As filed with the Securities and Exchange Commission on February 11, 2005
Registration No. -333-_______
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
InterCare DX, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Incorporated in California
(State or other jurisdiction of incorporation or organization)
95-4304537
(I.R.S. Employer Identification No.)
900 Wilshire Boulevard, Suite 500, Los Angeles, CA 90017
(Address of Principal Executive Offices, including ZIP Code)
THE STOCK OPTION PLAN OF INTERCARE DX, INC.
(Full Title of the Plan)
Anthony C. Dike, Chief Executive Officer
900 Wilshire Boulevard, Suite 500, Los Angeles, CA 90017
(213) 627-8878
(Name, Address and Telephone Number of Agent for Service)
CALCULATION OF REGISTRATION FEE
CALCULATION OF REGISTRATION FEE
Title of Securities to be Registered Proposed Amount to be Registered
------------------------------------ --------------------------------
Common Stock, No par value 2,000,000
Proposed Maximum Offering Price Maximum Aggregate Offering Price
------------------------------- --------------------------------
$0.10 $200,000.00
Amount of Registration Fee
-------------------------
$23.54
(1) This registration statement shall cover any additional shares of common
stock which become issuable under the plans by reason of any stock dividend,
stock split, recapitalization or any other similar transactions without receipt
of consideration which results in an increase in the number of shares of the
Registrant's outstanding common stock.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(h). Pursuant to Rule 457(h)(1), this estimate is based
upon the price at which the options may be exercised.
1
TABLE OF CONTENTS
-----------------
PART I
- -------
PART II
- --------
Item 3. Incorporation of Documents by Reference.
------------------------------------------------------
Item 4. Description of Securities.
--------------------------------------
Item 5. Interests of Named Experts and Counsel.
------------------------------------------------------
Item 6. Indemnification of Directors and Officers.
--------------------------------------------------------
Item 7. Exemption from Registration Claimed.
-------------------------------------------------
Item 8. Exhibits.
-------------------
SIGNATURES
- ----------
EX-5.1
- ------
EX-23.1
- -------
EX-24.1
- -------
EX-99.1
- -------
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information specified in Part I will be sent
or given to employees as specified by Rule 428(b)(1). Such documents are not
being filed with the Securities and Exchange Commission ("Commission") either as
part of this Registration Statement or as prospectuses or prospectus supplements
pursuant to Rule 424. Such documents and the documents incorporated by
reference in this Registration Statement pursuant to Item 3 of Part II of this
Form, taken together, constitute a prospectus that meets the requirements of
Section 10(a) of the Securities Act of 1933, as amended ("Securities Act").
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
We hereby incorporate by reference into this Registration Statement the
following documents filed by us with the Commission:
(a) An Annual Report on Form 10-KSB for the year ended December 31, 2003;
(b) A Quarterly Report on Form 10-QSB for the quarter ended September 30, 2004;
(c) A Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004;
(d) A Quarterly Report on Form 10-QSB for the quarter ended March 31, 2004;
(e) A Current Report on Form 8-K, dated January 2, 2005;
(f) A Current Report on Form 8-K/A, dated December 17, 2004;
(g) A Current Report on Form 8-K, dated December 17, 2004;
(h) A Current Report on Form 8-K, dated November 3, 2004;
(i) A Current Report on Form 8-K, dated March 6, 2004;
(j) A Current Report on Form 8-K, dated February 17, 2004;
(k) A Current Report on Form 8-K, dated January 16, 2004;
(l) All other reports filed by us pursuant to Sections 13(a) and 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act").
All documents filed by us pursuant to Sections 13(a), 13(c), 14 and 15(d)
of the Exchange Act after the date of this Registration Statement and 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
2
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein and to be a part hereof shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Common Stock
- -------------
We are authorized to issue up to 100,000,000 shares of common stock, no par
value, of which 14,293,403 shares were issued and outstanding as of September
30, 2004. All outstanding shares of our common stock are fully paid and
nonassessable and the shares of our common stock offered by this prospectus will
be, upon issuance, fully paid and nonassessable. We are registering 2,000,000
shares of Common Stock, pursuant to this S-8 Registration Statement.
Preferred Stock
- ----------------
We are authorized 20,000,000 shares of preferred stock, with no par value.
No shares of preferred stock have been issued. The Board of Directors has the
authority to issue preferred stock from time to time in series and to fix the
designations, powers (including voting powers, if any), preferences, and
relative participating, options, conversion, and other special rights, and the
qualifications, limitations, and restrictions of each series.
The flexibility vested in the Board of Directors to issue preferred stock in one
or more series can enhance the Board of Directors' bargaining capability on
behalf of our shareholders in the event of a possible takeover and could, under
some circumstances, be used to render more difficult or discourage a merger,
tender offer, or proxy contest, the assumption of control by a holder of a large
block of our securities, or the removal of incumbent management, even if such a
transaction were favored by the holders of the requisite number of the
then-outstanding shares, in that the rights, privileges, and preferences of one
or more series of preferred stock, which preferred stock could be privately
placed, could involve provisions as to voting, redemption, conversion, or other
rights that could deter such action. Accordingly, shareholders might be
deprived of an opportunity to consider a takeover proposal that a third party
might otherwise consider making, because we have a class of preferred stock
authorized; the issuance of preferred stock may discourage bids for the common
stock at a premium over the market price, could adversely affect the voting
rights of holders of common stock, and could adversely affect the market price
of the common stock. We currently do not have any plans or commitments that
would involve the issuance of shares of our preferred stock.
Voting
- ------
Holders of our common stock are entitled to cast one vote for each share
held at all shareholder meetings for all purposes, including the election of
directors.
The holders of more than 50% of the voting power of our common stock issued and
outstanding and entitled to vote and present in person or by proxy, together
with any preferred stock issued and outstanding and entitled to vote and present
in person or by proxy, constitute a quorum at all meetings of our shareholders.
The vote of the holders of a majority of our common stock present and entitled
to vote at a meeting, together with any preferred stock present and entitled to
vote at a meeting, will decide any question brought before the meeting, except
when California law, our Articles of Incorporation, or our bylaws require a
greater vote and except when California law requires a vote of any preferred
stock issued and outstanding, voting as a separate class, to approve a matter
brought before the meeting. Holders of our common stock do not have cumulative
voting for the election of directors.
Dividends
- ---------
Holders of our common stock are entitled to dividends when, as, and if
declared by the Board of Directors out of funds available for distribution. The
payment of any dividends may be limited or prohibited by loan agreement
3
provisions or priority dividends for preferred stock that may be outstanding.
Preemptive Rights
- ------------------
The holders of our common stock have no preemptive rights to subscribe for
any additional shares of any class of our capital stock or for any issue of
bonds, notes or other securities convertible into any class of our capital
stock.
Liquidation
- -----------
If we liquidate or dissolve, the holders of each outstanding share of our
common stock will be entitled to share equally in our assets legally available
for distribution to our shareholders after payment of all liabilities and after
distributions to holders of preferred stock legally entitled to be paid
distributions prior to the payment of distributions to holders of our common
stock.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
California General Corporation Law ("California Law"), Chapter 3
- -----------------------------------------------------------------------
Under California Law, a director's liability to a company or its
shareholders may not be limited with respect to the following items: (i) acts or
omissions that involve intentional misconduct or a knowing and culpable
violation of law, (ii) acts or omissions that a director believes to be contrary
to the best interests of the company or its shareholders or that involve the
absence of good faith on the part of the director, (iii) any transaction from
which a director derived an improper personal benefit, (iv) acts or omissions
that show a reckless disregard for the director's duty to the company or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duties, of a risk
of a serious injury to the company or its shareholders, (v) acts or omissions
that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the company or its shareholders, (vi)
contracts or transactions between the company and a director within the scope of
Section 310 of the California Law, (vii) improper distributions, loans and
guarantees under Section 316 of the California Law, (viii) acts or omissions
occurring prior to the date such provision eliminating or limiting the personal
liability of a director became effective or (ix) acts or omissions as an
officer, notwithstanding that the officer is also a director or that his or her
actions, if negligent or improper, have been ratified by the directors. The
limitation of liability does not affect the availability of injunctions and
other equitable remedies available to the Company's shareholders for any
violation by a director of the director's fiduciary duty to the Company or its
shareholders.
Articles of Incorporation
- ---------------------------
Our Articles of Incorporation, as amended, provide that we shall indemnify,
to the full extent permitted by California law, any of our directors, officers,
employees or agents who are made, or threatened to be made, a party to a
proceeding by reason of the fact that he or she is or was one of our directors,
officers, employees or agents against judgments, penalties, fines, settlements
and reasonable expenses incurred by the person in connection with the proceeding
if specified standards are met. We have also purchased directors and officers
liability insurance, which provides coverage against certain liabilities
including liabilities under the Securities Act. Although indemnification for
liabilities arising under the Securities Act may be permitted to our directors,
officers and controlling persons under these provisions, we have been advised
that, in the opinion of the Securities Exchange Commission, indemnification for
liabilities arising under the Securities Act is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
Specific provisions relating to the indemnification of our directors and
4
officers are provided for in our Bylaws specified below.
Bylaws
- ------
Section 5.5(a) of the our bylaws provides that each person who was or is
made a party to or is threatened to be made a party to or is involuntarily
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "Proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the legal representative,
is or was a director or officer of the corporation or is or was serving (during
such person's tenure as director or officer) at the request of the corporation,
any other corporation, partnership, joint venture, trust or other enterprise in
any capacity, whether the basis of a Proceeding is an alleged action in an
official capacity as a director or officer or in any other capacity while
serving as a director or officer, shall be indemnified and held harmless by the
corporation to the fullest extent authorized by California General Corporation
Law, against all expenses, liability and loss reasonably incurred or suffered by
person in connection therewith. The right to indemnification conferred shall be
a contract right and shall include the right to be paid by the corporation the
expenses incurred in defending a Proceeding in advance of its final disposition;
provided, however, that, if California General Corporation Law requires, the
payment of such expenses in advance of the final disposition of a Proceeding
shall be made only upon receipt by the corporation of an undertaking by or on
behalf of such director or officer to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified.
Section 5.5(b) of our bylaws provides that if a claim for indemnity is not
paid in full by us within 90 days after a written claim has been received by us,
the claimant may at any time thereafter bring suit against us to recover the
unpaid amount of the claim and, to the extent that the claimant is successful,
he shall also be entitled to be paid the expense of prosecuting such claim
including reasonable attorneys' fees incurred in connection therewith.
Additionally, our Bylaws provide that the right of indemnification shall
not be exclusive of any other rights which any director, officer, employee or
agent may have or hereafter acquire under any statute, provision of the Articles
of Incorporation, bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, to the extent the additional rights to indemnification
are authorized in the Articles of Incorporation of the corporation.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits .
4.1/(1)/ Articles of Incorporation of the registrant as amended to date
4.2/(1)/ Bylaws
5.1* Opinion of Bryan Cave LLP regarding the validity of the securities
being registered
23.1* Consent of Madsen and Associates CPA's, Inc.
23.2* Consent of Bryan Cave LLP (included in Exhibit 5.1)
24.1* Power of Attorney
99.1* Stock Option Plan of InterCare DX, Inc.
* Filed herewith
/(1)/ Incorporated herein by reference to Exhibits 3.1 and 3.2,
respectively, from our Registration Statement on Form SB-2 (Commission File
Number: 333-57780), filed March 28, 2001.
Item 9. Undertakings.
(a) We hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
5
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) We hereby undertake that, for purposes of determining any liability under
the Securities Act, each filing of our annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on the date
indicated.
Date: February 7 2005 INTERCARE DX, INC.
By: /s/ Anthony C. Dike
----------------------
Anthony C. Dike, MD
Chairman & CEO
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
By: /s/ Anthony C. Dike, MD
---------------------------
Name: Anthony C. Dike, MD
Title: Director
By: /s/ Donald Stanford
---------------------
Name: Donald Stanford
Title: Director
By: /s/ Karunyan Arulanantham
---------------------------
Name: Karunyan Arulanantham
Title: Director
6
By: /s/ Jude Uwaezuoke
--------------------
Name: Jude Uwaezuoke
Title: Director
By: /s/ Wesley Bradford
---------------------
Name: Wesley Bradford
Title: Director
EXHIBIT INDEX
Exhibit Description
5.1 Opinion of Bryan Cave LLP regarding the validity of the securities
being registered
23.1 Consent of Madsen and Associates CPA's, Inc.
23.2 Consent of Bryan Cave LLP
24.1 Power of Attorney
99.1 Stock Option Plan of InterCare DX, Inc.
EXHIBIT 5.1
OPINION OF BRYAN CAVE LLP
February 7 2005
InterCare DX, Inc.
900 Wilshire Boulevard, Suite 500
Los Angeles, California 90017
Re: InterCare DX, Inc. -- Registration Statement on Form S-8 for issuance of up
to 2,000,000 shares of common stock
Gentlemen:
We have acted as special counsel to InterCare DX, Inc., a California
corporation (the "Company"), in connection with the registration for issuance of
up to 2,000,000 shares of the Company's common stock with par value (the
"Shares"), as described in the Company's Registration Statement on Form S-8 (the
"Registration Statement") filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act, as amended (the "Securities Act"). The
Shares may hereafter be issued pursuant to the Stock Option Plan of the Company
(the "Plan").
In rendering the opinions expressed herein, we have examined (i) the Company's
Articles of Incorporation and the amendment thereto, (ii) the Company's Bylaws,
(iii) the applicable minutes of meetings or consents in lieu of meetings of the
Company's board of directors (the "Board"), and (iv) such other corporate
records and documents, certificates of corporate and public officials and status
as we have deemed necessary for the purposes of this opinion. In such
examination, we have assumed the genuineness of all signatures, the authenticity
of all corporate records, documents, and instruments submitted to us as
originals, the conformity to original documents of all documents submitted to us
as conformed, certified, or photostatic copies thereof, the authenticity of the
originals of such photostatic, certified, or conformed copies, and compliance
both in the past and in the future with the terms of the Plan by the Company and
its employees, officers, the Board, and any committees appointed to administer
the Plan.
Based upon such examination and in reliance thereon, we are of the opinion that
upon the issuance of Shares in accordance with the terms and conditions of the
Plan, including receipt prior to issuance by the Company of the full
consideration for the Shares, the Shares will be validly issued, fully paid, and
nonassessable shares of Common Stock. This opinion is not rendered with respect
to any laws other than the laws of the State of California and the Federal law
of the United States.
We consent to the filing of this opinion with the Commission as Exhibit 5.1 to
the Registration Statement. In giving this consent, we do not thereby admit that
7
we are within the category of persons whose consent is required under Section 7
of the Securities Act, the rules and regulations of the Commission promulgated
thereunder, or Item 509 of Regulation S-K.
This opinion letter is rendered as of the date first written above and we
disclaim any obligation to advise you of facts, circumstances, events, or
developments that hereafter may be brought to our attention and that may alter,
affect, or modify the opinion expressed herein. Our opinion is expressly limited
to the matters set forth above and we render no opinion, whether by implication
or otherwise, as to any other matters relating to the Company or the Shares. We
bring to your attention that our legal opinions are an expression of
professional judgment and are not a guarantee of a result.
Very truly yours,
/S/ Bryan Cave LLP
BRYAN CAVE LLP
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in this Registration Statement of
InterCare DX, Inc. on Form S-8 of our report dated January 10, 2005, appearing
in the Annual Report on Form 10-KSB of InterCare DX, Inc. for the year ended
December 31, 2003.
Madsen & Associates CPA's, Inc.
Salt Lake City, Utah 84107
February 7, 2005
Exhibit 24.1
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Anthony C. Dike his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and on his behalf and in his name, place and stead, in any and all
capacities, to sign any and all documents relating to this Registration
Statement, including any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits and supplements thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, and hereby grants to such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof. Pursuant to the requirements of the
Securities Act, this Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
Dated: February 7 2005
By: /s/ Donald Stanford
---------------------
Name: Donald Stanford
Title: Director
By: /s/ Karunyan Arulanantham
---------------------------
Name: Karunyan Arulanantham
Title: Director
8
By: /s/ Jude Uwaezuoke
--------------------
Name: Jude Uwaezuoke
Title: Director
By: /s/ Wesley Bradford
---------------------
Name: Wesley Bradford
Title: Director
Exhibit 99.1
Stock Option Plan
of
InterCare DX, Inc.
(the "Company")
SECTION 1 - DESCRIPTION OF PLAN.
The Stock Option Plan (the "Plan"), of InterCare DX, Inc. (the "Company"), a
corporation organized under the laws of the State of California. Under this
Plan, key employees of the Company or any present and future subsidiaries of the
Company to be selected as below set forth, may be granted options (the
"Options") to purchase shares of the Common Stock, based on the average of the
preceding 12 months fair-market value of the Company's Common Stock("Common
Stock"). For purposes of this Plan, the term "subsidiary" mean any corporation
50% or more of the voting stock of which is owned by the Company or by a
subsidiary (as so defined) of the Company.
It is intended that the Options under this Plan will either qualify for
treatment as incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and be designated "Incentive Stock
Options" or not qualify for such treatment and be designated "Non-qualified
Stock Options".
SECTION 2 - PURPOSE OF PLAN.
The purpose of the Plan and of granting options to specified employees is to
further the growth, development and financial success of the Company and its
subsidiaries by providing additional incentives to certain key employees holding
responsible positions by assisting them to acquire shares of Common Stock and to
benefit directly from the Company's growth, development and financial success.
SECTION 3 - ELIGIBILITY.
The persons who shall be eligible to receive grants of Options under this Plan
shall be the directors, officers, key employees and consultants of the Company
or any of its subsidiaries. A person who holds an Option is herein referred to
as an "Optionee". More than one Option may be granted to anyone Optionee,
however no Optionee may be granted options to purchase an aggregate number of
shares of Common Stock amounting to thirty percent (30%) or more of the total
number of shares that may be issued pursuant to this Plan upon the exercise of
Options granted hereunder.
For Incentive Stock Options, the aggregate fair market value (determined at the
time the Option is granted) of the Common Stock with respect to which incentive
stock options are exercisable for the first time by any Optionee during any
calendar year (under all Incentive Stock Option plans of the Company or any
subsidiary which are qualified under Section 422 of the Code) shall not exceed
$5,000,000.00
SECTION 4 - ADMINISTRATION.
The Plan shall be administered by a committee (the "Option Committee") to be
composed of at least two "disinterested" (as such term is used in Rule 16b-3
promulgated under the Securities Exchange Act of 1934) members of the Board of
Directors of the Company (the "Board"). Members of the Option Committee shall be
appointed, both initially and as vacancies occur, by the Board, to serve at the
pleasure of the Board. The entire Board may serve as the Option Committee, if by
the terms of this Plan all Board members are otherwise eligible to serve on the
Option Committee. No person may serve as a member of the Option Committee if
such person (a) is eligible to receive an Option under the Plan or under any
other plan of the Company entitling the participants to acquire Common Stock or
stock options of the Company or any of its affiliates (other than plans excepted
9
by Rule l6b-3(c) (2), or (b) was so eligible at any time within the preceding
one-year period. The Option Committee shall meet at such times and places as it
determines and may meet through a telephone conference call. A majority of its
members shall constitute quorum, and the decision of a majority of those present
at any meeting at which a quorum is present shall constitute the decision of the
Option Committee. A memorandum signed by all of its members shall constitute the
decision of the Option Committee without necessity, in such event, for holding
an actual meeting. The Option Committee is authorized and empowered to
administer the Plan and, subject to the Plan, including the provisions of 20
Section 17, (i) to select the Optionees, to specify the number of shares of
Common Stock with respect to which Options are granted to each Optionee, to
specify the Option Price and the terms of the Options, and in general to grant
Options; (ii) to determine the dates upon which Options shall be granted and the
terms and conditions thereof in a manner consistent with this Plan, which terms
and conditions need not be identical as to the various Options granted; (iii) to
interpret the Plan; (iv) to prescribe, amend and rescind rules relating to the
Plan (v) to accelerate the time during which an Option may be exercised,
notwithstanding the provisions of the Option Agreement (as defined in Section
12) stating the time during which it may be exercised; (vi) to accelerate the
date by which any unexercised but vested portion of an Option terminates,
thereby requiring the Optionee to exercise the vested unexercised portion of
such Option or forfeit it, but in no event shall such date be less than two (2)
weeks later than the date the Optionee is informed of such acceleration; and
(vii) to determine the rights and obligations of participants under the Plan.
The interpretation and construction by the Option Committee of any provision of
the Plan or of any Option granted under it shall be final. No member of the
Option Committee shall be liable for any action or determination made in good
faith with respect to the Plan of any Option granted under it.
SECTION 5 - SHARES SUBJECT TO THE PLAN.
The aggregate number of shares of Common Stock which may be purchased pursuant
to the exercise of Options (whether Incentive Stock Options or Non-qualified
Stock Options) granted under the Plan shall not exceed 2,000,000 shares. Upon
the expiration or termination for any reason of an outstanding Option which
shall not have been exercised in full or upon the repurchase by the Company of
shares of Common Stock issued pursuant to rights of repurchase, any shares of
Common Stock then remaining unissued which shall have been reserved for issuance
upon such exercise or which shall have been repurchased shall again become
available for the granting of additional Options under the Plan.
SECTION 6 - OPTION PRICE.
Expect as provided in Section 11, the purchase price per share (the "Option
Price") of the shares of Common Stock underlying each Option shall be not less
than the fair market value of such shares on the date of granting of the Option.
Such fair market value shall be determined by the Option Committee on the basis
of reported closing sales price on such date or, in the absence of reported
sales price on such date, on the basis of the average of reported closing bid
and asked prices on such date. In the absence of either reported sales price or
reported bid and asked prices, the Option Committee shall determine such market
value on the basis of the best available evidence.
SECTION 7 - EXERCISE OF OPTIONS.
Subject to all other provisions of this Plan, each Option shall be exercisable
for the full number of shares of Common Stock subject thereto, or any part
thereof, in such installments and at such intervals as the Option Committee may
determine in granting such Option, provided that (i) each Option shall become
fully exercisable no later than five (5) years from the date the Option is
granted, (ii) the number of shares of Common Stock subject to each Option shall
become exercisable at the rate of at least 20% per year each year until the
Option is fully exercisable, and (iii) no option may be exercisable subsequent
to its termination date. Each Option shall terminate and expire, and shall no
longer be subject to exercise, as the Option Committee may determine in granting
such Option, but in no event later than ten years after the date of grant
thereof. The Option shall be exercised by the Optionee by giving written notice
to the Company specifying the number of shares to be purchased and accompanied
by payment of the full purchase price therefor in cash, by check or in such
other form of lawful consideration as the Board may approve from time to time,
including, without limitation and in the sole discretion of the Board, the
assignment and transfer by the Optionee to the Company of outstanding shares of
the Company's Common Stock theretofore held by Optionee.
SECTION 8 - ISSUANCE OF COMMON STOCK.
The Company's obligation to issue shares of its Common Stock upon exercise of an
10
Option granted under the Plan is expressly conditioned upon the completion by
the Company of any registration or other qualification of such shares under any
state and/or federal law or ruling 2l or regulations or the making of such
investment or other representations and undertakings by the Optionee (or his or
her legal representative, heir or legatee, as the case may be) in order to
comply with the requirements of any exemption from any such registration or
other qualification of such shares which the Company in its sole discretion
shall deem necessary or advisable. Such required representations and
undertakings may include representations and agreements that such Optionee (or
his or her legal representative, heir or legatee) : (a) is purchasing such
shares for investment and not with any present intention of selling or otherwise
disposing thereof; and (b) agrees to have a legend placed upon the face and
reverse of any certificates evidencing such shares (or, if applicable, and
appropriate data entry made in the ownership records of the Company) setting
forth (i) any representations and undertaking which such Optionee and
undertaking which such Optionee has given to the Company or a reference thereof,
and (ii) that, prior to effecting any sale or other disposition of any such
shares, the Optionee must furnish to the Company an opinion of counsel,
satisfactory to the Company and its counsel, to the effect that such sale or
disposition will not violate the applicable requirements of state and federal
laws and regulatory agencies. The Company will make a reasonable good faith
effort to comply with such state and/or federal laws, rulings or regulations as
may be applicable at the time the Optionee (or his or her legal representative,
heir or legatee, as the case may be) wishes to exercise an Option, provided that
the Optionee (or his or her legal representative, heir or legatee) also makes a
reasonable good faith effort to comply with said laws, rulings and regulations;
however, there can be no assurance that either the Company or the Optionee (or
his or her legal representative, heir or legatee), each in the respective
exercise of their reasonable good faith business judgment, will in fact comply
with said laws, ruling and regulations.
SECTION 9 - NONTRANSFERABILITY.
No Option shall be assignable or transferable, except that an Option may be
transferable by will or by the laws of descent and distribution or pursuant to
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder, provided such
Option explicitly so provides. During the lifetime of an Optionee, any Option
granted to him or her shall be exercisable only by him or her. After the death
of an Optionee, the Option granted to him (if so transferable) may be exercised,
prior to its termination, only by his or her legal representative, his legatee
or a person who acquired the right to exercise the Option by reason of the death
of the Optionee.
SECTION 10 - RECAPITALIZATION, REORGANIZATION, MERGER OR CONSOLIDATION.
If the outstanding shares of Common Stock of the Company are increased,
decreased, or exchanged for different securities through reorganization, merger,
consolidation, recapitalization, reclassification, stock split, stock dividend
or like capital adjustment, a proportionate adjustment shall be made (a) in the
aggregate number of shares of Common Stock which may be purchased pursuant to
the exercised of Options granted under the Plan, as provided in Section 5, and
(b) in the number, price, and kind of shares subject to any outstanding Option
granted under the Plan.
Upon the dissolution or liquidation of the Company or upon any reorganization,
merger, or consolidation in which the Company does not survive or in which the
equity ownership of the Company prior to such transaction represents less than
50% of the equity ownership of the Company subsequent to the transaction, the
Plan and each outstanding Option shall terminate; provided that the Company will
give written notice thereof each Optionee at least thirty (30) days prior to the
date of such dissolution, liquidation, reorganization, merger or consolidation,
and in such event (a) the Company may, but shall not be obligated to, with
respect to each Optionee who is not tendered an option by the surviving
corporation in accordance with all of the terms of provision (b) immediately
below, grant the right, until ten days before the effective date of such
dissolution, liquidation, reorganization, merger or consolidation, to exercise,
in whole or in part, any unexpired Option or Options issued to him or her,
without regard to the surviving entity.
SECTION 12 - OPTION AGREEMENT .
Each Option granted under the Plan shall be evidenced by a written stock 22
option agreement executed by the Company and accepted by the Optionee, which (a)
shall contain each of the provisions and agreements herein specifically required
to be contained therein, (b) shall contain terms and conditions permitting such
11
Option to qualify for treatment as an incentive stock option under Section 422
of the Code if the Option is designated an Incentive Stock Option, (c) may
contain the agreement of the Optionee to resell any Common Stock issued pursuant
to the exercise of Options granted under the Plan to the Company (or its
assignee) for the Option Price of such Options to the extent any vesting
restrictions apply to such Common Stock, or for the then fair market value of
such Common Stock if no such restrictions then apply, (d) may contain the
agreement of the Optionee granting a right of first refusal to the Company (or
its assignee) on transfers of Common Stock no subject to vesting restrictions,
and (e) may contain such other terms and conditions as the Option Committee
deems desirable and which are not inconsistent with the Plan. With regard to
agreements of the Optionee contemplated by items (c) and (d) of the previous
sentence, the Company's rights pursuant to a right of first refusal and,
notwithstanding any other termination provisions, the Company's right to
repurchase vested shares shall terminate upon the closing of the first sale of
the Common Stock of the Company to the public pursuant to a registration
statement filed with, and declared effective by the Securities and Exchange
Commission under the Securities Act, with gross proceeds to the Company as
seller of not less than $7.5 million before deducting underwriting commissions,
or upon the liquidation or dissolution of the Company.
SECTION 13 - RIGHTS AS A SHAREHOLDER.
An Optionee or a transferee of an Option shall have no rights as a shareholder
with respect to any shares covered by this Option until exercise thereof, except
that each Optionee shall have the right to receive a copy of the Company's
audited financial statements (if available) no later than 120 days following the
end of each fiscal year of the Company. No adjustment shall be made for
dividends (Ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights of which the record date is prior to
the exercise date, except as expressly provided in Section 10.
SECTION 14 - TERMINATION OF OPTIONS.
Each Option granted under the Plan shall set forth a termination date thereof,
which date shall be not later than ten years from the date such Option is
granted. In any event all Options shall terminate an expire upon the first to
occur of the following events:
(a) the expiration of three months from the date of an Optionee's termination of
employment (other than by reason of death), except that if an Optionee is then
disabled (within the meaning of Section 22(e) (3) of the Code), the expiration
of one year from the date of such Optionee's termination of employment; or
(b) the expiration of one year from the date of the death of an Optionee if his
or her death occurs while he or she is, or not later than three months after he
or she has ceased to be, employed by the Company or any of its subsidiaries in a
capacity in which he or she would be eligible receive grants of Options under
the Plan; or
(c) the termination of the Option pursuant to Section 10 of the Plan.
The termination of employment of an Optionee by death or otherwise shall not
accelerate or otherwise affect the number of shares to which an Option may be
exercised and such Option may only be exercised with respect to that number of
shares which could have been purchased under the Option had the Option been
exercised by the Optionee on the date of such termination.
SECTION 15 - WITHHOLDING OF TAXES.
The Company may deduct and withhold from the wages, salary, bonus and other
compensation paid by the Company to the Optionee the requisite tax upon the
amount of taxable income, if any, recognized by the Optionee in connection with
the exercise in whole or in part of any Option or the sale of Common Stock
issued to the Optionee upon exercise of the Option, all as may be required from
time to time under any federal or state laws and regulations. This withholding
of tax shall be required from time to time 23 under any shall. be bonus or
Optionee federal. or state tax laws and regulations. This withholding of tax
made from the Company's concurrent or next payment of wages, salary, other
income to the Optionee or by payment to the Company by the of required
withholding tax, as the Option Committee may determine.
SECTION 16 - EFFECTIVENESS AND TERMINATION OF PLAN.
The Plan shall be effective on the date on which it is adopted by the Board;
provided, however, (a) the Plan shall be approved by the shareholders of the
Company within 12 months of such date of adoption by the Board, (b) no Option
shall be exercised pursuant to the Plan until. the Plan has been approved by the
shareholders of the Company, and (c) no Option may be granted hereunder on or
after that date which is ten years form the effective date of the Plan. The Plan
shall terminate when all Options granted hereunder either have been fully
12
exercised, and all shares of Common Stock which may be purchased pursuant to the
exercise of such Options have been so purchased, or have expired; provided,
however, that the Board may in its absolute discretion terminated the Plan at
any time. No such termination, other than as provided for in Section 10 hereof,
shall in any way affect any Option then outstanding.
SECTION 17 - AMENDMENT OF PLAN.
The Board may (a) make such changes in the terms and conditions of granted
Options as it deems advisable, provided each Optionee affected by such change
consents thereto, and (b) make such amendments to the Plan as it deems
advisable. Such amendments and changes shall include, but not be limited to,
acceleration of the time at which an Option may be exercised, but may not,
without the written consent or approval of the holders of a majority of that
voting stock of the Company which is represented and is entitled to vote at a
duly held shareholders meeting (a) increase the maximum number of shares subject
to Options, except pursuant to Section 10 of the Plan (b) decrease the Option
Price requirement contained in Section 6 (except as contemplated by Section 11)
of the Plan (c) change the designation of the class of employees eligible to
receive Options (d) modify the limits set forth in Section 3 of the Plan
regarding the value of Common Stock for which any Optionee may be granted
Options, unless the provisions of Section 422(d) of the Code are likewise
modified or (e) in any manner materially increased the benefits accruing to
participants under the Plan.
13
6
C040462/0116411/291159.1
1
C040462/0116411/291159.1
C040462/0116411/291159.1