SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Check the appropriate box:
[X] Preliminary information statement [ ] Confidential, for use of
Commission Only (as
permitted by Rule 14c-5(d)(2))
[ ] Definitive information statement
VISIJET, 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 transactions applies:
(3) Per unit price of 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:
VISIJET, INC.
192 TECHNOLOGY DRIVE, SUITE Q
IRVINE, CALIFORNIA 92618
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INFORMATION STATEMENT
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WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
INTRODUCTION
This Information Statement is being mailed or otherwise furnished to
stockholders of VisiJet, Inc., a Delaware corporation ("VisiJet" or the
"Company"), in connection with the approval, by written consent of the holders
of a majority of the Company's Common Stock, of (i) an amendment to the
Certificate of Incorporation of the Company to increase the authorized Common
Stock of the Company to 100,000,000 shares, and (ii) VisiJet's 2003 Stock Option
Plan.
This Information Statement is being first sent to stockholders on or
about December , 2004.
VOTE REQUIRED
The vote which was required to approve each matter was the affirmative
vote of the holders of a majority of the Company's Common Stock.
The record date for purposes of determining the number of outstanding
shares of Common Stock of the Company, and for determining stockholders entitled
to vote, was the close of business on August 31, 2004. As of the record date,
the Company had 27,879,663 shares of Common Stock outstanding. Holders of the
shares have no preemptive rights. Shareholders beneficially owning 13,971,264
shares as of the record date executed written consents approving the two
matters.
THE ACTIONS
INCREASE IN AUTHORIZED SHARES. On July 15, 2004, the Board of Directors
approved, subject to stockholder approval, an Amendment to the Company's
Certificate of Incorporation to increase the number of Common Stock which the
Company is authorized to issue from fifty million (50,000,000) shares to one
hundred million (100,000,000) shares. At present, the Certificate of
Incorporation provides that the total number of shares the Company has authority
to issue is fifty million (50,000,000) shares of Common Stock and ten million
(10,000,000) shares of Preferred Stock. The authorized Preferred Stock is
unaffected by the proposed amendment.
Following approval by the Board of Directors, the proposal was approved
by the written consents of holders of a majority of the Company's outstanding
common stock.
The change will be accomplished by amending the second sentence of
ARTICLE IV of the Company's Certificate of Incorporation to read as follows:
The total number of shares of Common Stock this Corporation is
authorized to issue is 100,000,000, and each such share shall
have a par value of $.001, and the total number of shares of
Preferred Stock this corporation is authorized to issue is
10,000,000, and each such share shall have a par value of
$.001.
The Amendment will become effective upon filing the Amendment to the
Company's Certificate of Incorporation with the Delaware Secretary of State,
anticipated to be approximately twenty-one days after this Information Statement
has been distributed to the Company's stockholders.
The Board of Directors of the Company believes that the Amendment is
advisable and in the best interests of the Company and its stockholders in order
allow it to honor existing equity financing commitments, to provide for
conversion of outstanding convertible securities into Common Stock or issuance
of shares of Common Stock upon exercise of outstanding options and warrants, and
to attract and obtain additional sources of capital in the future pursuant to
additional equity financing transactions.
APPROVAL OF STOCK OPTION PLAN. On November 10, 2003 the Board of
Directors of VisiJet approved the VisiJet 2003 Stock Option Plan. The Option
Plan provides for the grant of incentive and non-qualified stock options to
selected employees, as well as the grant of non-qualified options to selected
directors, advisory board members and consultants. The Option Plan is
administered by the Compensation Committee of the Board of Directors and
authorizes the grant of options for 3,000,000 shares. The Compensation Committee
determines the individual employees and consultants who participate under the
Plan, the terms and conditions of options, the option price, the vesting
schedule of options and other terms and conditions of the options granted
pursuant thereto.
As of November 30, 2004, options to purchase a total of 2,460,000
shares of the Company's common stock were outstanding. The following table
summarizes information about stock options outstanding at November 30, 2004:
Weighted
Average
Exercise Number Life in Number
Price Outstanding Years Exercisable
---------- ------------- ------------- ------------
$1.10 1,090,000 9.06 610,006
$0.40 1,370,000 9.98 220,000
--------- -------
2,460,000 830,006
ACTION BY WRITTEN CONSENT
Under Section 228 of the Delaware General Corporation Law, any action
which may be taken at any meeting of the stockholders may also be taken without
a meeting and without prior notice and without a vote, so long as a consent is
signed by the holders of the number of outstanding shares that would be
necessary to authorize such action at a shareholders' meeting at which all
shares entitled to vote were present and voted (here, a majority of the
outstanding shares of Common Stock of the Company).
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Common Stock of the Company as of November 30, 2004, by (i)
each person known by the Company to beneficially own 5% or more of the
outstanding Common Stock of the Company; (ii) each of the Company's directors;
and (iii) all directors of the Company as a group.
Name And Address Number Of Shares Percentage Of
Of Beneficial Owner Beneficially Owned (1)(2) Outstanding Shares (2)
------------------- ------------------------- ----------------------
Lance Doherty 4,585,758(3) 15.55%
9342 Jeronimo Road
Irvine, CA 92618
Financial Entrepreneurs, Inc. (4) 3,383,001(3) 11.68%
300 South 4th Street
Las Vegas, Nevada 89101
David E. Eisenberg Trust (5) 2,950,000(3) 9.70%
520 Madison, 38th Floor
New York, NY 10022
Taika Investments, Inc. (6) 2,200,000 7.67%
Calle Los Mangos C/Alameda
Edificio Los Mangos PB
OFC 1 y 2
La Campina
Caracas 1030,Venezuela
Lewis Family Interest, LP (7) 1,950,000(3) 6.63%
520 Madison, 38th Floor
New York, NY 10022
Randal A. Bailey ** 510,357(3) 1.77%
192 Technology, Suite Q
Irvine, CA 92618
Richard H. Keates, M.D.** 425,000(3) 1.47%
20 Sutton Place South
New York, NY 10022
Laurence Schreiber** 243,478(3) *
192 Technology, Suite Q
Irvine, CA 92618
Norman Schwartz** 125,664(3) *
192 Technology, Suite Q
Irvine, CA 92618
Adam Krupp** 50,000(3) *
535 Eighth Avenue, 14th Floor
New York, NY 10018
All directors and executive
officers as a group (5 persons) 1,354,499(3) 4.60%
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* Denotes less than one percent.
** Denotes member of the Board of Directors.
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(1) Except as set forth, the persons named in the table have sole voting and
investment power with respect to all shares shown as beneficially owned by them.
(2) Applicable percentage of ownership is based on 28,677,520 shares outstanding
as of November 30, 2004, together with applicable warrants and options for such
stockholder. Beneficial ownership is determined in accordance with the rules of
the Securities and Exchange Commission and includes voting and investment power
with respect to shares. Shares subject to options or warrants currently
exercisable or exercisable within 60 days after November 30, 2004 are included
in the number of shares beneficially owned and are deemed outstanding for
purposes of computing the percentage ownership of the person holding such
options or warrants, but are not deemed outstanding for computing the percentage
of any other stockholder.
(3) Includes shares issuable upon exercise of currently exercisable options or
warrants.
(4) Controlled by Norton Cooper
(5) Controlled by David E. Eisenberg
(6) Controlled by Carlos Fernandez
(7) Controlled by Peter C. Lewis
REASONS FOR THE PROPOSED INCREASE IN CAPITAL; INTEREST OF PRINCIPAL SHAREHOLDERS
AND DIRECTORS IN THE PROPOSED INCREASE
The Board of Directors approved the increase in the authorized shares
because of a series of transactions which may, in the aggregate, require the
issuance of shares of Common Stock in excess of the amount currently available
to be issued. In connection with certain of the transactions, the Company agreed
to increase the authorized number of shares of Common Stock. In addition to
authorizing sufficient shares to satisfy existing obligations, the Board of
Directors believes that it is in the best interests of the Company to have a
sufficient number of shares of Common Stock available for future acquisition or
financing transactions.
The following is a description of transactions completed during 2004
which could entail the issuance of additional shares of Common Stock.
In financing transactions in early 2004, the Company issued warrants to
purchase 585,000 shares of Common Stock.
In February 2004, the Company issued $500,000 in debentures and, in
connection with these debentures, issued warrants to purchase 375,000 shares of
the Company's common stock to the debenture holders.
In May 2004, the Company issued $750,000 in debentures and, in
connection with these debentures, issued warrants to purchase 500,000 shares of
the Company's common stock to the debenture holders.
Also in May 2004, the Company issued $800,000 in convertible
debentures, convertible into Common Stock of the Company. In addition, the
debenture holders received warrants to purchase an aggregate of 1,066,666 shares
of the Company's common stock.
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In June 2004, the Company issued $1,000,000 in convertible debentures
In addition, the debenture holders received warrants to purchase shares
1,000,000 of the Company's common stock.
In July 2004, the Company entered into convertible note agreements with
an aggregate principal balance of $1,000,000. In addition, the debenture holders
received warrants to purchase 1,000,000 shares of the Company's common stock.
In October 2004 VisiJet entered into convertible note agreements with
an aggregate principal balance of $850,000. In addition, the debenture holders
received warrants to purchase 850,000 shares of the Company's common stock.
Also in October 2004, the Company consummated the sale of 450,000
shares of Series A Convertible Preferred Stock ("Series A Shares") The Series A
Shares, which have a "stated value" for purposes of conversion and redemption of
$10.00 per share, are convertible at any time for a period of three years from
the date of issuance into shares of the Company's common stock ("Common Stock").
The number of shares of Common Stock to be issued upon conversion is determined
by dividing the aggregate stated value of the Series A Shares being converted by
the conversion price then in effect, which is to be the lesser of $0.609 (the
"Fixed Conversion Price"), or eighty percent (80%) of the lowest closing bid
price of the Common Stock in the ten (10) trading days preceding the date of
conversion, but in no event less than 30 percent (30%) of the Fixed Conversion
Price.
The following is a description of transactions currently pending which,
if completed, could entail the issuance of additional shares of Common Stock.
In October 2004 VisiJet entered into a stock purchase agreement with a
private equity investment fund pursuant to which the fund agreed to purchase an
aggregate of 4,750,000 shares of the Company's common stock, based on a minimum
price of $1.00 per share. In addition, under the agreement the investor would
receive five-year warrants to purchase up to 1,900,000 shares of our common
stock, at an exercise price of $1.00 per share. Completion of this financing and
related funding is contingent on the effectiveness of a Registration Statement
covering the shares of common stock and the shares of common stock underlying
the warrants, which the Company anticipates filing with the Securities and
Exchange Commission.
The Board of Directors believes that it is in the Company's best
interests to increase the number of authorized shares of Common Stock in order
to provide the Company with the flexibility to issue Common Stock without
further action by the Company's shareholders (unless required by law or
regulation), to have sufficient authorized shares to satisfy the obligations
described above, and for such other corporate purposes as the Board may deem
advisable. These purposes may include, among other things, the sale of shares to
obtain additional capital funds, the purchase of property, the use of additional
shares for various equity compensation and other employee benefit plans of the
Company or of acquired companies, the acquisition of other companies, and other
bona fide purposes. Other than as described above, the Company has no present
arrangements, agreements or understandings for the use of the additional shares
proposed to be authorized. However, the Company is currently seeking equity
financing to provide additional funding for operations and regularly explores
potential acquisitions and business combinations that might involve the issuance
of additional equity.
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The additional shares of Common Stock for which authorization is sought
would be a part of the existing class of Common Stock and, if and when issued,
would have the same rights and privileges as the currently outstanding shares of
Common Stock. Current shareholders do not have preemptive rights under the
Company's Certificate of Incorporation, and will not have such rights with
respect to these additional authorized shares of Common Stock. If the Board of
Directors elects to issue additional shares of Common Stock, such issuance could
have a dilutive effect on the earnings per share, voting power and shareholdings
of current shareholders.
The proposed amendment to increase the number of authorized shares of
Common Stock could, under certain circumstances, have an anti-takeover effect,
although this is not the intention of this proposal. For example, in the event
of a hostile attempt to take over control of the Company, it may be possible for
the Company to hinder the attempt by issuing shares of Common Stock, thereby
diluting the voting power of the other outstanding shares and increasing the
potential costs to acquire control of the Company. The amendment therefore may
have the effect of discouraging unsolicited takeover attempts, potentially
limiting the opportunity for our shareholders to dispose of their shares at a
higher price than may otherwise be available. The proposed amendment could have
the effect of permitting our current management, including the current Board of
Directors, to retain its position, and place it in a better position to resist
changes that shareholders may wish to make if they are dissatisfied with the
conduct of our business. This proposal to increase the authorized Common Stock
has been prompted by business and financial considerations, and the Board of
Directors is not aware of any attempt to take control of the Company. The Board
of Directors has not approved this amendment with the intent that it be utilized
as a type of anti-takeover device.
The Board of Directors believes that the amendment of the Certificate of
Incorporation to increase the number of authorized shares of Common Stock is in
the best interests of the Company and its shareholders.
THE STOCK OPTION PLAN
DESCRIPTION OF THE PLAN. The purpose of the VisiJet 2003 Stock Option
Plan is to provide incentives to attract, retain and motivate eligible persons
whose present and potential contributions are important to the success of the
Company, by offering them an opportunity to participate in our future
performance through awards of options. The Plan is administered by the
Compensation Committee of the Board of Directors, and covers a total of
3,000,000 shares. The following is a brief description of the Plan.
OPTIONS. The Plan allows the grant of both Incentive Stock Options
("ISO") and Nonqualified Stock Options ("NQSOS"). The Compensation Committee
selects the persons to whom options will be granted, the number of shares
subject to the option, the exercise price of the option, the period during which
the option may be exercised, and all other terms and conditions of the option,
subject to certain specified conditions. Incentive Stock Options may be granted
only to employees (including officers and directors who are also employees) of
VisiJet or any parent or subsidiary of VisiJet. Each option granted under the
Plan is evidenced by a Stock Option Agreement that will expressly identify the
option as an ISO or an NQSO (the "OPTION AGREEMENT"), and will be in such form
and contain such provisions (which need not be the same for each participant) as
the Compensation Committee may from time to time approve, and which will comply
with and be subject to the terms and conditions of the Stock Plan. The date of
grant of an option is the date on which the committee makes the determination to
grant such option, unless otherwise specified by the committee. The Option
Agreement and a copy of the Plan are to be delivered to the participant within a
reasonable time after the granting of the option.
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EXERCISE PERIOD. Options may be exercisable within the times or upon
the events determined by the committee as set forth in the Stock Option
Agreement governing such option; provided, however, that no option will be
exercisable after the expiration of 10 years from the date the option is
granted. The Option Agreements may provide for vesting of options based on
continued employment.
EXERCISE PRICE. The exercise price of an option is determined by the
committee when the option is granted and may be not less than 85 percent of the
fair market value of the shares of our common stock on the date of exercise;
provided that the exercise price of any ISO granted to a person who beneficially
owns more than ten percent of our outstanding Common Stock must be at least 110
percent of the fair market value of our common stock on the date of grant.
Payment for the shares may be made in cash or as otherwise provided in the Plan.
METHOD OF EXERCISE. Options may be exercised only by delivery of a
written stock option exercise agreement in a form approved by the Compensation
Committee, together with payment of the exercise price for the number of shares
being purchased.
TERMINATION. Upon an employee's termination of employment due to
disability (as defined in the Plan) or death, (a) all options to the extent then
presently exercisable remain in full force and effect and may be exercised for a
period of 180 days thereafter (in the case of disability) or twelve months
thereafter (in the case of death) , and (b) all Stock Options to the extent not
then presently exercisable terminate as of the date of such termination of
employment. Upon termination of employment for reasons other than death or
disability, the options remain exercisable for 30 days after termination.
LIMITATIONS ON ISOS. The aggregate fair market value (determined as of
the date of grant) of shares of our common stock with respect to which ISOs are
exercisable for the first time by a participant during any calendar year may not
exceed $100,000.
OPTION TRANSFERABILITY. Options granted under the Plan are not
transferable or assignable by the participant, and may not be made subject to
execution, attachment or similar process, other than by will or by the laws of
descent and distribution.
ADOPTION AND STOCKHOLDER APPROVAL. The Plan became effective on the
date it was adopted by the Board of Directors. The Plan provides for approval by
the stockholders thereafter. The committee may grant options pursuant to the
Plan upon approval by the Board of Directors.
TERM OF PLAN. Unless earlier terminated as provided, the Plan will
terminate 10 years from the date of adoption,
AMENDMENT OR TERMINATION OF THE STOCK PLANS. Our board of directors may
at any time terminate or amend the Plan, provided that, to the extent required
under Delaware law or to qualify transactions under the Plan for exemption under
Rule 16b-3 promulgated under the Exchange Act, no amendment to the Stock Plan
is effective without further approval of our stockholders.
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REASONS FOR SHAREHOLDER APPROVAL OF THE STOCK OPTION PLAN; INTEREST OF PRINCIPAL
SHAREHOLDERS AND DIRECTORS IN THE STOCK OPTION PLAN.
The Board of Directors believes that it is in the best interests of the
Company to approve the Plan so that the Company can grant options to provide
incentives to attract, retain and motivate eligible persons whose present and
potential contributions are important to the success of the Company.
Certain officers and directors of VisiJet have received options under
the Plan, as follows:
Name Position No. of Shares Exercise Price Termination
---- -------- ------------- -------------- -----------
Randal A. Bailey President and a director 200,000 $1.10 November 10, 2013
200,000 $0.40 October 20, 2014
Laurence M. Schreiber Chief Operating Officer and 200,000 $1.10 November 10, 2013
a director 200,000 $0.40 October 20, 2014
Richard H. Keates, M.D. Chairman and a director 200,000 $1.10 November 10, 2013
200,000 $0.40 October 20, 2014
Norman Schwartz Director and Contracts 75,000 $1.10 November 10, 2013
Administrator 100,000 $0.40 October 20, 2014
Adam Krupp Director 25,000 $1.10 November 10, 2013
25,000 $0.40 October 20, 2014
ADDITIONAL INFORMATION
Additional information concerning VisiJet, including its annual and
quarterly reports filed with the Securities and Exchange Commission, may be
accessed through the Securities and Exchange Commission's EDGAR archives at
www.sec.gov.
Dated: December , 2004
By Order of the Board of Directors
By: Laurence M. Schreiber, Secretary
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APPENDIX
VISIJET, INC.
2003 STOCK OPTION PLAN
I. PURPOSE
The VisiJet, Inc. 2003 Stock Option Plan (the "PLAN") is intended to
promote the interests of VisiJet, Inc., a Delaware corporation (the "COMPANY"),
by providing a method for the Company to offer eligible individuals who provide
valuable services to the Company, or its parent or subsidiary corporations,
incentives and rewards that will encourage them to acquire a proprietary
interest, or otherwise increase their proprietary interest, in the Company and
continue to render services to the Company (or its parent or subsidiary
corporations).
The following shall apply to determine the parent and subsidiary
corporations of the Company:
(i) Any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company shall be considered to be a parent
corporation of the Company (a "PARENT"), provided each such corporation (other
than the Company) owns, at the time of the determination, stock with fifty
percent or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
(ii) Each corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company shall be considered to be a subsidiary
of the Company (a "SUBSIDIARY"), provided each such corporation (other than the
last corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
II. ADMINISTRATION
A. PRIMARY COMMITTEE. With respect to executive officers, a committee
comprised of non-employee members of the Board of Directors who satisfy the
requirements of Rule 16b-3 of the Securities Exchange Act of 1934 (the "1934
ACT") to exempt stock awards made hereunder from the short-swing profit recovery
rules of Section 16(b) of the 1934 Act (the "PRIMARY COMMITTEE") and who satisfy
the requirements of Section 162(m) of the Internal Revenue Code shall have sole
and exclusive authority to administer the Plan
B. SECONDARY COMMITTEE. With respect to all other persons eligible to
participate in the Plan, administration of the Plan may, at the discretion of
the Board of Directors (the "BOARD"), be vested in the Primary Committee or a
second committee comprised of one or more Board members (the "SECONDARY
COMMITTEE" and, with the Primary Committee, the "COMMITTEE"), or the Board may
retain the power to administer the Plan with respect to all such persons. The
members of the Secondary Committee may be individuals who are employees eligible
to receive option grants under the Plan or any stock option, stock appreciation,
stock bonus or other stock plan of the Company (or any Parent or Subsidiary) or
who have any other business relationship with the Company outside their roles as
members of the Board. The Board, any Primary Committee or any Secondary
Committee charged with the administration of the Plan are referred to
hereinafter as the "PLAN ADMINISTRATOR."
C. MEMBERS. Members of the Primary Committee or any Secondary Committee
shall serve for such period of time as the Board may determine and may be
removed by the Board at any time. The Board may also at any time terminate the
functions of any Secondary Committee and reassume all powers and authority
previously delegated to such committee.
D. PLAN ADMINISTRATOR. Each Plan Administrator shall, within the scope
of its administrative functions under the Plan, have full power and authority
(subject to the provisions of the Plan) to establish such rules and regulations
as it may deem appropriate for proper administration of the Plan and to make
such determinations under, and issue such interpretations of, the provisions of
the Plan and any outstanding options as it may deem necessary or advisable.
Decisions of the Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties who have an
interest in the Plan under its jurisdiction or any option thereunder.
E. COMMITTEE MEMBERS. Service on the Primary Committee or the Secondary
Committee shall constitute service as a Board member, and members of each such
committee shall accordingly be entitled to full indemnification and
reimbursement as Board members for their service on such committee. No member of
the Primary Committee or the Secondary Committee shall be liable for any act or
omission made in good faith with respect to the Plan or any grants under the
Plan.
III. ELIGIBILITY FOR OPTION GRANTS
The persons eligible to receive option grants under the Plan are as
follows:
(i) regular employees who are on the payroll of the Company, including
officers and directors who are employed by the Company, its Parent or its
Subsidiary ("EMPLOYEES");
(ii) non-employee members of the Board or the non-employee members of
the board of directors of any Parent or Subsidiary; and
(iii) consultants, who are natural persons, who provide services to the
Company (or its Parent or Subsidiary).
The Plan Administrator shall have full authority to determine which
eligible individuals are to receive option grants under the Plan, the number of
shares to be covered by each such grant, whether the granted option is to be an
incentive stock option ("INCENTIVE OPTION") which satisfies the requirements of
Section 422 of the Internal Revenue Code or a non-statutory option, the time or
times at which each such option is to become exercisable, and the maximum term
for which the option is to remain outstanding.
IV. STOCK SUBJECT TO THE PLAN
A. STOCK; NUMBER OF SHARES. The stock issuable under the Plan shall be
shares of the Company's authorized but unissued, or reacquired, Common Stock.
The aggregate number of shares which may be issued over the term of the Plan
shall not exceed 3,000,000 shares. Of the 3,000,000 shares, 1,000,000 shares
shall be set aside as Incentive Stock Options. The total number of shares
issuable under the Plan shall be subject to adjustment from time to time in
accordance with the provisions of this Section IV.
B. OPTIONS RESTORED TO PLAN. Shares subject to outstanding options
shall be available for subsequent option grants under the Plan to the extent
options expire or terminate for any reason prior to exercise in full.
C. RECAPITALIZATIONS, REORGANIZATIONS. In the event any change is made
to the Common Stock issuable under the Plan by reason of any stock split, stock
dividend, combination of shares, exchange of shares or other change affecting
the outstanding Common Stock as a class without receipt of consideration,
proportionate adjustments shall be made to (a) the aggregate number and/or class
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of shares issuable under the Plan and (b) the aggregate number and/or class of
shares and the option price per share in effect under each outstanding option in
order to prevent the dilution or enlargement of benefits thereunder. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.
V. TERMS AND CONDITIONS OF OPTIONS
A. OPTION GRANTS Options granted pursuant to the Plan shall be
authorized by action of the Plan Administrator and may, at the Plan
Administrator's discretion, be either Incentive Options or non-statutory
options. Individuals who are not Employees may not be granted Incentive Options.
Each granted option shall be evidenced by one or more instruments in the form
approved by the Plan Administrator; PROVIDED, however, that each such instrument
shall comply with and incorporate the terms and conditions specified below. Each
instrument evidencing an Incentive Option shall, in addition, be subject to the
applicable provisions of Section VI.
B. OPTION PRICE; PAYMENT
(1) The option price per share shall be fixed by the Plan
Administrator. In no event, however, shall the option price per share be less
than eighty-five percent (85%) of the Fair Market Value of a share of Common
Stock on the date of the option grant.
(2) The option price shall become immediately due upon exercise of
the option and shall, subject to the provisions of Section IX and the instrument
evidencing the grant, be payable in one or more of the forms specified below:
(i) cash or check drawn to the Company's order;
(ii) in shares of Common 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
(iii) to the extent not prohibited by applicable law and to
the extent the option is exercised for vested shares, through a sale
and remittance procedure pursuant to which the optionee is to provide
irrevocable written instructions (I) 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,
an amount sufficient to cover the aggregate option price payable for
the purchased shares plus all applicable Federal and State income and
employment taxes required to be withheld by the Company by reason of
such purchase and (II) to the Company to deliver the certificates for
the purchased shares directly to such brokerage firm in order to effect
the sale transaction.
For purposes of this subparagraph B, the "EXERCISE DATE" shall be the
first date on which there shall have been delivered to the Company both written
notice of the exercise of the option and, except to the extent such sale and
remittance procedure is utilized, payment of the option price for the purchased
shares.
(3) The "FAIR MARKET VALUE" of a share of Common Stock on any
relevant date under subparagraph 1 above (and for all other valuation purposes
under the Plan) shall be determined in accordance with the following provisions:
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(i) If the Common Stock is not at the time listed or admitted
to trading on any stock exchange but is traded on the Nasdaq National
Market System, the Nasdaq SmallCap Market, OTC Bulletin Board, or the
"pink sheets," the Fair Market Value shall be the closing selling price
of one share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers through its
Nasdaq system or any successor system, by the OTC Bulletin Board, or by
any generally recognized securities transaction reporting service. If
there is no closing selling price for the Common Stock on the date in
question, then the closing selling price on the last preceding date for
which such quotation exists shall be determinative of Fair Market
Value.
(ii) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in question
on the stock exchange determined by the Plan Administrator to be the
primary market for the Common Stock, as such price is officially quoted
in the composite tape of transactions on such exchange. If there is no
reported sale of Common Stock on such exchange on the date in question,
then the Fair Market Value shall be the closing selling price on the
exchange on the last preceding date for which such quotation exists.
(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in any
over-the-counter market, or if the Plan Administrator determines that
the value determined pursuant to subparagraphs (i) and (ii) above does
not accurately reflect the Fair Market Value of the Common Stock, then
such Fair Market Value shall be determined by the Plan Administrator
after taking into account such factors as the Plan Administrator shall
deem appropriate, including one or more independent professional
appraisals.
C. EXERCISABILITY. Each option granted under the Plan shall be
exercisable at such time or times, during such period, and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
instrument evidencing such option. No such option, however, shall have a maximum
term in excess of ten years from the grant date and no Incentive Option granted
to any 10% Stockholder shall have a maximum term in excess of five years from
the grant date. During the lifetime of the optionee, the option shall be
exercisable only by the optionee and shall not be assignable or transferable by
the optionee otherwise than by will or by the laws of descent and distribution.
D. SERVICE
(1) Except to the extent otherwise provided pursuant to subparagraph 3
below, the following provisions shall govern the exercise period applicable to
any options held by the optionee at the time of death or cessation of Service.
For the purposes of this Plan, the term "SERVICE" shall mean service to the
Company, or a Parent or Subsidiary, by an individual as an Employee, a
non-employee member of the Board of Directors or a consultant. The determination
of Service, including the termination of Service, shall be made by the Plan
Administrator, whose decision shall be conclusive.
(i) Should the optionee cease to remain in Service for any
reason other than death or Disability (as hereinafter defined), then
the period during which each outstanding option held by such optionee
is to remain exercisable shall be limited to the 30 day period
following the date of such cessation of Service.
(ii) In the event such Service terminates by reason of
Disability, then the period during which each outstanding option held
by the optionee is to remain exercisable shall be limited to the 180
day period following the date of such cessation of Service.
"DISABILITY" shall mean the inability of an individual to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment and shall be determined by the Plan
Administrator on the basis of such medical evidence as the Plan
Administrator deems warranted under the circumstances.
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(iii) Should the optionee die while holding one or more
outstanding options, then the period during which each such option is
to remain exercisable shall be limited to the twelve-month period
following the date of the optionee's death. During such limited period,
the option may be exercised by the personal representative of the
optionee's estate or by the person or persons to whom the option is
transferred pursuant to the optionee's will or in accordance with the
laws of descent and distribution.
(iv) Each such option shall, during such limited exercise
period, be exercisable for any or all of the shares for which the
option is exercisable on the date of the optionee's cessation of
Service. Upon the expiration of such limited exercise period or (if
earlier) upon the expiration of the option term, the option shall
terminate and cease to be exercisable.
(2) Under no circumstances shall any option be exercisable after the
specified expiration date of the option term.
(3) The optionee shall be considered to be an Employee for so long as
such individual remains in the employ of the Company or one or more of its
Parent or Subsidiary corporations, subject to the control and direction of the
employer entity as to both the work to be performed and the manner and method of
performance.
(4) The Board shall have full power and authority to extend the period
of time for which the option is to remain exercisable following the optionee's
termination of Service from the three-month (six months in the case of
Disability) or shorter period set forth in the option agreement to such greater
period of time as the Board shall deem appropriate; PROVIDED, that in no event
shall such option be exercisable after the specified expiration date of the
option term.
E. An optionee shall have none of the rights of a stockholder with
respect to the shares subject to the option until such individual shall have
exercised the option and paid the option price.
VI. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees of the Company. Options which are not
designated as Incentive Options when issued under the Plan shall not be subject
to such terms and conditions.
A. OPTION PRICE. The option price per share of the Common Stock subject
to an Incentive Option shall in no event be less than one hundred percent of the
Fair Market Value of a share of Common Stock on the date of grant. In the case
of an option granted to the owner of stock (as determined under Section 424(d)
of the Internal Revenue Code) possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the Company or any one of its
Parent or Subsidiary corporations (such person to be herein referred to as a
"10% STOCKHOLDER"), the option price per share shall not be less than one
hundred and ten percent (110%) of the Fair Market Value of one share of Common
Stock on the grant date.
B. DOLLAR LIMITATION. The aggregate Fair Market Value (determined as of
the respective date or dates of grant) of the Common Stock for which one or more
options granted to any Employee under this Plan (or any other option plan of the
Company or its Parent or Subsidiary) may for the first time become exercisable
as incentive stock options under the Federal tax laws during any one calendar
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year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two or more such options which become exercisable for
the first time in the same calendar year, the foregoing limitation on the
exercisability thereof as incentive stock options under the Federal tax laws
shall be applied on the basis of the order in which such options are granted.
Except as modified by the preceding provisions of this Section VI, all
the provisions of the Plan shall be applicable to the Incentive Options granted
hereunder.
VII. CORPORATE TRANSACTIONS
A. EFFECT OF CORPORATE TRANSACTIONS. In the event of (i) a sale, lease
or other disposition of all or substantially all of the assets of the Company,
(ii) a merger or consolidation in which the Company is not the surviving entity
(except for a transaction the principal purpose of which is to change the State
of Company's incorporation) or (iii) a reverse merger in which the Company is
the surviving entity but in which all of the Company's outstanding voting stock
immediately preceding the merger are converted by virtue of the merger or
transferred to the acquiring entity or its wholly-owned Subsidiary
(individually, a "CORPORATE TRANSACTION"), then any surviving entity or
acquiring entity shall assume any outstanding options under the Plan or shall
substitute similar options. Notwithstanding the assumption or substitution of
any portion of any outstanding option under the Plan by the surviving entity or
acquiring entity, in the event of a Corporate Transaction the vesting and
exercisability of each outstanding option under the Plan shall accelerate so
that each option shall become immediately vested and exercisable immediately
prior to the Corporate Transaction. In the event the surviving entity or
acquiring entity refuses to assume such options or to substitute similar options
for those outstanding under the Plan, then the vesting and exercisability of
each option outstanding under the Plan shall automatically accelerate in full so
that each option shall, immediately prior to the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares or fully vested
shares of Common Stock.
B. TERMINATION OF OPTIONS. Immediately following the consummation of
the Corporate Transaction, all outstanding options shall terminate and cease to
be outstanding, except to the extent assumed by the surviving entity or
acquiring entity (or Parent thereof).
C. ADJUSTMENTS. Each outstanding option which is assumed in connection
with the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would be issuable, in
consummation of such Corporate Transaction, to an actual holder of the same
number of shares of Common Stock as are subject to such option immediately prior
to such Corporate Transaction, and appropriate adjustments shall also be made to
the option price payable per share, provided the aggregate option price payable
for such securities shall remain the same. Appropriate adjustments shall also be
made to the class and number of securities available for issuance under the Plan
following the consummation of such Corporate Transaction.
D. INCENTIVE OPTIONS. The portion of any Incentive Option accelerated
in connection with a Corporate Transaction shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.
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E. NO LIMITATIONS. The grant of options under this Plan shall in no way
affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
VIII. TAX WITHHOLDING
A. COMPLIANCE WITH LAW. The Company's obligation to deliver shares of
Common Stock upon the exercise of options or upon the vesting of such shares
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.
B. USE OF SHARES FOR WITHHOLDING. The Plan Administrator may, in its
discretion, provide any or all holders of Non-Statutory Options or unvested
shares of Common Stock under the Plan with the right to use shares of Common
Stock in satisfaction of all or part of the taxes incurred by such holders in
connection with the exercise of their options. Such right may be provided to any
such holder in either or both of the following formats:
(i) STOCK WITHHOLDING . The election to have the Company
withhold, from the shares of Common Stock otherwise issuable upon the
exercise of such Non-Statutory Option or the vesting of such shares, a
portion of those shares with an aggregate Fair Market Value equal to
the percentage of the taxes (not to exceed one hundred percent )
designated by the holder.
(ii) STOCK DELIVERY. The election to deliver to the Company,
at the time the Non-Statutory Option is exercised or the shares vest,
one or more shares of Common Stock previously acquired by such holder
(other than in connection with the option exercise or share vesting
triggering the taxes) with an aggregate Fair Market Value equal to the
percentage of the taxes (not to exceed one hundred percent (100%))
designated by the holder.
IX. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the optionee any right to
continue in the service or employ of the Company (or any Parent or Subsidiary of
the Company employing or retaining such optionee) for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Company (or any Parent or Subsidiary of the Company employing or retaining such
optionee) or of the optionee, which rights are hereby expressly reserved by
each, to terminate the Service of the optionee at any time for any reason, with
or without cause.
X. AMENDMENT OF THE PLAN
A. AMENDMENT BY BOARD. The Board shall have complete and exclusive
power and authority to amend or modify the Plan in any or all respects
whatsoever; PROVIDED , however, that no such amendment or modification shall,
without the consent of the Company's stockholders, adversely affect the rights
and obligations with respect to options at the time outstanding under the Plan;
and PROVIDED , further that any amendment or modification by the Board to (i)
increase the maximum number of shares issuable under the Plan or the maximum
number of shares for which any person may be granted options per calendar year,
except for permissible adjustments under Section IV or (ii) materially modify
the eligibility requirements for the grant of options under the Plan, shall not
be effective without the approval of the Company's stockholders within one year
of such amendment or modification to the Plan.
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B. INCREASE IN AVAILABLE SHARES. Options may be granted under this Plan
to purchase shares of Common Stock in excess of the number of shares then
available for issuance under the Plan, provided (i) an amendment to increase the
maximum number of shares issuable under the Plan is adopted by the Board prior
to the initial grant of any such option and within one year thereafter such
amendment is approved by the Company's stockholders and (ii) each option granted
is not to become exercisable, in whole or in part, at any time prior to the
obtaining of such stockholder approval.
XI. EFFECTIVE DATE AND TERM OF PLAN
A. APPROVAL BY BOARD OF DIRECTORS. The Plan became effective when
adopted by the Board on November 10, 2003, subject to approval by the Company's
stockholders.
B. TERMINATION. Unless sooner terminated in accordance with Section
VII, the Plan shall terminate upon the EARLIER of (i) November 9, 2013 or (ii)
the date on which all shares available for issuance under the Plan shall have
been issued pursuant to the exercise or surrender of options granted hereunder.
If the date of termination is determined under clause (i) above, then options
outstanding on such date shall thereafter continue to have force and effect in
accordance with the provisions of the instruments evidencing such options.
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