Exhibit 99
PROSPECTUS
Techedge, Inc.
175 Fox Hollow Road
Woodbury, New York 11747
Telephone: 516-364-0787
2003 Non-Statutory Stock Option Plan, dated April 8, 2003
Shares Of Common Stock, $.0001 Par Value
This Prospectus relates to the Techedge, Inc.. 2003 Non-Statutory Stock Option
Plan, dated April 8, 2003 (the "Stock Option Plan"), pursuant to which officers,
directors, attorneys, consultants, other advisors and other employees of
Techedge, Inc.. (the "Company") and its Affiliates are eligible to receive
shares of Common Stock of the Company (the "Stock Option Shares") in
consideration for their past services. Participants in the Stock Option Plan may
make payment for the Stock Option Shares either (i) in cash, represented by bank
or cashier's check, certified check or money order (ii) in lieu of payment for
bona fide services rendered, and such services were not in connection with the
offer or sale of securities in a capital-raising transaction, (iii) by
delivering shares of the Company's Common Stock which have been beneficially
owned by the optionee, the optionee's spouse, or both of them for a period of at
least six (6) months prior to the time of exercise (the "Delivered Stock") in a
number equal to the number of Stock Option Shares being purchased upon exercise
of the Option or (iv) by delivery of shares of corporate stock which are freely
tradeable without restriction and which are part of a class of securities which
has been listed for trading on the NASDAQ system or a national securities
exchange, with an aggregate fair market value equal to or greater than the
exercise price of the Stock Option Shares being purchased under the Option, or
(v) a combination of cash, services, Delivered Stock or other corporate shares.
Since the sale of any securities of the Company by "affiliates" of the Company
may not be made without compliance with the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or an exemption therefrom (such as that provided by Rule 144 thereunder), the
Company plans to advise those participants in the Stock Option Plan who may be
"affiliates" of the Company, as such term is defined in Rule 144, (the Company
and such participants not so conceding) that any such sales by participants who
are not "affiliates" of the Company may be effected without compliance with the
registration and prospectus delivery requirements of the Act.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is April 8, 2003
A copy of any document or part thereof incorporated by reference in the
Registration Statement or any other documents required to be delivered to
participants pursuant to Rule 428(b) of the Securities Act but not delivered
with this Prospectus will be furnished without charge upon written request.
Requests should be addressed to: 2003 Non-Statutory Stock Option Plan, Techedge,
Inc., 175 Fox Hollow Road, Woodbury, New York 11747, Telephone: 516-364-0787.
The Company is subject to the informational requirements of the Exchange Act and
in accordance therewith files, reports and other information with the Securities
and Exchange Commission. The reports and other information filed by the Company
can be inspected at the public reference facilities maintained by the Commission
in Washington, D.C., 450 Fifth Street, Washington, D.C. 20549; the Midwest
Regional Office, Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; the Pacific Regional Office, 5670 Wilshire Blvd., 11th
Floor, Los Angeles, California 90036-3648; and the New York Office, 233
Broadway, New York, New York 10279. Copies of such material can be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rates. Additionally, our SEC filings are available to the public via
the internet at the SEC's website at www.sec.gov.
No person has been authorized to give any information or to make any
representation, other than those contained in this Prospectus, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer or solicitation by anyone in any state in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to any person to whom it is unlawful to make such
offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof.
TABLE OF CONTENTS
The Company..................................................................2
General Information Regarding The 2003 Non-Statutory Stock Option Plan.......4
The Employers.............................................................4
Purposes..................................................................4
Period of Stock Option Plan...............................................4
Administration............................................................4
Reorganizations and Recapitalizations of the Company......................5
Securities To Be Offered.....................................................7
Eligible Participants........................................................7
Purchase Of Securities Pursuant To The Stock Option Plan.....................7
Consideration for Shares Issued Under the Stock Option Plan...............7
Exercise Period and Termination...........................................8
Option Price..............................................................8
Transferability...........................................................9
Assignability................................................................9
Amendments...................................................................9
Tax Effects Of Stock Option Plan Participation..............................10
Tax Treatment to the Participants........................................10
Federal Income Tax Treatment of Nonqualified Stock Options...............10
Restrictions On Resale Of Common Stock......................................10
Legal Matters...............................................................11
Indemnification Of Officers And Directors...................................11
Incorporation Of Certain Documents By Reference.............................12
Further Information.........................................................12
Exhibit A - 2003 Non-Statutory Stock Option Plan dated April 8, 2003
The Company
The Company was originally formed as a Delaware Limited Partnership under the
name of BSD Development Partners, LTD. ("BSD") in 1997 for the purpose of
investing in the intellectual property of emerging and established companies.
BSD realized net proceeds of $1,319,500 from a private placement to accredited
investors in early 1998. In December 2000, BSD's partnership agreement was
amended to permit the general partner, in its sole discretion, to merge BSD into
a corporation. The Company was formed in July 2002 to serve as the vehicle for
this merger which was effected in September 2002. The Company will endeavor to
continue the business of BSD and seek to enhance the liquidity of the securities
owned by its investors by becoming subject to the reporting requirements of the
1934 Act and by seeking to have its common stock traded on the National
Association of Securities Dealers Over the Counter Bulletin Board ("OTCBB") and
when it is established, the BBX. The Company might not be able to accomplish
this plan. Any reference to the Company in this registration statement shall,
when the context requires, also include BSD.
The Company seeks to generate income and enhance its capital by investing
primarily in intellectual property of emerging and established companies. The
Company's primary strategy will be to purchase exclusive and non-exclusive
licensing rights to intellectual property that management believes has
application outside of such intellectual properties present area of utilization
as well as any operating assets necessary to exploit the intellectual property
rights. Thereafter, the Company will seek to re-sell, sub-license, or re-market
its rights to others or otherwise exploit such rights. Since the Company has not
yet identified any target companies, it cannot state how many potential
licensors may exist or what types of arrangements it may seek with these as yet
unidentified entities. The Company's intention is to utilize its management's
expertise in an effort to enhance its ability in identifying potential
licensors. However, no assurance can be given that management will be successful
in identifying such opportunities.
Intellectual property includes patents, trademarks, copyrights and trade
secrets. Management believes that many companies are exploring opportunities to
exploit their portfolios of intellectual property assets through licensing,
acquisition transactions and joint ventures as well as other types of strategic
alliances. Management believes that if the Company can demonstrate to the
intellectual property owner that it has an opportunity to successfully generate
revenues from exploiting the property, it may be able to acquire a license or
other interest therein. Management believes that, through its experience, it can
identify valuable intellectual property assets not currently being fully
exploited. Upon obtaining the rights to the intellectual property, Management
believes the Company can successfully identify intellectual properties suitable
for the Company's plan and develop plans for their exploitation that can be
marketed to the property owner, i.e., a company with technology is a specific
area may have the potential to apply same to other applications outside the
primary area or industry. If the Company can demonstrate that potential revenues
may be generated through addition applications of current technologies, the
Company's ability to enter into agreements may be enhanced. The Company will
then negotiate agreements for the exploitation of those property rights through
sub-licensing, re-selling, re-marketing or other types of strategic alliances.
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In a typical transaction, the Company will first identify intellectual property
assets that are ready to be marketed but for which the entity owning the
intellectual property does not have the resources to effectively capitalize on
the product. Management will then conduct a due diligence investigation of the
value of the assets as well as the ownership of the assets. Once satisfied,
management will negotiate for the acquisition of rights to the intellectual
property, typically through a license agreement. Thereafter, the Company will
attempt to enter into another agreement or strategic alliance for the
exploitation of the assets.
It is currently contemplated that the Company will generally be compensated by
royalty or licensing fees in connection with any further licensing agreement(s).
Although the Company may be obligated to pay a licensing fee or royalty to the
owner of the intellectual property, management believes that it can successfully
negotiate the acquisition of the intellectual property rights and the
exploitation of the intellectual property rights such that the fees the Company
receives are in excess of those paid to the owner. However, management might not
be able to negotiate these agreements successfully and prior management of BSD
had only limited success in such endeavors and BSD dissipated all of its capital
in its efforts. Management believes that there are a significant number of
potential intellectual property owners who could benefit from the Company's
services. Management also believes that its experience in applied technology may
make the Company attractive to certain intellectual property owners. The terms
of any future agreement, including the Company's obligations to defend the
intellectual property, which may involve significant expenses, cannot be
predicted. Furthermore, the Company will need to raise capital if it seeks to be
a credible licensor. It may not be able to accomplish these goals.
The Company's Current Operations
On December 31, 1997, the Company entered into a non-exclusive worldwide
Software License and Distribution Agreement (the "License Agreement") with RDX
Acquisition Corp. d/b/a RMTi ("RMTi"). Royalties of $1,200,000 were paid upon
the execution of the License Agreement and the Company must pay 3% of all
revenues generated through distribution of RMTi products to RDMi. Accordingly,
approximately 90% of the net proceeds of the Offering were applied to the
payment for this license. The agreement is for a term equal to the life of the
intellectual property licensed. To date the Company has not realized any
revenues pursuant to the License Agreement. This is because the marketing plan
utilized by prior management was not effective. The licensed software is
utilized in a cross platform web server for customer use. At the time the
License Agreement was entered into RMTi was controlled by principals of the
placement agent in the then ongoing Offering. The Company also operates a web
site at www.bsd.com for marketing its internet web server software. The Company
anticipates realizing revenues through the utilization of a new marketing plan
which will focus on the overseas market where the IBM AS400 computer are most
heavily utilized. This may allow (through the license) for sales of
communication products for the mid-range computer market (and specifically the
aforesaid 1BM AS400 system). We have not yet begun to actively contact
resellers, distributors or direct sales contacts and accordingly, it is
premature to state whether or not this proposed approach will be successful.
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Merger with BSD
On September 4, 2002, BSD was merged with and into the Company. The Sixty One
(61) holders of limited partnership interests in BSD received 3,000,000 shares
of the Company's common stock in the merger or Thirty Seven and One Half (37.5%)
percent of the outstanding shares. The merger was effected pursuant to the terms
of BSD's partnership agreement, as amended, which permitted the general partner
to effect the merger without the further approval of BSD's limited partners.
BSD's Management believed that the merger would benefit the limited partners of
BSD as the flexibility of the corporate form would enhance the Company's ability
to seek capital, intellectual properties and management. Additionally, once the
Company is listed for trading, the former limited partners - now stockholders -
may be in a position to sell their Company's securities in the open market.
Accordingly, the merger provides for potential new liquidity for former limited
partners.
General Information Regarding The
2003 Non-Statutory Stock Option Plan
The Employers. The Company has its principal executive offices located in New
York at 175 Fox Hollow Road, Woodbury, New York 11747, Telephone: 516-364-0787.
Purposes. The Stock Option Plan was adopted by the Board of Directors of the
Company on April 8, 2003 and subsequently approved by the consent of the
requisite shareholders on April 8, 2003 and is intended as an employment
incentive, to aid in attracting and retaining in the employ or service of the
Company and any Affiliated Corporation, persons of experience and ability and
whose services are considered valuable, to encourage the sense of proprietorship
in such persons, and to stimulate the active interest of such persons in the
development and success of the Company.
Period of Stock Option Plan. The Stock Option Plan shall expire on April 7, 2013
except as to Nonqualified Stock Options then outstanding, which shall remain in
effect until they have expired or been exercised.
Administration. The Company's Board of Directors ("Board") may appoint and
maintain as administrator of the Stock Option Plan, the Compensation Committee
(the "Committee") of the Board which shall consist of at least three members of
the Board. Until such time as the Committee is duly constituted, the Board
itself shall have and fulfill the duties herein allocated to the Committee. The
Committee shall have full power and authority to designate Stock Option Plan
participants, to determine the provisions and terms of respective Options (which
need not be identical as to number of shares covered by any Option, the method
of exercise as related to exercise in whole or in installments, or otherwise,
including the Option price) and to interpret the provisions and supervise the
administration of the Stock Option Plan. The Committee may, in its discretion,
provide that certain Options not vest (that is, become exercisable) until
expiration of a certain period after issuance or until other conditions are
satisfied, so long as not contrary to the Stock Option Plan.
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A majority of the members of the Committee shall constitute a quorum. All
decisions and selections made by the Committee pursuant to the Stock Option
Plan's provisions shall be made by a majority of its members. Any decision
reduced to writing and signed by all of the members shall be fully effective as
if it had been made by a majority at a meeting duly held. The Committee shall
select one of its members as its chairman and shall hold its meetings at such
times and places as it deems advisable. If at any time the Board shall consist
of seven or more members, then the Board may amend the Stock Option Plan to
provide that the Committee shall consist only of Board members who shall not
have been eligible to participate in the Stock Option Plan (or similar stock or
stock option plan) of the Company or its affiliates at any time within one year
prior to appointment to the Committee.
Reorganizations and Recapitalizations of the Company
a. The existence of the Stock Option Plan and Options granted thereunder shall
not affect in any way the right or power of the Company or its shareholders to
make or authorize any and all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stocks ahead of or affecting the Company's Common Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any sale,
exchange or transfer of all or any part of its assets or business, or any other
corporation act or proceeding, whether of a similar character or otherwise.
b. The Stock Option Shares are shares of the Common Stock of the Company as
currently constituted. If, and whenever, prior to delivery by the Company of all
of the Stock Option Shares which are subject to Options granted thereunder, the
Company shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a Stock dividend, a stock split, combination of
shares (reverse stock split) or recapitalization or other increase or reduction
of the number of shares of the Common Stock outstanding without receiving
compensation therefore in money, services or property, then the number of Stock
Option Shares available under the Stock Option Plan and the number of Stock
Option Shares with respect to which Options granted thereunder may thereafter be
exercised shall (i) in the event of an increase in the number of outstanding
shares, be proportionately increased, and the cash consideration payable per
share shall be proportionately reduced; and (ii) in the event of a reduction in
the number of outstanding shares, be proportionately reduced, and the cash
consideration payable per share shall be proportionately increased.
c. If the Company is reorganized, merged, consolidated or party to a plan of
exchange with another corporation pursuant to which shareholders of the Company
receive any shares of stock or other securities, there shall be substituted for
the Stock Option Shares subject to the unexercised portions of outstanding
Options an appropriate number of shares of each class of stock or other
securities which were distributed to the shareholders of the Company in respect
of such Stock Option Shares in the case of a reorganization, merger,
consolidation or plan of exchange; provided, however, that all such Options may
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be canceled by the Company as of the effective date of a reorganization, merger,
consolidation, plan of exchange, or any dissolution or liquidation of the
Company, by giving notice to each optionee or his personal representative of its
intention to do so and by permitting the purchase of all the shares subject to
such outstanding Options for a period of not less than thirty (30) days during
the sixty (60) days next preceding such effective date.
d. Except as expressly provided above, the Company's issuance of Stock Option
Shares of any class, or securities convertible into Stock Option Shares of any
class, for cash or property, or for labor or services, either upon direct sale
or upon the exercise of rights or warrants to subscribe therefore, or upon
conversion of shares or obligations of the Company convertible into Stock Option
Shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of Stock Option Shares subject
to Options granted thereunder or the purchase price of such shares.
A copy of the Stock Option Plan is attached hereto as Exhibit A.
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Securities To Be Offered
Subject to adjustment, a total of Two Million (2,000,000) shares of Common Stock
("Stock"), of the Company shall be subject to the Stock Option Plan. The Common
Stock subject to the Stock Option Plan shall consist of un-issued shares or
previously issued shares reacquired and held by the Company or any Affiliated
Corporation, and such amount of shares shall be and is hereby reserved for sale
for such purpose. Any of such shares which may remain unsold and which are not
subject to outstanding Options at the termination of the Stock Option Plan shall
cease to be reserved for the purpose of the Stock Option Plan, but until
termination of the Stock Option Plan, the Company shall at all times reserve a
sufficient number of shares to meet the requirements of the Stock Option Plan.
Should any Option expire or be canceled prior to its exercise in full, the
unexercised shares theretofore subject to such Option may again be subjected to
an Option under the Stock Option Plan.
On April 8, 2003, the Board of Directors adopted the Stock Option Plan and
authorized the issuance of 2,000,000 Common Shares to be subject to the Stock
Option Plan.
Eligible Participants
The persons eligible for participation in the Stock Option Plan as recipients of
Options shall include full-time and part-time employees (as determined by the
Committee) and officers of the Company or of an Affiliated Corporation. In
addition, directors of the Company or any Affiliated Corporation who are not
employees of the Company or an Affiliated Corporation and any attorney,
consultant or other adviser to the Company or any Affiliated Corporation shall
be eligible to participate in the Stock Option Plan. For all purposes of the
Stock Option Plan, any director who is not also a common law employee and is
granted an option under the Stock Option Plan shall be considered an "employee"
until the effective date of the director's resignation or removal from the Board
of Directors, including removal due to death or disability. The Committee shall
have full power to designate, from among eligible individuals, the persons to
whom Options may be granted. A person who has been granted an Option thereunder
may be granted an additional Option or Options, if the Committee shall so
determine. The granting of an Option shall not be construed as a contract of
employment or as entitling the recipient thereof to any rights of continued
employment.
Purchase Of Securities Pursuant To The Stock Option Plan
And Payment For Securities Offered
Consideration for Shares Issued Under the Stock Option Plan. The purchase price
of the Stock Option Shares as to which an Option is exercised shall be paid in
full at the time of exercise and no Stock Option Shares shall be issued until
full payment is made therefore. Payment shall be made either (i) in cash,
represented by bank or cashier's check, certified check or money order (ii) in
lieu of payment for bona fide services rendered, and such services were not in
connection with the offer or sale of securities in a capital-raising
transaction, (iii) by delivering shares of the Company's Common Stock which have
been beneficially owned by the optionee, the optionee's spouse, or both of them
for a period of at least six (6) months prior to the time of exercise (the
"Delivered Stock") in a number equal to the number of Stock Option Shares being
purchased upon exercise of the Option or (iv) by delivery of shares of corporate
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stock which are freely tradeable without restriction and which are part of a
class of securities which has been listed for trading on the NASDAQ system or a
national securities exchange, with an aggregate fair market value equal to or
greater than the exercise price of the Stock Option Shares being purchased under
the Option, or (v) a combination of cash, services, Delivered Stock or other
corporate shares. An Option shall be deemed exercised when written notice
thereof, accompanied by the appropriate payment in full, is received by the
Company. No holder of an Option shall be, or have any of the rights and
privileges of, a shareholder of the Company in respect of any Stock Option
Shares purchasable upon exercise of any part of an Option unless and until
certificates representing such shares shall have been issued by the Company to
him or her.
Exercise Period and Termination. The nonqualified stock options exercise period
shall be a term of not more than ten (10) years from the date of granting of
each nonqualified stock option and shall automatically terminate:
i. Upon termination of the optionee's employment with
the Company for cause;
ii. At the expiration of twelve (12) months from the date
of termination of the optionee's employment with the
Company for any reason other than death, without
cause; provided, that if the optionee dies within
such twelve-month period, sub-clause (iii) below
shall apply; or
iii. At the expiration of fifteen (15) months after the
date of death of the optionee.
Employment with the Company as used in the Stock Option Plan shall include
employment with any Affiliated Corporation and nonqualified stock options
granted under the Stock Option Plan shall not be affected by an employee's
transfer of employment among the Company and any Parent or Subsidiary thereof.
An optionee's employment with the Company shall not be deemed interrupted or
terminated by a bona fide leave of absence (such as sabbatical leave or
employment by the Government) duly approved, military leave, maternity leave or
sick leave.
Option Price. The Stock Option Plan provides that the option price with respect
to each option will not be less than Ten (10%) percent of the fair market value
of such share on the date the option is granted. The fair market value of a
share on a particular date shall be deemed to be the average of either (i) the
highest and lowest prices at which shares were sold on the date of grant, if
traded on a national securities exchange, (ii) the high and low prices reported
in the consolidated reporting system, if traded on a "last sale reported"
system, such as NASDAQ, or (iii) the high bid and high asked price for
over-the-counter securities. If no transactions in the stock occur on the date
of grant, the fair market value shall be determined as of the next earliest day
for which reports or quotations are available. If the common shares are not then
quoted on any exchange or in any quotation medium at the time the option is
granted, then the Board of Directors or Committee will use its discretion in
selecting a good faith value believed to represent fair market value based on
factors then known to them.
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Transferability
a. Options granted under the Stock Option Plan are transferable by the
holder (a) by will or the laws of descent and distribution and (b) to the extent
permitted by Form S-8 as amended April 7, 1999. If a participant dies during
employment or within three months thereafter, the option granted to him may be
exercised by his legal representative to the extent set forth therein until
either the expiration of the option or within one year after the date of death,
whichever comes first.
b. Notwithstanding anything to the contrary as may be contained in this
Plan regarding rights as to transferability or lack thereof, all options granted
hereunder may and shall be transferable to the extent permitted in accordance
with SEC Release No. 33-7646 entitled "Registration of Securities on Form S-8"
as effective April 7, 1999 and in particular in accordance with that portion of
such Release which expands Form S-8 to include stock option exercise by family
members so that the rules governing the use of Form S-8 (a) do not impede
legitimate intra family transfer of options and (b) may facilitate transfer for
estate planning purposes - all as more specifically defined in Article III,
Sections A and B thereto, the contents of which are herewith incorporated by
reference.
Assignability
No Option shall be assignable or otherwise transferable (by the optionee or
otherwise) except by will or the laws of descent and distribution or except as
permitted in accordance with SEC Release No.33-7646 as effective April 7, 1999
and in particular that portion thereof which expands upon transferability as is
contained in Article III entitled "Transferable Options and Proxy Reporting" as
indicated in Section A 1 through 4 inclusive and Section B thereof. No Option
shall be pledged or hypothecated in any manner, whether by operation of law or
otherwise, nor be subject to execution, attachment or similar process.
Amendments
The Board may amend, alter or discontinue the Stock Option Plan at any time in
such respects as it shall deem advisable in order to conform to any change in
any other applicable law, or in order to comply with the provisions of any rule
or regulation of the Securities and Exchange Commission required to exempt the
Stock Option Plan or any Options granted thereunder from the operation of
Section 16(b) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), or in any other respect not inconsistent with Section 16(b) of the
Exchange Act; provided, that no amendment or alteration shall be made which
would impair the rights of any participant under any Option theretofore granted,
without his consent (unless made solely to conform such Option to, and necessary
because of, changes in the foregoing laws, rules or regulations), and except
that no amendment or alteration shall be made without the approval of
shareholders which would:
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a. Decrease the Option price provided for in Paragraph 5 (except as
provided in Paragraph 9), or change the classes of persons eligible to
participate in the Stock Option Plan as provided in Paragraph 3; or
b. Extend the Option period provided for in Paragraph 6; or
c. Materially increase the benefits accruing to participants under the
Stock Option Plan; or
d. Materially modify the requirements as to eligibility for participation
in the Stock Option Plan; or
e. Extend the expiration date of the Stock Option Plan as set forth in
Paragraph 11 of the Stock Option Plan.
Tax Effects Of Stock Option Plan Participation
Tax Treatment to the Participants. The Stock Option Plan provides for the grant
of nonqualified stock options. A description of these options and certain
federal income tax aspects associated therewith is set forth below. Because tax
results may vary due to individual circumstances, each participant in the Stock
Option Plan is urged to consult his personal tax adviser with respect to the tax
consequences of the exercise of an option or the sale of stock received upon the
exercise thereof, especially with respect to the effect of state tax laws.
Federal Income Tax Treatment of Nonqualified Stock Options. No income is
recognized by an optionee when a non-qualified stock option is granted. Except
as described below, upon exercise of a nonqualified stock option, an optionee is
treated as having received ordinary income at the time of exercise in an amount
equal to the difference between the option price paid and the then fair market
value of the Common Stock acquired. The Company is entitled to a deduction at
the same time and in a corresponding amount. The optionee's basis in the Common
Stock acquired upon exercise of a nonqualified stock option is equal to the
option price plus the amount of ordinary income recognized, and any gain or loss
thereafter recognized upon disposition of the Common Stock is treated as capital
gain or loss.
Stock acquired by "insiders' (i.e., officers, directors or persons holding 10%
or more of the stock of the Company who are subject to the restrictions on
short-swing trading imposed by Section 16(b) of the Securities Exchange Act of
1934) upon exercise of nonqualified stock options constitutes "restricted
property" and, unless the optionee elects otherwise, the recognition of income
upon exercise is deferred to the date upon which the stock acquired upon
exercise may first be sold without incurring Section 16(b) liability (generally
six months after exercise). If such an optionee does not elect to recognize
income upon exercise, the insider will realize ordinary income in an amount
equal to the difference between the option price and the fair market value on
the date the stock may first be sold without incurring Section 16(b) liability.
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Restrictions On Resale Of Common Stock
While the Stock Option Plan does not place restrictions on re-sales of Common
Stock acquired thereunder, shares acquired under the Stock Option Plan by an
"affiliate," as that term is defined in Rule 405, under the Securities Act of
1933, may only be resold pursuant to the registration requirements of the Act,
Rule 144 or another applicable exemption therefrom. Generally, sales of
securities, including Common Stock of the Company, are subject to antifraud
provisions contained in federal and state securities laws. Acquisitions
(including acquisitions under the Stock Option Plan) and dispositions of Common
Stock of the Company by an officer, director or affiliate of the Company within
any six month period may give rise to the right of the Company to recapture any
profit from such transactions pursuant to Section 16(b) of the Securities
Exchange Act of 1934.
It is advisable for a participant to consult with legal counsel concerning the
securities law implications of his exercise of options and his acquisition or
disposition of shares of Common Stock under the Stock Option Plan.
Legal Matters
The validity of the issuance of the shares of Common Stock offered hereby will
be passed upon for the Company by Gary B. Wolff, P.C., 805 Third Avenue,
New York, New York 10022.
Indemnification Of Officers And Directors
Section 145 of the Delaware Business Corporation Law contains provisions
relating to the indemnification of officers and directors. Additionally,
Articles "Ninth" and "Eleventh" of the Registrant's Articles of Incorporation
reads as follows:
NINTH: The Corporation shall, to the fullest extent permitted by Section 145 of
the General Corporation Law of the State of Delaware, as the same may be amended
and supplemented, indemnify any and all persons whom it shall have power to
indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-Law, agreement,
vote of stockholders or disinterested Directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
and
ELEVENTH: No Director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
Director, except for liability (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) for the payment of unlawful dividends or unlawful stock repurchases
or redemptions under Section 174 of the Delaware General Corporation Law; or
(iv) for any transaction from which the Director derived an improper personal
benefit.
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Incorporation Of Certain Documents By Reference
The following documents are incorporated by reference in the registration
statement:
a. The registrant's effective Form 10-SB registration statement under SEC
File Number 000-50005
b. All other reports filed by the registrant pursuant to sections 13(a) or
15(d) of the Securities Exchange Act of 1934 since the end of the year covered
by the Form 10-SB referred to in (a) above; and
c. Not Applicable.
All documents subsequently filed by the registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing
of a post-effective amendment to the registration statement which indicates that
all of the shares of common stock offered have been sold or which deregisters
all of such shares then remaining unsold, shall be deemed to be incorporated by
reference in the 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 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.
Further Information
A Registration Statement on Form S-8 was filed by the Company with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933. This Prospectus omits certain of the information contained in the
Registration Statement and reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company and the securities to which this Prospectus relates.
Statements herein contained concerning the provisions of any document are not
necessarily complete, and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference.
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