly provided in Section 5(i) hereof.
(k) Modification, Acceleration, Extension, and Renewal of Options: Subject
to the terms and conditions and within the limitations of the Plan,
the Board may modify an Option, or, once an Option is exercisable,
accelerate the rate at which it may be exercised, and may extend or
renew outstanding Options granted under the Plan or accept the
surrender of outstanding Options (to the extent not theretofore
exercised) and authorize the granting of new Options in substitution
for such Options, provided such action is permissible under Section
422 of the Code and applicable state securities rules. Notwithstanding
the provisions of this Section 5(k), however, no modification of an
Option shall, without the consent of the Optionee, alter to the
Optionee's detriment or impair any rights or obligations under any
Option theretofore granted under the Plan.
(l) Exercise Before Exercise Date: At the discretion of the Board, the
Option may, but need not, include a provision whereby the Optionee may
elect to exercise all or any portion of the Option prior to the stated
exercise date of the Option or any installment thereof. Any shares so
purchased prior to the stated exercise date shall be subject to
repurchase by the Company upon termination of Optionee's employment as
contemplated by Section 5(n) hereof prior to the exercise date stated
in the Option and such other restrictions and conditions as the Board
or Committee may deem advisable.
(m) Other Provisions: The Option agreements authorized under the Plan
shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the Options, as the Board or the
Committee shall deem advisable. Shares shall not be issued pursuant to
the exercise of an Option, if the exercise of such Option or the
issuance of shares thereunder would violate, in the opinion of legal
counsel for the Company, the provisions of any applicable law or the
rules or regulations of any applicable governmental or administrative
agency or body, such as the Code, the Securities Act, the Exchange
18
Act, applicable state securities rules, Colorado corporation law, and
the rules promulgated under the foregoing or the rules and regulations
of any exchange upon which the shares of the Company are listed.
Without limiting the generality of the foregoing, the exercise of each
Option shall be subject to the condition that if at any time the
Company shall determine that (i) the satisfaction of withholding tax
or other similar liabilities, or (ii) the listing, registration or
qualification of any shares covered by such exercise upon any
securities exchange or under any state or federal law, or (iii) the
consent or approval of any regulatory body, or (iv) the perfection of
any exemption from any such withholding, listing, registration,
qualification, consent or approval is necessary or desirable in
connection with such exercise or the issuance of shares thereunder,
then in any such event, such exercise shall not be effective unless
such withholding, listing registration, qualification, consent,
approval or exemption shall have been effected, obtained or perfected
free of any conditions not acceptable to the Company.
(n) Repurchase Agreement: The Board may, in its discretion, require as a
condition to the Grant of an Option hereunder, that an Optionee
execute an agreement with the Company, in form and substance
satisfactory to the Board in its discretion ("Repurchase Agreement"),
(i) restricting the Optionee's right to transfer shares purchased
under such Option without first offering such shares to the Company or
another shareholder of the Company upon the same terms and conditions
as provided therein; and (ii) providing that upon termination of
Optionee's employment with the Company, for any reason, the Company
(or another shareholder of the Company, as provided in the Repurchase
Agreement) shall have the right at its discretion (or the discretion
of such other shareholders) to purchase and/or redeem all such shares
owned by the Optionee on the date of termination of his or her
employment at a price equal to: (A) the fair value of such shares as
of such date of termination; or (B) if such repurchase right lapses at
20% of the number of shares per year, the original purchase price of
such shares, and upon terms of payment permissible under applicable
state securities rules; provided that in the case of Options or Stock
Awards granted to officers, directors, consultants or affiliates of
the Company, such repurchase provisions may be subject to additional
or greater restrictions as determined by the Board or Committee.
6. Stock Awards and Restricted Stock Purchase Offers.
(a) Types of Grants.
(i) Stock Award. All or part of any Stock Award under the Plan may be
subject to conditions established by the Board or the Committee,
and set forth in the Stock Award Agreement, which may include,
but are not limited to, continuous service with the Company,
achievement of specific business objectives, increases in
specified indices, attaining growth rates and other comparable
measurements of Company performance. Such Awards may be based on
Fair Market Value or other specified valuation. All Stock Awards
will be made pursuant to the execution of a Stock Award Agreement
substantially in the form attached hereto as Exhibit C.
(ii) Restricted Stock Purchase Offer. A Grant of a Restricted Stock
Purchase Offer under the Plan shall be subject to such (i)
vesting contingencies related to the Participant's continued
association with the Company for a specified time and (ii) other
specified conditions as the Board or Committee shall determine,
in their sole discretion, consistent with the provisions of the
Plan. All Restricted Stock Purchase Offers shall be made pursuant
to a Restricted Stock Purchase Offer substantially in the form
attached hereto as Exhibit D.
19
(b) Conditions and Restrictions. Shares of Stock which Participants may
receive as a Stock Award under a Stock Award Agreement or Restricted
Stock Purchase Offer under a Restricted Stock Purchase Offer may
include such restrictions as the Board or Committee, as applicable,
shall determine, including restrictions on transfer, repurchase
rights, right of first refusal, and forfeiture provisions. When
transfer of Stock is so restricted or subject to forfeiture provisions
it is referred to as "Restricted Stock". Further, with Board or
Committee approval, Stock Awards or Restricted Stock Purchase Offers
may be deferred, either in the form of installments or a future lump
sum distribution. The Board or Committee may permit selected
Participants to elect to defer distributions of Stock Awards or
Restricted Stock Purchase Offers in accordance with procedures
established by the Board or Committee to assure that such deferrals
comply with applicable requirements of the Code including, at the
choice of Participants, the capability to make further deferrals for
distribution after retirement. Any deferred distribution, whether
elected by the Participant or specified by the Stock Award Agreement,
Restricted Stock Purchase Offers or by the Board or Committee, may
require the payment be forfeited in accordance with the provisions of
Section 6(c). Dividends or dividend equivalent rights may be extended
to and made part of any Stock Award or Restricted Stock Purchase
Offers denominated in Stock or units of Stock, subject to such terms,
conditions and restrictions as the Board or Committee may establish.
(c) Cancellation and Rescission of Grants. Unless the Stock Award
Agreement or Restricted Stock Purchase Offer specifies otherwise, the
Board or Committee, as applicable, may cancel any unexpired, unpaid,
or deferred Grants at any time if the Participant is not in compliance
with all other applicable provisions of the Stock Award Agreement or
Restricted Stock Purchase Offer, the Plan and with the following
conditions:
(i) A Participant shall not render services for any organization or
engage directly or indirectly in any business which, in the
judgment of the chief executive officer of the Company or other
senior officer designated by the Board or Committee, is or
becomes competitive with the Company, or which organization or
business, or the rendering of services to such organization or
business, is or becomes otherwise prejudicial to or in conflict
with the interests of the Company. For Participants whose
employment has terminated, the judgment of the chief executive
officer shall be based on the Participant's position and
responsibilities while employed by the Company, the Participant's
post-employment responsibilities and position with the other
organization or business, the extent of past, current and
potential competition or conflict between the Company and the
other organization or business, the effect on the Company's
customers, suppliers and competitors and such other
considerations as are deemed relevant given the applicable facts
and circumstances. A Participant who has retired shall be free,
however, to purchase as an investment or otherwise, stock or
other securities of such organization or business so long as they
are listed upon a recognized securities exchange or traded
over-the-counter, and such investment does not represent a
substantial investment to the Participant or a greater than ten
percent (10%) equity interest in the organization or business.
20
(ii) A Participant shall not, without prior written authorization from
the Company, disclose to anyone outside the Company, or use in
other than the Company's business, any confidential information
or material, as defined in the Company's Proprietary Information
and Invention Agreement or similar agreement regarding
confidential information and intellectual property, relating to
the business of the Company, acquired by the Participant either
during or after employment with the Company.
(iii)A Participant, pursuant to the Company's Proprietary Information
and Invention Agreement, shall disclose promptly and assign to
the Company all right, title and interest in any invention or
idea, patentable or not, made or conceived by the Participant
during employment by the Company, relating in any manner to the
actual or anticipated business, research or development work of
the Company and shall do anything reasonably necessary to enable
the Company to secure a patent where appropriate in the United
States and in foreign countries.
(iv) Upon exercise, payment or delivery pursuant to a Grant, the
Participant shall certify on a form acceptable to the Committee
that he or she is in compliance with the terms and conditions of
the Plan. Failure to comply with all of the provisions of this
Section 6(c) prior to, or during the six months after, any
exercise, payment or delivery pursuant to a Grant shall cause
such exercise, payment or delivery to be rescinded. The Company
shall notify the Participant in writing of any such rescission
within two years after such exercise, payment or delivery. Within
ten days after receiving such a notice from the Company, the
Participant shall pay to the Company the amount of any gain
realized or payment received as a result of the rescinded
exercise, payment or delivery pursuant to a Grant. Such payment
shall be made either in cash or by returning to the Company the
number of shares of Stock that the Participant received in
connection with the rescinded exercise, payment or delivery.
(d) Nonassignability.
(i) Except pursuant to Section 6(e)(iii) and except as set forth in
Section 6(d)(ii), no Grant or any other benefit under the Plan
shall be assignable or transferable, or payable to or exercisable
by, anyone other than the Participant to whom it was granted.
(ii) Where a Participant terminates employment and retains a Grant
pursuant to Section 6(e)(ii) in order to assume a position with a
governmental, charitable or educational institution, the Board or
Committee, in its discretion and to the extent permitted by law,
may authorize a third party (including but not limited to the
trustee of a "blind" trust), acceptable to the applicable
governmental or institutional authorities, the Participant and
the Board or Committee, to act on behalf of the Participant with
regard to such Awards.
(e) Termination of Employment. If the employment or service to the Company
of a Participant terminates, other than pursuant to any of the
following provisions under this Section 6(e), all unexercised,
deferred and unpaid Stock Awards or Restricted Stock Purchase Offers
shall be cancelled immediately, unless the Stock Award Agreement or
Restricted Stock Purchase Offer provides otherwise:
(i) Retirement Under a Company Retirement Plan. When a Participant's
employment terminates as a result of retirement in accordance
with the terms of a Company retirement plan, the Board or
Committee may permit Stock Awards or Restricted Stock Purchase
Offers to continue in effect beyond the date of retirement in
accordance with the applicable Grant Agreement and the
exercisability and vesting of any such Grants may be accelerated.
(ii) Rights in the Best Interests of the Company. When a Participant
resigns from the Company and, in the judgment of the Board or
Committee, the acceleration and/or continuation of outstanding
Stock Awards or Restricted Stock Purchase Offers would be in the
best interests of the Company, the Board or Committee may (i)
authorize, where appropriate, the acceleration and/or
21
continuation of all or any part of Grants issued prior to such
termination and (ii) permit the exercise, vesting and payment of
such Grants for such period as may be set forth in the applicable
Grant Agreement, subject to earlier cancellation pursuant to
Section 9 or at such time as the Board or Committee shall deem
the continuation of all or any part of the Participant's Grants
are not in the Company's best interest.
(iii) Death or Disability of a Participant.
(1) In the event of a Participant's death, the Participant's
estate or beneficiaries shall have a period up to the
expiration date specified in the Grant Agreement within
which to receive or exercise any outstanding Grant held by
the Participant under such terms as may be specified in the
applicable Grant Agreement. Rights to any such outstanding
Grants shall pass by will or the laws of descent and
distribution in the following order: (a) to beneficiaries so
designated by the Participant; if none, then (b) to a legal
representative of the Participant; if none, then (c) to the
persons entitled thereto as determined by a court of
competent jurisdiction. Grants so passing shall be made at
such times and in such manner as if the Participant were
living.
(2) In the event a Participant is deemed by the Board or
Committee to be unable to perform his or her usual duties by
reason of mental disorder or medical condition which does
not result from facts which would be grounds for termination
for cause, Grants and rights to any such Grants may be paid
to or exercised by the Participant, if legally competent, or
a committee or other legally designated guardian or
representative if the Participant is legally incompetent by
virtue of such disability.
(3) After the death or disability of a Participant, the Board or
Committee may in its sole discretion at any time (1)
terminate restrictions in Grant Agreements; (2) accelerate
any or all installments and rights; and (3) instruct the
Company to pay the total of any accelerated payments in a
lump sum to the Participant, the Participant's estate,
beneficiaries or representative; notwithstanding that, in
the absence of such termination of restrictions or
acceleration of payments, any or all of the payments due
under the Grant might ultimately have become payable to
other beneficiaries.
(4) In the event of uncertainty as to interpretation of or
controversies concerning this Section 6, the determinations
of the Board or Committee, as applicable, shall be binding
and conclusive.
7. Investment Intent. All Grants under the Plan are intended to be exempt from
registration under the Securities Act provided by Rule 701 thereunder.
Unless and until the granting of Options or sale and issuance of Stock
subject to the Plan are registered under the Securities Act or shall be
exempt pursuant to the rules promulgated thereunder, each Grant under the
Plan shall provide that the purchases or other acquisitions of Stock
thereunder shall be for investment purposes and not with a view to, or for
resale in connection with, any distribution thereof. Further, unless the
issuance and sale of the Stock have been registered under the Securities
Act, each Grant shall provide that no shares shall be purchased upon the
exercise of the rights under such Grant unless and until (i) all then
applicable requirements of state and federal laws and regulatory agencies
shall have been fully complied with to the satisfaction of the Company and
its counsel, and (ii) if requested to do so by the Company, the person
exercising the rights under the Grant shall (i) give written assurances as
to knowledge and experience of such person (or a representative employed by
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such person) in financial and business matters and the ability of such
person (or representative) to evaluate the merits and risks of exercising
the Option, and (ii) execute and deliver to the Company a letter of
investment intent and/or such other form related to applicable exemptions
from registration, all in such form and substance as the Company may
require. If shares are issued upon exercise of any rights under a Grant
without registration under the Securities Act, subsequent registration of
such shares shall relieve the purchaser thereof of any investment
restrictions or representations made upon the exercise of such rights.
8. Amendment, Modification, Suspension or Discontinuance of the Plan. The
Board may, insofar as permitted by law, from time to time, with respect to
any shares at the time not subject to outstanding Grants, suspend or
terminate the Plan or revise or amend it in any respect whatsoever, except
that without the approval of the shareholders of the Company, no such
revision or amendment shall (i) increase the number of shares subject to
the Plan, (ii) decrease the price at which Grants may be granted, (iii)
materially increase the benefits to Participants, or (iv) change the class
of persons eligible to receive Grants under the Plan; provided, however, no
such action shall alter or impair the rights and obligations under any
Option, or Stock Award, or Restricted Stock Purchase Offer outstanding as
of the date thereof without the written consent of the Participant
thereunder. No Grant may be issued while the Plan is suspended or after it
is terminated, but the rights and obligations under any Grant issued while
the Plan is in effect shall not be impaired by suspension or termination of
the Plan.
In the event of any change in the outstanding Stock by reason of a
stock split, stock dividend, combination or reclassification of shares,
recapitalization, merger, or similar event, the Board or the Committee may
adjust proportionally (a) the number of shares of Stock (i) reserved under
the Plan, (ii) available for Incentive Stock Options and Nonstatutory
Options and (iii) covered by outstanding Stock Awards or Restricted Stock
Purchase Offers; (b) the Stock prices related to outstanding Grants; and
(c) the appropriate Fair Market Value and other price determinations for
such Grants. In the event of any other change affecting the Stock or any
distribution (other than normal cash dividends) to holders of Stock, such
adjustments as may be deemed equitable by the Board or the Committee,
including adjustments to avoid fractional shares, shall be made to give
proper effect to such event. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization
or liquidation, the Board or the Committee shall be authorized to issue or
assume stock options, whether or not in a transaction to which Section
424(a) of the Code applies, and other Grants by means of substitution of
new Grant Agreements for previously issued Grants or an assumption of
previously issued Grants.
9. Tax Withholding. The Company shall have the right to deduct applicable
taxes from any Grant payment and withhold, at the time of delivery or
exercise of Options, Stock Awards or Restricted Stock Purchase Offers or
vesting of shares under such Grants, an appropriate number of shares for
payment of taxes required by law or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. If Stock is used to satisfy tax withholding,
such stock shall be valued based on the Fair Market Value when the tax
withholding is required to be made.
10. Availability of Information. During the term of the Plan and any additional
period during which a Grant granted pursuant to the Plan shall be
exercisable, the Company shall make available, not later than one hundred
and twenty (120) days following the close of each of its fiscal years, such
financial and other information regarding the Company as is required by the
bylaws of the Company and applicable law to be furnished in an annual
report to the shareholders of the Company.
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11. Notice. Any written notice to the Company required by any of the provisions
of the Plan shall be addressed to the chief personnel officer or to the
chief executive officer of the Company, and shall become effective when it
is received by the office of the chief personnel officer or the chief
executive officer.
12. Indemnification of Board. In addition to such other rights or
indemnifications as they may have as directors or otherwise, and to the
extent allowed by applicable law, the members of the Board and the
Committee shall be indemnified by the Company against the reasonable
expenses, including attorneys' fees, actually and necessarily incurred in
connection with the defense of any claim, action, suit or proceeding, or in
connection with any appeal thereof, to which they or any of them may be a
party by reason of any action taken, or failure to act, under or in
connection with the Plan or any Grant granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such claim, action, suit or
proceeding, except in any case in relation to matters as to which it shall
be adjudged in such claim, action, suit or proceeding that such Board or
Committee member is liable for negligence or misconduct in the performance
of his or her duties; provided that within sixty (60) days after
institution of any such action, suit or Board proceeding the member
involved shall offer the Company, in writing, the opportunity, at its own
expense, to handle and defend the same.
13. Governing Law. The Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by the Code or the
securities laws of the United States, shall be governed by the law of the
State of Colorado and construed accordingly.
14. Effective and Termination Dates. The Plan shall become effective on the
date it is approved by the holders of a majority of the shares of Stock
then outstanding. The Plan shall terminate ten years later, subject to
earlier termination by the Board pursuant to Section 8.
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The foregoing 2005 Incentive Stock Plan (consisting of 14 pages, including
this page) was duly adopted and approved by the Board of Directors on February
28, 2005.
IN VIVO MEDICAL DIAGNOSTICS, INC.,
a Colorado corporation
By: /s/ John Fuller
-------------------------------------
John Fuller
Its: President and Chief Executive Officer
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