As filed with the Securities and Exchange Commission on August 5, 1997.
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
Cardiovascular Diagnostics, Inc.
(Exact name of issuer as specified in its charter)
North Carolina 56-1493744
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) (Identification Number)
5301 Departure Drive, Raleigh, North Carolina 27604
(Address of Principal Executive Offices) (Zip Code)
Cardiovascular Diagnostics, Inc. 1994 Stock Plan
Cardiovascular Diagnostics, Inc. 1995 Stock Plan
(Full title of the plans)
John P. Funkhouser
President
Cardiovascular Diagnostics, Inc.
5301 Departure Drive
Raleigh, North Carolina 27616
(Name and address of agent for service)
(919) 954-9871
(Telephone number, including area code, of agent for service)
Copies to:
Donald R. Reynolds, Esq.
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina 27607
(919) 781-4000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------ ----------------------------
<S> <C> <C> <C> <C>
Title of Proposed maximum Proposed maximum
securities to Amounts to offering price aggregate Amount of
be registered be registered per share* offering price* registration fee
- -----------------------------------------------------------------------------------
Common Stock,
par value 1,114,234
$.001 per share shares $6.375 $7,103,241.75 $2,152.50
- -----------------------------------------------------------------------------------
</TABLE>
*Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(c), based on the average of the high and low prices for the Common
Stock on the NASDAQ National Market System on August 1, 1997.
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents heretofore filed by Cardiovascular Diagnostics,
Inc. (the "Company") with the Securities and Exchange Commission (the
"Commission") are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, filed pursuant to Section 13 of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act");
(b) The Company's Proxy Statement dated April 15, 1997, filed pursuant
to Section 14 of the Exchange Act, in connection with the Annual Meeting of
Shareholders of the Company held on May 9, 1997;
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, filed pursuant to Section 13 of the Exchange Act; and
(d) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed pursuant to Section 12 of the
Exchange Act on October 12, 1995, including any amendment or report filed for
the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date hereof and prior to the filing of
a post-effective amendment that indicates that all securities offered under this
registration statement have been sold or that deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein (or in any other subsequently filed document
that also is or is deemed to be incorporated by reference herein) modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed to constitute a part hereof except as so modified or superseded.
Item 4. Description of Securities
Not applicable. The class of securities to be offered is registered
under Section 12 of the Exchange Act.
Item 5. Interests of Named Experts and Counsel
Not applicable.
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Item 6. Indemnification of Directors and Officers
The Company's Articles of Incorporation and Bylaws include provisions
to (i) eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the fullest extent permitted
by Section 55-8-30(e) of the North Carolina Business Corporation Act (the "North
Carolina Law") and (ii) require the Company to indemnify its directors and
officers to the fullest extent permitted by Sections 55-8-50 through 55-8-58 of
the North Carolina Law, including circumstances in which indemnification is
otherwise discretionary. Pursuant to Sections 55-8-51 and 55-8-57 of the North
Carolina Law, a corporation generally has the power to indemnify its present and
former directors, officers, employees and agents against expenses incurred by
them in connection with any suit to which they are, or are threatened to be
made, a party by reason of their serving in such positions so long as they acted
in good faith and in a manner they reasonably believed to be in, or not opposed
to, the best interests of the corporation, and with respect to any criminal
action, they had no reasonable cause to believe their conduct was unlawful. The
Company believes that these provisions are necessary to attract and retain
qualified persons as directors and officers. These provisions do not eliminate
the directors' duty of care, and, in appropriate circumstances, equitable
remedies such as injunctive or other forms of non-monetary relief will remain
available under North Carolina Law. In addition, each director will continue to
be subject to liability for breach of the director's duty of loyalty to the
Company, for acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law, for acts or omissions that the director
believes to be contrary to the best interests of the Company or its
shareholders, for any transaction from which the director derived an improper
personal benefit, for acts or omissions involving a reckless disregard for the
director's duty to the Company or its shareholders when the director was aware
or should have been aware of a risk of serious injury to the Company or its
shareholders, for 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, for improper transactions between the director and the
Company and for improper distributions to shareholders and loans to directors
and officers. These provisions do not affect a director's responsibilities under
any other laws, such as the federal securities laws or state or federal
environmental laws.
The Company's Bylaws require the Company to indemnify its directors and
officers against expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred (including expenses of a derivative action) in
connection with any proceeding, whether actual or threatened, to which any such
person may be made a party by reason of the fact that such person is or was a
director or officer of the Company or any of its affiliated enterprises,
provided such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interest of the Company and, with
respect to any criminal proceeding, had no reasonable cause to believe his or
her conduct was unlawful. The Company's Bylaws also set forth certain procedures
that will apply in the event of a claim for indemnification thereunder.
Item 7. Exemption from Registration Claimed
Not applicable.
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Item 8. Exhibits
Exhibit
Number Description
4.1 Cardiovascular Diagnostics, Inc. 1994 Stock Plan, as amended.
4.2 Cardiovascular Diagnostics, Inc. 1995 Stock Plan, as amended.
5.1 Opinion of Wyrick Robbins Yates & Ponton LLP.
24.1 Consent of Coopers & Lybrand LLP.
24.2 Consent of counsel (included in opinion filed as Exhibit 5.1).
25.1 Power of Attorney (see page 6).
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(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) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's 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.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange 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 the
registrant of expenses incurred or paid by a director officer or controlling
person of the registrant 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, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit
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<PAGE>
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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 Raleigh, State of North Carolina, on the 30th day of
July 1997.
CARDIOVASCULAR DIAGNOSTICS, INC.
By: /s/ JOHN P. FUNKHOUSER
John P. Funkhouser
President
POWER OF ATTORNEY
Each person whose signature appears below in so signing also makes,
constitutes and appoints JOHN P. FUNKHOUSER and B. DENISE HOBBS, and each of
them acting alone, his or her true and lawful attorneys-in-fact, with full power
of substitution, for him or her in any and all capacities, to execute and cause
to be filed with the Securities and Exchange Commission any and all amendments
and post-effective amendments to this Form S-8, with exhibits thereto and other
documents in connection therewith, and hereby ratifies and confirms all that
said attorneys-in-fact or his, her or their substitute or substitutes may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Form S-8 has been signed below by the following persons in the capacities
and on the date indicated.
Signature Title Date
/s/ JOHN P. FUNKHOUSER President and Director July 30, 1997
John P. Funkhouser (Principal Executive
Officer)
/s/ B. DENISE HOBBS Vice President of Finance July 31, 1997
B. Denise Hobbs and Administration
(Principal Financial and
Accounting Officer)
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/s/ DENNIS J. DOUGHERTY Director July 31, 1997
Dennis J. Dougherty
/s/ WILLIAM A. HAWKINS Director July 29, 1997
William A. Hawkins
/s/ JOHN K. PIROTTE Director July 31, 1997
John K. Pirotte
Director July 31, 1997
Stephen R. Puckett
/s/ PHILIP R. TRACY Director July 31, 1997
Philip R. Tracy
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<PAGE>
<PAGE>
CARDIOVASCULAR DIAGNOSTICS, INC.
1994 STOCK PLAN
(as amended by the Board of Directors through December 31, 1995)
1. Purpose. This 1994 Stock Plan (the "Plan") is intended to provide
incentives:
(a) to employees of Cardiovascular Diagnostics, Inc. (the
"Company"), or its parent (if any) or any of its present or future subsidiaries
(collectively, "Related Corporations"), by providing them with opportunities to
purchase Common Stock (as defined below) of the Company pursuant to options
granted hereunder that qualify as "incentive stock options" ("ISOs") under
Section 422 of the Internal Revenue Code of 1986, as amended, or any successor
statute (the "Code");
(b) to employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase Common Stock (as
defined below) of the Company pursuant to options granted hereunder that do not
qualify as ISOs (nonstatutory stock options, or "NSOs");
(c) to employees and consultants of the Company and Related
Corporations by providing them with bonus awards of Common Stock (as defined
below) of the Company ("Stock Bonuses"); and
(d) to employees and consultants of the Company and Related
Corporations by providing them with opportunities to make direct purchases of
Common Stock (as defined below) of the Company ("Purchase Rights").
Both ISOs and NSOs are referred to hereafter individually as "Options,"
and Options, Stock Bonuses and Purchase Rights are referred to hereafter
collectively as "Stock Rights." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation,"
respectively, as those terms are defined in Section 424 of the Code.
2. Administration of the Plan.
(a) The Plan shall be administered by the Board of Directors
of the Company (the "Board"); provided, however, in the event the Company (or
any successor thereto that maintains this Plan) registers equity securities
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Plan shall thereafter be administered by the Board only if
each member of the Board is a "disinterested person" as defined below.
Notwithstanding the preceding sentence, the Board may
<PAGE>
appoint a committee (the "Committee") of two or more of its members to
administer this Plan, provided, however, in the event the Company (or any
successor thereto that maintains this Plan) registers equity securities under
Section 12 of the Exchange Act, then each member of the Committee shall be a
"disinterested person" as defined below. A "disinterested person" is a director
who has not received, during the one year period (or such shorter period of time
that the Company's equity securities have been registered under Section 12 of
the Exchange Act) prior to service as an administrator of the Plan, any benefits
pursuant to the Plan, or any other stock award, stock purchase, stock option or
stock appreciation rights under any other plan sponsored by the Company or any
of the Related Corporations entitling participants to acquire stock, stock
options, stock appreciation rights or other equity securities of the Company or
any of its Related Corporations. Notwithstanding the preceding sentence, a
director shall not be disqualified from status as a "disinterested person"
solely by reason of (i) his or her participation in a formula plan satisfying
the requirements of Rule 16b-3(c)(2)(ii) promulgated under the Exchange Act,
(ii) his or her participation in an on-going securities acquisition plan meeting
the conditions of Rule 16b-3(d)(2)(i) promulgated under the Exchange Act, or
(iii) his or her election to receive any annual director's fee in either cash or
an equivalent amount of the Company's securities, or partly in both.
(c) Subject to ratification of the grant or authorization of
each Stock Right by the Board (if so required by applicable law), and subject to
the terms of the Plan, the Committee, if so appointed, shall have the authority
to:
(i) determine the employees of the Company and Related
Corporations (from among the class of employees eligible under Section 3 to
receive ISOs) to whom ISOs may be granted, and to determine (from among the
class of individuals and entities eligible under Section 3 to receive NSOs,
Stock Bonuses and Purchase Rights) to whom NSOs, Stock Bonuses and Purchase
Rights may be granted;
(ii) determine the time or times at which Options, Stock
Bonuses or Purchase Rights may be granted;
(iii) determine the option price of shares subject to each
Option, which price shall not be less than the minimum price specified in
Section 6, and the purchase price of shares subject to each Purchase Right;
(iv) determine whether each Option granted shall be an ISO
or NSO;
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(v) determine (subject to Section 7) the time or times
when each Option shall become exercisable and the duration of the exercise
period;
(vi) determine whether restrictions such as repurchase
options are to be imposed on shares subject to Options, Stock Bonuses and
Purchase Rights and the nature of such restrictions, if any; and
(vii) interpret the Plan and prescribe and rescind rules
and regulations relating to it.
If the Committee determines to issue a NSO, it shall take
whatever actions it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that such Option is not treated as
an ISO. The interpretation and construction by the Committee of any provisions
of the Plan or of any Stock Right granted under it shall be final unless
otherwise determined by the Board. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock Right
granted under it.
(c) The Committee may select one of its members as its
chairman, and shall hold meetings at such time and places as it may determine.
Acts by a majority of the Committee, or acts reduced to or approved in writing
by a majority of the members of the Committee, shall be the valid acts of the
Committee. All references in this Plan to the Committee shall mean the Board if
no Committee has been appointed. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members thereof and thereafter directly
administer the Plan.
3. Eligible Employees and Others. ISOs may be granted to any employee
of the Company or any Related Corporation. Those officers of the Company who are
not employees may not be granted ISOs under the Plan. NSOs, Stock Bonuses and
Purchase Rights may be granted to any director, employee or consultant of the
Company or any Related Corporation; provided, however, that no director of the
Company who is not also an employee of the Company shall be eligible to receive
any Stock Right under the Plan after the time when the Company shall have
registered its equity securities under Section 12 of the Exchange Act. Granting
of any Stock Right to any individual or entity shall neither entitle that
individual or entity to, nor disqualify him or her from, participation in any
other grant of Stock Rights.
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4. Stock. The stock subject to Stock Rights shall be authorized but
unissued shares of class A common stock of the Company, par value $.001 per
share, or such shares of the Company's capital stock into which such class of
shares may be converted pursuant to any reorganization, recapitalization,
merger, consolidation or the like (the "Common Stock"), or shares of Common
Stock reacquired by the Company in any manner. The aggregate number of shares
that may be issued pursuant to the Plan is 626,084 shares, subject to adjustment
as provided herein. Any such shares may be issued as ISOs, NSOs or Stock
Bonuses, or to persons or entities making purchases pursuant to Purchase Rights,
so long as the number of shares so issued does not exceed such aggregate number,
as adjusted. If any Option granted under the Plan shall expire or terminate for
any reason without having been exercised in full or shall cease for any reason
to be exercisable in whole or in part, or if the Company shall reacquire any
shares issued pursuant to Stock Rights, the unpurchased shares subject to such
Options and any shares so reacquired by the Company shall again be available for
grants of Stock Rights under the Plan.
5. Granting of Stock Rights. Stock Rights may be granted under the Plan
at any time after the Effective Date, as set forth in Section 16, and prior to
10 years thereafter. The date of grant of a Stock Right under the Plan will be
the date specified by the Committee at the time it grants the Stock Right;
provided, however, that such date shall not be prior to the date on which the
Committee acts. The Committee shall have the right, with the consent of the
optionee, to convert an ISO granted under the Plan to an NSO pursuant to Section
17.
6. Minimum Price; ISO Limitations.
(a) The price per share specified in the agreement relating to
each NSO, Stock Bonus or Purchase Right granted under the Plan shall be
established by the Committee, taking into account any noncash consideration to
be received by the Company from the recipient of Stock Rights.
(b) The price per share specified in the agreement relating to
each ISO granted under the Plan shall not be less than the fair market value per
share of Common Stock on the date of such grant. In the case of an ISO to be
granted to an employee owning stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Related
Corporation, the price per share specified in the agreement relating to such ISO
shall not be less than 110% of the fair market value per share of Common Stock
on the date of the grant.
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(c) In no event shall the aggregate fair market value
(determined at the time an ISO is granted) of Common Stock for which ISOs
granted to any employee are exercisable for the first time by such employee
during any calendar year (under all stock option plans of the Company and any
Related Corporation) exceed $100,000; provided that this Section shall have no
force or effect to the extent that its inclusion in the Plan is not necessary
for Options issued as ISOs to qualify as ISOs pursuant to Section 422 of the
Code.
(d) If, at the time an Option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the time such Option is granted and
shall mean:
(i) the average as of the close of business on that date
of the high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common Stock is
then traded on a national securities exchange;
(ii) the last reported sale price as of the close of
business on that date of the Common Stock on the Nasdaq National Market System
(the "NASDAQ/NMS"), if the Common Stock is not then traded on a national
securities exchange but is then traded on the NASDAQ/NMS; or
(iii) the closing bid price or average of bid prices last
quoted on that date by an established quotation service, if the Common Stock is
not reported on the NASDAQ/NMS.
However, if the Common Stock is not publicly traded
at the time an Option is granted under the Plan, "fair market value" shall be
deemed to be the fair value of the Common Stock as determined by the Committee
after taking into consideration all factors that it deems appropriate,
including, without limitation, recent sale and offer prices on the Common Stock
in private transactions negotiated at arm's length, but determined without
regard to any restriction other than a restriction that, by its terms, will
never lapse.
7. Option Duration. Subject to earlier termination as provided in
Sections 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than:
(a) 10 years from the date of grant in the case of NSOs;
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(b) 10 years from the date of grant in the case of ISOs
generally; and
(c) 5 years from the date of grant in the case of ISOs granted
to an employee owning stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Related Corporation.
Subject to earlier termination as provided in Sections 9 and
10, the term of each ISO shall be the term set forth in the original instrument
granting such ISO, except with respect to any part of such ISO that is converted
into an NSO pursuant to Section 17.
8. Exercise of Options. Subject to the provisions of Section 9 through
Section 12 of the Plan, each Option granted under the Plan shall be exercisable
as follows:
(a) the Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the
Committee may specify;
(b) once an installment becomes exercisable it shall remain
exercisable until expiration or termination of the Option, unless otherwise
specified by the Committee;
(c) each Option or installment may be exercised at any time or
from time to time, in whole or in part, for up to the total number of shares
with respect to which it is then exercisable; and
(d) the Committee shall have the right to accelerate the date
of exercise of any installment of any Option, provided that the Committee shall
not accelerate the exercise date of any installment of any ISO granted to any
employee (and not previously converted into an NSO pursuant to Section 17) if
such acceleration would violate the annual vesting limitation contained in
Section 422 of the Code, as described in Section 6(c).
9. Termination of Employment. If an ISO optionee ceases to be employed
by the Company and all Related Corporations other than by reason of death or
disability as defined in Section 10, unless otherwise specified in the
instrument granting such ISO, the ISO optionee shall have the continued right to
exercise any ISO held by him or her, to the extent of the number of shares with
respect to which he or she could have exercised it on the date of termination,
until the ISO's specified expiration date; provided, however, in the event the
ISO optionee exercises any ISO after the date that is three months following the
date of termination of employment, such ISO will automatically be converted into
an NSO
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<PAGE>
subject to the terms of the Plan. Employment shall be considered as continuing
uninterrupted during any bona fide leave of absence (such as those attributable
to illness, military obligations or governmental service) provided that the
period of such leave does not exceed 90 days or, if longer, any period during
which such optionee's right to reemployment with the Company is guaranteed by
statute or by contract. A bona fide leave of absence with the written approval
of the Company shall not be considered an interruption of employment under the
Plan, provided that such written approval contractually obligates the Company or
any Related Corporation to continue the employment of the optionee after the
approved period of absence. ISOs granted under the Plan shall not be affected by
any change of employment within or among the Company and Related Corporations,
so long as the optionee continues to be an employee of the Company or any
Related Corporation.
NOTHING IN THE PLAN SHALL BE DEEMED TO GIVE ANY GRANTEE OF ANY STOCK
RIGHT THE RIGHT TO BE RETAINED IN EMPLOYMENT OR OTHER SERVICE BY THE COMPANY OR
ANY RELATED CORPORATION FOR ANY PERIOD OF TIME.
10. Death; Disability.
(a) If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of death, any ISO of his or hers may be
exercised to the extent of the number of shares with respect to which he or she
could have exercised it on the date of death, by his or her estate, personal
representative or beneficiary who has acquired the ISO by will or by the laws of
descent and distribution, at any time prior to the ISO's specified expiration
date, unless otherwise specified in the instrument granting such ISO.
(b) If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of disability, he or she shall continue
to have the right to exercise any ISO held by him or her on the date of
termination until the ISO's specified expiration date, unless otherwise
specified in the instrument granting such ISO; provided, however, in the event
the optionee exercises after the date that is one year following the date of
termination, such ISO will automatically be converted into a NSO subject to the
terms of the Plan. For the purposes of the Plan, the term "disability" shall
mean "permanent and total disability" as defined in Section 22(e)(3) of the
Code.
11. Assignability. No Stock Right shall be assignable or transferable
by the grantee except with the consent of the Committee, by will or by the laws
of descent and distribution, and during the lifetime of the grantee each Stock
Right shall be
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exercisable only by him or her, except with the prior consent of the Committee;
provided that no such assignment shall be made in the case of an ISO.
12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in Sections 6 through 11 hereof and may contain such other
provisions as the Committee deems advisable that are not inconsistent with the
Plan, including restrictions (or other conditions deemed by the Committee to be
in the best interests of the Company) applicable to the exercise of Options or
to shares of Common Stock issuable upon exercise of Options. In granting any
NSO, the Committee may specify that such NSO shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may
from time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.
13. Adjustments. Upon the occurrence of any of the following events,
the rights of a recipient of a Stock Right granted hereunder shall be adjusted
as hereinafter provided, unless otherwise provided in the written agreement
between the recipient and the Company relating to such Stock Right:
(a) If the shares of Common Stock shall be subdivided or
combined into a greater or smaller number of shares or if the Company shall
issue shares of Common Stock as a stock dividend on its outstanding Common
Stock, the number of shares of Common Stock deliverable upon the exercise of
outstanding Stock Rights shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
(if any) per share to reflect such subdivision, combination or stock dividend.
(b) If the Company is to be consolidated with or acquired by
another entity in a merger, sale of all or substantially all of the Company's
assets or otherwise (an "Acquisition"), unless otherwise provided by the
Committee, in its sole discretion, all conditions to the exercisability of
Options and rights of the Company to repurchase or restrict the sale of shares
of Common Stock issued pursuant to exercise of a Stock Right shall lapse and the
Committee or the board of directors of any entity assuming the obligations of
the Company hereunder (the "Successor Board") shall, as to outstanding Options,
make
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appropriate provision for the continuation of such Options by substituting on an
equitable basis for the shares then subject to such Options the consideration
payable with respect to the outstanding shares of Common Stock in connection
with the Acquisition.
(c) In the event of a recapitalization or reorganization of
the Company (other than a transaction described in subsection (b) above)
pursuant to which securities of the Company or of another corporation are issued
with respect to the outstanding shares of Common Stock, an optionee upon
exercising an Option shall be entitled to receive for the purchase price paid
upon such exercise the securities he or she would have received if he or she had
exercised the Option immediately prior to such recapitalization or
reorganization.
(d) Notwithstanding the foregoing, any adjustments made
pursuant to subsections (a), (b) or (c) with respect to ISOs shall be made only
after the Committee determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section 424 of the Code)
or would cause any adverse tax consequences for the holders of such ISOs. If the
Committee determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs, it may refrain from making such
adjustments as to all or some of such ISOs.
(e) In the event of the proposed dissolution or liquidation of
the Company, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as shall be determined by the Committee.
(f) Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares subject to Options. No
adjustments shall be made for dividends paid in cash or in property other than
Common Stock of the Company.
(g) No fractional shares shall be issued under the Plan and
any optionee who would otherwise be entitled to receive a fraction of a share
upon exercise of an Option shall receive from the Company cash in lieu of such
fractional shares in an amount equal to the fair market value of such fractional
shares, as determined in the sole discretion of the Committee.
(h) Upon the happening of any of the foregoing events
described in subsections (a), (b) or (c) above, the class and aggregate number
of shares set forth in Section 4 hereof that are
9
<PAGE>
subject to Stock Rights that previously have been or subsequently may be granted
under the Plan shall also be appropriately adjusted to reflect the events
described. The Committee or the Successor Board shall determine the specific
adjustments to be made under this Section 13 and, subject to Section 2, its
determination shall be conclusive.
14. Means of Exercising Stock Rights.
(a) A Stock Right (or any part or installment thereof) shall
be exercised by giving written notice to the Company at its principal office
address. Such notice shall identify the Stock Right being exercised and specify
the number of shares as to which such Stock Right is being exercised,
accompanied by full payment of the exercise price therefor either (a) in United
States dollars in cash or by check, (b) at the discretion of the Committee,
through the delivery of already-owned shares of Common Stock having a fair
market value equal as of the date of the exercise to the cash exercise price of
the Stock Right, or (c) at the discretion of the Committee, by delivery of the
grantee's personal recourse note bearing interest payable not less than annually
at no less than 100% of the lowest applicable Federal rate, as defined in
Section 1274(d) of the Code, or (d) at the discretion of the Committee, by any
combination of (a), (b) and (c). If the Committee exercises its discretion to
permit payment of the exercise price of an ISO by means of the methods set forth
in clauses (b), (c) or (d) of the preceding sentence, such discretion shall be
exercised in writing at the time of the grant of the ISO in question. The holder
of a Stock Right shall not have the rights of a shareholder with respect to the
shares covered by the Stock Right until the date of issuance of a stock
certificate for such shares. Except as expressly provided above in Section 13
with respect to changes in capitalization and stock dividends, no adjustment
shall be made for dividends or similar rights for which the record date is
before the date such stock certificate is issued.
(b) All Stock Rights granted to officers and directors of the
Company within the meaning of Section 16 of the Exchange Act, or to beneficial
owners, directly or indirectly, of more than ten percent (10%) of any class of
any equity security of the Company which is registered pursuant to Section 12 of
the Exchange Act (such officers, directors and beneficial owners hereinafter
referred to as "Insiders"), shall be held by such Insiders for a period of at
least six (6) months from the date of grant prior to the disposition thereof. In
the case of Options and Purchase Rights, at least six months must elapse from
the date of the grant of the Option or Purchase Right to the date of the
disposition of such Option or Purchase Right (other than upon exercise thereof)
or underlying Common Stock of the Company.
10
<PAGE>
15. Stock Appreciation Rights; Surrender of Options. The Committee may,
in its sole and absolute discretion and subject to such terms and conditions as
it deems appropriate, accept the surrender by an optionee of an Option granted
to him under the Plan and authorize payment in consideration therefor of an
amount equal to the difference between the purchase price payable for the shares
of Common Stock under the instrument granting the Option and the fair market
value of the shares subject to the Option (determined as of the date of such
surrender of the Option). Such payment shall be made in shares of Common Stock
valued at fair market value on the date of such surrender, or in cash, or partly
in such shares of Common Stock and partly in cash as the Committee shall
determine. The surrender shall be permitted only if the Committee determines
that such surrender is consistent with the purpose set forth in Section 1, and
only to the extent that the Option is exercisable under Section 8 on the date of
surrender. In no event shall an optionee surrender his Option under this Section
if the fair market value of the shares on the date of such surrender is less
than the purchase price payable for the shares of Common Stock subject to the
Option. Any ISO surrendered pursuant to the provisions of this Section 15 shall
be deemed to have been converted into a NSO immediately prior to such surrender.
Notwithstanding the foregoing, if on the date of surrender the optionee is an
Insider, then any election to surrender an Option shall not be permitted unless
(a) such surrender shall occur after the date six (6) months from the date such
Option was granted, (b) the Insider shall have made an irrevocable election to
surrender the Option pursuant to this paragraph 15 at least six (6) months prior
to the date the Option is surrendered or (c) the surrender of the Option
hereunder by the Insider is otherwise exempt pursuant to the regulations
promulgated under Section 16 of the Exchange Act.
16. Term and Amendment of Plan. This Plan was adopted by the Board on
February 3, 1994 (the "Effective Date"), and was approved by the shareholders of
the Company in September 1994. The Plan shall expire 10 years after the
Effective Date (except as to Stock Rights outstanding on that date). Subject to
the provisions of Section 5 above, Stock Rights may be granted under the Plan
prior to the date of shareholder approval of the Plan. The Board may terminate
or amend the Plan in any respect at any time, except that without the approval
of the shareholders obtained within 12 months before or after the Board adopts a
resolution authorizing any of the following actions,
(a) the total number of shares that may be issued under the
Plan may not be increased (except by adjustment pursuant to Section 13);
11
<PAGE>
(b) the provisions of Section 3 regarding eligibility for
grants of ISOs may not be modified;
(c) the provisions of Section 6(b) regarding the exercise
price at which shares may be offered pursuant to ISOs may not be modified
(except by adjustment pursuant to Section 13); and
(d) the expiration date of the Plan may not be extended.
Except as provided in Section 13(b) and the second sentence of this
Section 16, in no event may action of the Board or shareholders alter or impair
the rights of a grantee, without his or her consent, under any Stock Right
previously granted.
17. Conversion of ISOs into NSOs; Termination of ISOs. The Committee,
at the request of any optionee, may in its discretion take such actions as may
be necessary to convert such optionee's ISOs (or any installments or portions of
installments thereof) that have not been exercised on the date of conversion
into NSOs at any time prior to the expiration of such ISOs. Such actions may
include, but not be limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such Options. At the time of
such conversion, the Committee (with the consent of the optionee) may impose
such conditions on the exercise of the resulting NSOs as the Committee in its
discretion may determine, provided that such conditions shall not be
inconsistent with the Plan. Nothing in the Plan shall be deemed to give any
optionee the right to have such optionee's ISOs converted into NSOs, and no such
conversion shall occur until and unless the Committee takes appropriate action.
The Committee, with the consent of the optionee, may also terminate any portion
of any ISO that has not been exercised at the time of such termination.
18. Application of Funds. The proceeds received by the Company from the
sale of shares pursuant to Stock Rights shall be used for general corporate
purposes.
19. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Common Stock under the Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.
20. Withholding of Additional Income Taxes.
(a) Upon the exercise of an NSO, or the grant of a Stock Bonus
or Purchase Right for less than the fair market value of the Common Stock, the
making of a Disqualifying Disposition (as defined in Section 21), the vesting of
restricted Common Stock
12
<PAGE>
acquired on the exercise of a Stock Right hereunder or the surrender of an
Option pursuant to Section 15, the Company, in accordance with Section 3402(a)
of the Code and any applicable state statute or regulation, may require the
optionee, Stock Bonus recipient or purchaser to pay to the Company additional
withholding taxes in respect of the amount that is considered compensation
includable in such person's gross income. With respect to (a) the exercise of an
Option, (b) the grant of a Stock Bonus, (c) the grant of a Purchase Right of
Common Stock for less than its fair market value, (d) the vesting of restricted
Common Stock acquired by exercising a Stock Right, or (e) the acceptance of a
surrender of an Option, the Committee in its discretion may condition such event
on the payment by the optionee, Stock Bonus recipient or purchaser of any such
additional withholding taxes.
(b) At the sole and absolute discretion of the Committee, the
holder of Stock Rights may pay all or any part of the total estimated federal
and state income tax liability arising out of the exercise or receipt of such
Stock Rights, the making of a Disqualifying Disposition, or the vesting of
restricted Common Stock acquired on the exercise of a Stock Right hereunder
(each of the foregoing, a "Tax Event") by tendering already-owned shares of
Common Stock or (except in the case of a Disqualifying Disposition) by directing
the Company to withhold shares of Common Stock otherwise to be transferred to
the holder of such Stock Rights as a result of the exercise or receipt thereof
in an amount equal to the estimated federal and state income tax liability
arising out of such event. In such event, the holder of Stock Rights must,
however, notify the Committee of his or her desire to pay all or any part of the
total estimated federal and state income tax liability arising out of a Tax
Event by tendering already-owned shares of Common Stock or having shares of
Common Stock withheld prior to the date that the amount of federal or state
income tax to be withheld is to be determined. If the holder of Stock Rights is
an Insider, an election by an Insider to pay all or any part of the total
estimated federal and state income tax liability arising out of any Tax Event
(other than a Disqualifying Disposition) by having shares of Common Stock
withheld (i) shall be made at least six (6) months prior to the date of the Tax
Event and shall be irrevocable (except that an Insider can revoke such election
upon six months' notice to the Committee by making a written irrevocable
election to revoke the prior election); or (ii) shall be made in accordance with
paragraph 15 of the Plan or as otherwise may be permitted pursuant to the
regulations promulgated under Section 16 of the Exchange Act. For purposes of
this paragraph 20, shares of Common Stock shall be valued at their fair market
value on the date that the amount of the tax withholdings is to be determined.
13
<PAGE>
21. Notice to Company of Disqualifying Disposition. Each employee who
receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition (as defined below) of any Common
Stock acquired pursuant to the exercise of an ISO. A "Disqualifying Disposition"
is any disposition (including any sale) of such Common Stock before either (a)
two years after the date the employee was granted the ISO, or (b) one year after
the date the employee acquired Common Stock by exercising the ISO. If the
employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.
22. Governing Law; Construction. The validity and construction of the
Plan and the instruments evidencing Stock Rights shall be governed by the laws
of the State of North Carolina. In construing this Plan, the singular shall
include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.
23. Lock-up Agreement. Each recipient of securities hereunder agrees,
in connection with the first registration with the United States Securities and
Exchange Commission under the Securities Act of 1933, as amended, of the public
sale of the Company's Common Stock, upon request of the Company or any
underwriters managing such offering, not to sell, make any short sale of, loan,
grant any option for the purchase of or otherwise dispose of any securities of
the Company (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed 180 days) from the effective date of such
registration as the Company or the underwriters, as the case may be, shall
specify. Each such recipient agrees that the Company may instruct its transfer
agent to place stop-transfer notations in its records to enforce this Section
23.
14
<PAGE>
<PAGE>
CARDIOVASCULAR DIAGNOSTICS, INC.
1995 STOCK PLAN
As amended by the Board of Directors on
February 18, 1997
1. Purpose. This 1995 Stock Plan (the "Plan") is intended to provide
incentives:
(a) to employees of Cardiovascular Diagnostics, Inc. (the
"Company"), or its parent (if any) or any of its present or future subsidiaries
(collectively, "Related Corporations"), by providing them with opportunities to
purchase Common Stock (as defined below) of the Company pursuant to options
granted hereunder that qualify as "incentive stock options" ("ISOs") under
Section 422 of the Internal Revenue Code of 1986, as amended, or any successor
statute (the "Code");
(b) to directors (subject to Section 24 hereof), employees and
consultants of the Company and Related Corporations by providing them with
opportunities to purchase Common Stock (as defined below) of the Company
pursuant to options granted hereunder that do not qualify as ISOs (nonstatutory
stock options, or "NSOs");
(c) to employees and consultants of the Company and Related
Corporations by providing them with bonus awards of Common Stock (as defined
below) of the Company ("Stock Bonuses"); and
(d) to employees and consultants of the Company and Related
Corporations by providing them with opportunities to make direct purchases of
Common Stock (as defined below) of the Company ("Purchase Rights").
Both ISOs and NSOs are referred to hereafter individually as "Options",
and Options, Stock Bonuses and Purchase Rights are referred to hereafter
collectively as "Stock Rights". As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation",
respectively, as those terms are defined in Section 424 of the Code.
2. Administration of the Plan.
(a) The Plan shall be administered by the Board of Directors
of the Company (the "Board"); provided, however, in the event the Company (or
any successor thereto that maintains this Plan) registers equity securities
under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Plan shall thereafter be administered by the Board only if
<PAGE>
each member of the Board is a "disinterested person" as defined below.
Notwithstanding the preceding sentence, the Board may appoint a committee (the
"Committee") of two or more of its members to administer this Plan, provided,
however, in the event the Company (or any successor thereto that maintains this
Plan) registers equity securities under Section 12 of the Exchange Act, then
each member of the Committee shall be a "disinterested person" as defined below.
A "disinterested person" is a director who has not received, during the one year
period (or such shorter period of time that the Company's equity securities have
been registered under Section 12 of the Exchange Act) prior to service as an
administrator of the Plan, any benefits pursuant to the Plan, or any other stock
award, stock purchase, stock option or stock appreciation rights under any other
plan sponsored by the Company or any of the Related Corporations entitling
participants to acquire stock, stock options, stock appreciation rights or other
equity securities of the Company or any of its Related Corporations.
Notwithstanding the preceding sentence, a director shall not be disqualified
from status as a "disinterested person" solely by reason of (i) his or her
participation in a formula plan satisfying the requirements of Rule
16b-3(c)(2)(ii) promulgated under the Exchange Act, (ii) his or her
participation in an on-going securities acquisition plan meeting the conditions
of Rule 16b-3(d)(2)(i) promulgated under the Exchange Act, or (iii) his or her
election to receive any annual director's fee in either cash or an equivalent
amount of the Company's securities, or partly in both.
(c) Subject to ratification of the grant or authorization of
each Stock Right by the Board (if so required by applicable law), and subject to
the terms of the Plan, the Committee, if so appointed, shall have the authority
to:
(i) determine the employees of the Company and Related
Corporations (from among the class of employees eligible under Section 3 to
receive ISOs) to whom ISOs may be granted, and to determine (from among the
class of individuals and entities eligible under Section 3 to receive NSOs,
Stock Bonuses and Purchase Rights, and subject to Section 24 hereof) to whom
NSOs, Stock Bonuses and Purchase Rights may be granted;
(ii) determine the time or times at which Options, Stock
Bonuses or Purchase Rights may be granted, subject to Section 24 hereof;
(iii) determine the option price of shares subject to each
Option, which price shall not be less than the minimum price specified in
Section 6 or 24 hereof, as appropriate, and the purchase price of shares subject
to each Purchase Right;
(iv) determine whether each Option granted shall be an ISO
or NSO, subject to Section 24 hereof;
<PAGE>
(v) determine (subject to Section 7) the time or times
when each Option shall become exercisable and the duration of the exercise
period, subject to Section 24 hereof;
(vi) determine whether restrictions such as repurchase
options are to be imposed on shares subject to Options, Stock Bonuses and
Purchase Rights and the nature of such restrictions, if any; and
(vii) interpret the Plan and prescribe and rescind rules
and regulations relating to it.
If the Committee determines to issue a NSO, it shall take
whatever actions it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that such Option is not treated as
an ISO. The interpretation and construction by the Committee of any provisions
of the Plan or of any Stock Right granted under it shall be final unless
otherwise determined by the Board. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock Right
granted under it.
(c) The Committee may select one of its members as its
chairman, and shall hold meetings at such time and places as it may determine.
Acts by a majority of the Committee, or acts reduced to or approved in writing
by a majority of the members of the Committee, shall be the valid acts of the
Committee. All references in this Plan to the Committee shall mean the Board if
no Committee has been appointed. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members thereof and thereafter directly
administer the Plan.
3. Eligible Employees and Others. ISOs may be granted to any employee
of the Company or any Related Corporation. Those officers of the Company who are
not employees may not be granted ISOs under the Plan. NSOs, Stock Bonuses and
Purchase Rights may be granted to any director, employee or consultant of the
Company or any Related Corporation; provided, however, that, except as set forth
in Section 24 hereof, no director of the Company who is not also an employee of
the Company shall be eligible to receive any Stock Right under the Plan after
the time when the Company shall have registered its equity securities under
Section 12 of the Exchange Act. Granting of any Stock Right to any individual or
entity shall neither entitle that individual or entity to, nor disqualify him or
her from, participation in any other grant of Stock Rights.
<PAGE>
4. Stock. The stock subject to Stock Rights shall be authorized but
unissued shares of class A common stock of the Company, par value $.001 per
share, or such shares of the Company's capital stock into which such class of
shares may be converted pursuant to any reorganization, recapitalization,
merger, consolidation or the like (the "Common Stock"), or shares of Common
Stock reacquired by the Company in any manner. The aggregate number of shares
that may be issued pursuant to the Plan is 488,150 shares, subject to adjustment
as provided herein. Any such shares may be issued as ISOs, NSOs or Stock
Bonuses, or to persons or entities making purchases pursuant to Purchase Rights,
so long as the number of shares so issued does not exceed such aggregate number,
as adjusted. If any Option granted under the Plan shall expire or terminate for
any reason without having been exercised in full or shall cease for any reason
to be exercisable in whole or in part, or if the Company shall reacquire any
shares issued pursuant to Stock Rights, the unpurchased shares subject to such
Options and any shares so reacquired by the Company shall again be available for
grants of Stock Rights under the Plan.
5. Granting of Stock Rights. Stock Rights may be granted under the Plan
at any time after the Effective Date, as set forth in Section 16, and prior to
10 years thereafter. The date of grant of a Stock Right under the Plan will be
the date specified by the Committee at the time it grants the Stock Right;
provided, however, that such date shall not be prior to the date on which the
Committee acts. The Committee shall have the right, with the consent of the
optionee, to convert an ISO granted under the Plan to an NSO pursuant to Section
17.
6. Minimum Price; ISO Limitations.
(a) The price per share specified in the agreement relating to
each NSO, Stock Bonus or Purchase Right granted under the Plan shall be
established by the Committee, taking into account any noncash consideration to
be received by the Company from the recipient of Stock Rights and subject to
Section 234 hereof.
(b) The price per share specified in the agreement relating to
each ISO granted under the Plan shall not be less than the fair market value per
share of Common Stock on the date of such grant. In the case of an ISO to be
granted to an employee owning stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Related
Corporation, the price per share specified in the agreement relating to such ISO
shall not be less than 110% of the fair market value per share of Common Stock
on the date of the grant.
(c) In no event shall the aggregate fair market value
(determined at the time an ISO is granted) of Common Stock for which ISOs
granted to any employee are exercisable for the first
<PAGE>
time by such employee during any calendar year (under all stock option plans of
the Company and any Related Corporation) exceed $100,000; provided that this
Section shall have no force or effect to the extent that its inclusion in the
Plan is not necessary for Options issued as ISOs to qualify as ISOs pursuant to
Section 422 of the Code.
(d) If, at the time an Option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the time such Option is granted and
shall mean:
(i) the average as of the close of business on that date
of the high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common Stock is
then traded on a national securities exchange;
(ii) the last reported sale price as of the close of
business on that date of the Common Stock on the Nasdaq National Market System
(the "NASDAQ/NMS"), if the Common Stock is not then traded on a national
securities exchange but is then traded on the NASDAQ/NMS; or
(iii) the closing bid price or average of bid prices last
quoted on that date by an established quotation service, if the Common Stock is
not reported on the NASDAQ/NMS.
However, if the Common Stock is not publicly traded
at the time an Option is granted under the Plan, "fair market value" shall be
deemed to be the fair value of the Common Stock as determined by the Committee
after taking into consideration all factors that it deems appropriate,
including, without limitation, recent sale and offer prices on the Common Stock
in private transactions negotiated at arm's length, but determined without
regard to any restriction other than a restriction that, by its terms, will
never lapse.
7. Option Duration. Subject to earlier termination as provided in
Sections 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than:
(a) 10 years from the date of grant in the case of NSOs;
(b) 10 years from the date of grant in the case of ISOs
generally; and
(c) 5 years from the date of grant in the case of ISOs granted
to an employee owning stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Related Corporation.
<PAGE>
Subject to earlier termination as provided in Sections 9 and
10, the term of each ISO shall be the term set forth in the original instrument
granting such ISO, except with respect to any part of such ISO that is converted
into an NSO pursuant to Section 17.
8. Exercise of Options. Subject to the provisions of Section 9 through
Section 12 of the Plan, each Option granted under the Plan shall be exercisable
as follows:
(a) the Option shall either be fully exercisable on the date
of grant or shall become exercisable thereafter in such installments as the
Committee may specify;
(b) once an installment becomes exercisable it shall remain
exercisable until expiration or termination of the Option, unless otherwise
specified by the Committee;
(c) each Option or installment may be exercised at any time or
from time to time, in whole or in part, for up to the total number of shares
with respect to which it is then exercisable; and
(d) the Committee shall have the right to accelerate the date
of exercise of any installment of any Option, provided that the Committee shall
not accelerate the exercise date of any installment of any ISO granted to any
employee (and not previously converted into an NSO pursuant to Section 17) if
such acceleration would violate the annual vesting limitation contained in
Section 422 of the Code, as described in Section 6(c).
9. Termination of Employment. If an ISO optionee ceases to be employed
by the Company and all Related Corporations other than by reason of death or
disability as defined in Section 10, unless otherwise specified in the
instrument granting such ISO, the ISO optionee shall have the continued right to
exercise any ISO held by him or her, to the extent of the number of shares with
respect to which he or she could have exercised it on the date of termination,
until the ISO's specified expiration date; provided, however, in the event the
ISO optionee exercises any ISO after the date that is three months following the
date of termination of employment, such ISO will automatically be converted into
an NSO subject to the terms of the Plan. Employment shall be considered as
continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment with the Company is
guaranteed by statute or by contract. A bona fide leave of absence with the
written approval of the Company shall not be considered an interruption of
employment under the Plan, provided that such written approval contractually
obligates the Company or any Related Corporation to
<PAGE>
continue the employment of the optionee after the approved period of absence.
ISOs granted under the Plan shall not be affected by any change of employment
within or among the Company and Related Corporations, so long as the optionee
continues to be an employee of the Company or any Related Corporation.
NOTHING IN THE PLAN SHALL BE DEEMED TO GIVE ANY GRANTEE OF ANY STOCK
RIGHT THE RIGHT TO BE RETAINED IN EMPLOYMENT OR OTHER SERVICE BY THE COMPANY OR
ANY RELATED CORPORATION FOR ANY PERIOD OF TIME.
10. Death; Disability.
(a) If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of death, any ISO of his or hers may be
exercised to the extent of the number of shares with respect to which he or she
could have exercised it on the date of death, by his or her estate, personal
representative or beneficiary who has acquired the ISO by will or by the laws of
descent and distribution, at any time prior to the ISO's specified expiration
date, unless otherwise specified in the instrument granting such ISO.
(b) If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of disability, he or she shall continue
to have the right to exercise any ISO held by him or her on the date of
termination until the ISO's specified expiration date, unless otherwise
specified in the instrument granting such ISO; provided, however, in the event
the optionee exercises after the date that is one year following the date of
termination, such ISO will automatically be converted into a NSO subject to the
terms of the Plan. For the purposes of the Plan, the term "disability" shall
mean "permanent and total disability" as defined in Section 22(e)(3) of the
Code.
11. Assignability. No Stock Right shall be assignable or transferable
by the grantee except with the consent of the Committee, by will or by the laws
of descent and distribution, and during the lifetime of the grantee each Stock
Right shall be exercisable only by him or her, except with the prior consent of
the Committee; provided that no such assignment shall be made in the case of an
ISO.
12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in Sections 6 through 11 hereof and may contain such other
provisions as the Committee deems advisable that are not inconsistent with the
Plan, including restrictions (or other conditions deemed by the Committee to be
in the best interests of the Company) applicable to the exercise of Options or
to shares of Common Stock issuable upon exercise of Options. In granting any
NSO, the Committee may specify that such NSO shall be subject
<PAGE>
to the restrictions set forth herein with respect to ISOs, or to such other
termination and cancellation provisions as the Committee may determine. The
Committee may from time to time confer authority and responsibility on one or
more of its own members and/or one or more officers of the Company to execute
and deliver such instruments. The proper officers of the Company are authorized
and directed to take any and all action necessary or advisable from time to time
to carry out the terms of such instruments.
13. Adjustments. Upon the occurrence of any of the following events,
the rights of a recipient of a Stock Right granted hereunder shall be adjusted
as hereinafter provided, unless otherwise provided in the written agreement
between the recipient and the Company relating to such Stock Right:
(a) If the shares of Common Stock shall be subdivided or
combined into a greater or smaller number of shares or if the Company shall
issue shares of Common Stock as a stock dividend on its outstanding Common
Stock, the number of shares of Common Stock deliverable upon the exercise of
outstanding Stock Rights shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
(if any) per share to reflect such subdivision, combination or stock dividend.
(b) If the Company is to be consolidated with or acquired by
another entity in a merger, sale of all or substantially all of the Company's
assets or otherwise (an "Acquisition"), unless otherwise provided by the
Committee, in its sole discretion, all conditions to the exercisability of
Options and rights of the Company to repurchase or restrict the sale of shares
of Common Stock issued pursuant to exercise of a Stock Right shall lapse and the
Committee or the board of directors of any entity assuming the obligations of
the Company hereunder (the "Successor Board") shall, as to outstanding Options,
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the shares then subject to such Options the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition.
(c) In the event of a recapitalization or reorganization of
the Company (other than a transaction described in subsection (b) above)
pursuant to which securities of the Company or of another corporation are issued
with respect to the outstanding shares of Common Stock, an optionee upon
exercising an Option shall be entitled to receive for the purchase price paid
upon such exercise the securities he or she would have received if he or she had
exercised the Option immediately prior to such recapitalization or
reorganization.
(d) Notwithstanding the foregoing, any adjustments made
pursuant to subsections (a), (b) or (c) with respect to ISOs
<PAGE>
shall be made only after the Committee determines whether such adjustments
would constitute a "modification" of such ISOs (as that term is defined in
Section 424 of the Code) or would cause any adverse tax consequences for the
holders of such ISOs. If the Committee determines that such adjustments made
with respect to ISOs would constitute a modification of such ISOs, it may
refrain from making such adjustments as to all or some of such ISOs.
(e) In the event of the proposed dissolution or liquidation of
the Company, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as shall be determined by the Committee.
(f) Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares subject to Options. No
adjustments shall be made for dividends paid in cash or in property other than
Common Stock of the Company.
(g) No fractional shares shall be issued under the Plan and
any optionee who would otherwise be entitled to receive a fraction of a share
upon exercise of an Option shall receive from the Company cash in lieu of such
fractional shares in an amount equal to the fair market value of such fractional
shares, as determined in the sole discretion of the Committee.
(h) Upon the happening of any of the foregoing events
described in subsections (a), (b) or (c) above, the class and aggregate number
of shares set forth in Section 4 hereof that are subject to Stock Rights that
previously have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described. The Committee or the
Successor Board shall determine the specific adjustments to be made under this
Section 13 and, subject to Section 2, its determination shall be conclusive.
14. Means of Exercising Stock Rights.
(a) A Stock Right (or any part or installment thereof) shall
be exercised by giving written notice to the Company at its principal office
address. Such notice shall identify the Stock Right being exercised and specify
the number of shares as to which such Stock Right is being exercised,
accompanied by full payment of the exercise price therefor either (a) in United
States dollars in cash or by check, (b) at the discretion of the Committee,
through the delivery of already-owned shares of Common Stock having a fair
market value equal as of the date of the exercise to the cash exercise price of
the Stock Right, or (c) at the discretion of the Committee, by delivery of the
grantee's personal recourse note bearing interest payable not less than
<PAGE>
annually at no less than 100% of the lowest applicable Federal rate, as defined
in Section 1274(d) of the Code, or (d) at the discretion of the Committee, by
any combination of (a), (b) and (c). If the Committee exercises its discretion
to permit payment of the exercise price of an ISO by means of the methods set
forth in clauses (b), (c) or (d) of the preceding sentence, such discretion
shall be exercised in writing at the time of the grant of the ISO in question.
The holder of a Stock Right shall not have the rights of a shareholder with
respect to the shares covered by the Stock Right until the date of issuance of a
stock certificate for such shares. Except as expressly provided above in Section
13 with respect to changes in capitalization and stock dividends, no adjustment
shall be made for dividends or similar rights for which the record date is
before the date such stock certificate is issued.
(b) All Stock Rights granted to officers and directors of the
Company within the meaning of Section 16 of the Exchange Act, or to beneficial
owners, directly or indirectly, of more than ten percent (10%) of any class of
any equity security of the Company which is registered pursuant to Section 12 of
the Exchange Act (such officers, directors and beneficial owners hereinafter
referred to as "Insiders"), shall be held by such Insiders for a period of at
least six (6) months from the date of grant prior to the disposition thereof. In
the case of Options and Purchase Rights, at least six months must elapse from
the date of the grant of the Option or Purchase Right to the date of the
disposition of such Option or Purchase Right (other than upon exercise thereof)
or underlying Common Stock of the Company.
15. Stock Appreciation Rights; Surrender of Options. The Committee may,
in its sole and absolute discretion and subject to such terms and conditions as
it deems appropriate, accept the surrender by an optionee of an Option granted
to him under the Plan and authorize payment in consideration therefor of an
amount equal to the difference between the purchase price payable for the shares
of Common Stock under the instrument granting the Option and the fair market
value of the shares subject to the Option (determined as of the date of such
surrender of the Option). Such payment shall be made in shares of Common Stock
valued at fair market value on the date of such surrender, or in cash, or partly
in such shares of Common Stock and partly in cash as the Committee shall
determine. The surrender shall be permitted only if the Committee determines
that such surrender is consistent with the purpose set forth in Section 1, and
only to the extent that the Option is exercisable under Section 8 on the date of
surrender. In no event shall an optionee surrender his Option under this Section
if the fair market value of the shares on the date of such surrender is less
than the purchase price payable for the shares of Common Stock subject to the
Option. Any ISO surrendered pursuant to the provisions of this Section 15 shall
be deemed to have been converted into a NSO immediately prior to such surrender.
Notwithstanding the foregoing, if on the date of surrender the optionee is an
Insider, then any
<PAGE>
election to surrender an Option shall not be permitted unless (a) such surrender
shall occur after the date six (6) months from the date such Option was granted,
(b) the Insider shall have made an irrevocable election to surrender the Option
pursuant to this paragraph 15 at least six (6) months prior to the date the
Option is surrendered or (c) the surrender of the Option hereunder by the
Insider is otherwise exempt pursuant to the regulations promulgated under
Section 16 of the Exchange Act.
16. Term and Amendment of Plan. This Plan was adopted by the Board on
September 12, 1995 (the "Effective Date"), subject (with respect to the
validation of ISOs granted under the Plan) to approval of the Plan by the
shareholders of the Company. If the approval of shareholders is not obtained by
one year after the Effective Date, any grants of ISOs under the Plan made prior
to that date will be rescinded. The Plan shall expire 10 years after the
Effective Date (except as to Stock Rights outstanding on that date). Subject to
the provisions of Section 5 above, Stock Rights may be granted under the Plan
prior to the date of shareholder approval of the Plan. The Board may terminate
or amend the Plan in any respect at any time, except that without the approval
of the shareholders obtained within 12 months before or after the Board adopts a
resolution authorizing any of the following actions,
(a) the total number of shares that may be issued under the
Plan may not be increased (except by adjustment pursuant to Section 13);
(b) the provisions of Section 3 regarding eligibility for
grants of ISOs may not be modified;
(c) the provisions of Section 6(b) regarding the exercise
price at which shares may be offered pursuant to ISOs may not be modified
(except by adjustment pursuant to Section 13); and
(d) the expiration date of the Plan may not be extended.
Except as provided in Section 13(b) and the second sentence of this
Section 16, in no event may action of the Board or shareholders alter or impair
the rights of a grantee, without his or her consent, under any Stock Right
previously granted.
17. Conversion of ISOs into NSOs; Termination of ISOs. The Committee,
at the request of any optionee, may in its discretion take such actions as may
be necessary to convert such optionee's ISOs (or any installments or portions of
installments thereof) that have not been exercised on the date of conversion
into NSOs at any time prior to the expiration of such ISOs. Such actions may
include, but not be limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such Options. At the time of
such conversion, the Committee (with the consent of the optionee) may impose
such conditions on
<PAGE>
the exercise of the resulting NSOs as the Committee in its discretion may
determine, provided that such conditions shall not be inconsistent with the
Plan. Nothing in the Plan shall be deemed to give any optionee the right to have
such optionee's ISOs converted into NSOs, and no such conversion shall occur
until and unless the Committee takes appropriate action. The Committee, with the
consent of the optionee, may also terminate any portion of any ISO that has not
been exercised at the time of such termination.
18. Application of Funds. The proceeds received by the Company from the
sale of shares pursuant to Stock Rights shall be used for general corporate
purposes.
19. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Common Stock under the Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.
20. Withholding of Additional Income Taxes.
(a) Upon the exercise of an NSO, or the grant of a Stock Bonus
or Purchase Right for less than the fair market value of the Common Stock, the
making of a Disqualifying Disposition (as defined in Section 21), the vesting of
restricted Common Stock acquired on the exercise of a Stock Right hereunder or
the surrender of an Option pursuant to Section 15, the Company, in accordance
with Section 3402(a) of the Code and any applicable state statute or regulation,
may require the optionee, Stock Bonus recipient or purchaser to pay to the
Company additional withholding taxes in respect of the amount that is considered
compensation includable in such person's gross income. With respect to (a) the
exercise of an Option, (b) the grant of a Stock Bonus, (c) the grant of a
Purchase Right of Common Stock for less than its fair market value, (d) the
vesting of restricted Common Stock acquired by exercising a Stock Right, or (e)
the acceptance of a surrender of an Option, the Committee in its discretion may
condition such event on the payment by the optionee, Stock Bonus recipient or
purchaser of any such additional withholding taxes.
(b) At the sole and absolute discretion of the Committee, the
holder of Stock Rights may pay all or any part of the total estimated federal
and state income tax liability arising out of the exercise or receipt of such
Stock Rights, the making of a Disqualifying Disposition, or the vesting of
restricted Common Stock acquired on the exercise of a Stock Right hereunder
(each of the foregoing, a "Tax Event") by tendering already-owned shares of
Common Stock or (except in the case of a Disqualifying Disposition) by directing
the Company to withhold shares of Common Stock otherwise to be transferred to
the holder of such Stock Rights as a result of the exercise or receipt thereof
in an amount equal to the estimated federal and state
<PAGE>
income tax liability arising out of such event. In such event, the holder of
Stock Rights must, however, notify the Committee of his or her desire to pay all
or any part of the total estimated federal and state income tax liability
arising out of a Tax Event by tendering already-owned shares of Common Stock or
having shares of Common Stock withheld prior to the date that the amount of
federal or state income tax to be withheld is to be determined. If the holder of
Stock Rights is an Insider, an election by an Insider to pay all or any part of
the total estimated federal and state income tax liability arising out of any
Tax Event (other than a Disqualifying Disposition) by having shares of Common
Stock withheld (i) shall be made at least six (6) months prior to the date of
the Tax Event and shall be irrevocable (except that an Insider can revoke such
election upon six months' notice to the Committee by making a written
irrevocable election to revoke the prior election); or (ii) shall be made in
accordance with paragraph 15 of the Plan or as otherwise may be permitted
pursuant to the regulations promulgated under Section 16 of the Exchange Act.
For purposes of this paragraph 20, shares of Common Stock shall be valued at
their fair market value on the date that the amount of the tax withholdings is
to be determined.
21. Notice to Company of Disqualifying Disposition. Each employee who
receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition (as defined below) of any Common
Stock acquired pursuant to the exercise of an ISO. A "Disqualifying Disposition"
is any disposition (including any sale) of such Common Stock before either (a)
two years after the date the employee was granted the ISO, or (b) one year after
the date the employee acquired Common Stock by exercising the ISO. If the
employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.
22. Governing Law; Construction. The validity and construction of the
Plan and the instruments evidencing Stock Rights shall be governed by the laws
of the State of North Carolina. In construing this Plan, the singular shall
include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.
23. Lock-up Agreement. Each recipient of securities hereunder agrees,
in connection with the first registration with the United States Securities and
Exchange Commission under the Securities Act of 1933, as amended, of the public
sale of the Company's Common Stock, upon request of the Company or any
underwriters managing such offering, not to sell, make any short sale of, loan,
grant any option for the purchase of or otherwise dispose of any securities of
the Company (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed 180 days) from the effective date
<PAGE>
of such registration as the Company or the underwriters, as the case may be,
shall specify. Each such recipient agrees that the Company may instruct its
transfer agent to place stop-transfer notations in its records to enforce this
Section 23.
24. Formula Grants to Outside Directors.
(a) Procedure for Grants. The provisions set forth in this
Section 24 shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder. All grants of options after the time
when the Company shall have registered its equity securities under Section 12 of
the Exchange Act to directors who are not also employees of the Company
("Outside Directors) under this Plan shall be automatic and non-discretionary
and shall be made strictly in accordance with the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the number of
shares to be covered by options granted to Outside Directors.
(ii) Each Outside Director shall be automatically
granted an Option to purchase 1,000 Shares on each date on which such person is
elected or re-elected a Director of the Company.
(iii) Notwithstanding the provisions of subsection
(ii) hereof, any grant of an Option made before the Company has obtained
shareholder approval of this Section shall be conditioned upon obtaining such
shareholder approval of this Section.
(iv) The terms of an option granted under shall be as
follows:
(A) The term of the option shall be ten (10)
years.
(B) The option shall be exercisable only
while the Outside Director remains a Director of the Company, except
(I) Termination of Continuous Status
as a Director. In the event an optionee's continuous status as a Director
terminates (other than upon the optionee's death or total and permanent
disability), the optionee may exercise his or her option, but only within 60
days from the date of such termination, and only to the extent that the optionee
was entitled to exercise it at the date of such termination (but in no event
later than the expiration of its 10-year term). To the extent that the optionee
does not exercise such option within the time specified herein, the option shall
terminate.
<PAGE>
(II) Disability of Optionee. In the
event optionee's continuous status as a director terminates as a result of total
and permanent disability, the optionee may exercise his or her option, but only
within 12 months from the date of such termination, and only to the extent that
the optionee was entitled to exercise it at the date of such termination (but in
no event later than the expiration of its 10-year term). To the extent that the
optionee does not exercise such option within the time specified herein, the
option shall terminate.
(III) Death of Optionee. In the
event of an optionee's death, the optionee's estate or a person who acquired the
right to exercise the option by bequest or inheritance may exercise the option,
but only within 12 months following the date of death, and only to the extent
that the optionee was entitled to exercise it at the date of death (but in no
event later than the expiration of its 10-year term). To the extent that the
optionee's estate or a person who acquired the right to exercise such option
does not exercise such option within the time specified herein, the option shall
terminate.
(C) The exercise price per share shall be
the fair market value per share on the date of grant of the option.
(v) In the event that any option granted hereunder
would cause the number of shares subject to outstanding options plus the number
of shares previously purchased under options to exceed the amount set forth in
Section 4 hereof, then the remaining shares available for option grant shall be
granted under options to the Outside Directors on a pro rata basis. No further
grants shall be made until such time, if any, as additional shares become
available for grant under the Plan through action of the shareholders to
increase the number of Shares which may be issued under the Plan or through
cancellation or expiration of options previously granted hereunder.
(b) No Right to Continue as a Director. The Plan shall not
confer upon any optionee any right with respect to continuation of service as a
Director or nomination to serve as a Director, nor shall it interfere in any way
with any rights which the director or the Company may have to terminate his or
her directorship at any time.
(c) Other Terms. In all other respects, options granted under
this Section 24 shall be governed by the terms and provisions of the Plan,
unless otherwise required to meet the requirements of Rule 16b-3, as amended
from time to time.
<PAGE>
EXHIBIT 5.1
WYRICK ROBBINS YATES & PONTON LLP
Attorneys at Law
The Summit
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina 27607-7506
August 5, 1997
Cardiovascular Diagnostics, Inc.
5301 Departure Drive
Raleigh, North Carolina 27604
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 filed by
Cardiovascular Diagnostics, Inc., a North Carolina corporation (the "Company"),
with the Securities and Exchange Commission on or about the date hereof (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 1,114,234 shares of the Company's Common
Stock, $.001 par value per share (the "Shares"). We understand that the Shares
are to be issued pursuant to the Company's 1994 Stock Plan and 1995 Stock Plan.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with the original of all documents submitted to us as copies thereof.
As your legal counsel, we have examined the proceedings taken, and are
familiar with the proceedings proposed to be taken, by you in connection with
the sale and issuance of the Shares.
It is our opinion that, upon completion of the proceedings being taken
or contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares, the Shares, when issued in the manner referred to in the Registration
Statement and in accordance with the resolutions adopted by the Board of
Directors of the Company, will be legally and validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus relating thereto, and any
amendments thereto.
Very truly yours,
WYRICK ROBBINS YATES & PONTON LLP
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Cardiovascular Diagnostics, Inc. on Form S-8 of our reports dated February 20,
1997, on our audits of the consolidated financial statements and Schedule II-
Valuation and Qualifying Accounts of Cardiovascular Diagnostics, Inc. as of
December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995 and
1994 which reports are included in the Company's fiscal 1996 Annual Report on
Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Raleigh, North Carolina
August 4, 1997
<PAGE>
