<PAGE>
As filed with the Securities and Exchange Commission on August 4, 1999.
Registration No. 000-22351
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FIRSTQUOTE INC.
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(Exact name of registrant as specified in its charter)
Delaware 98-0162893
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
12 Avenue des Morgines, 1213 Petit Lancy, Geneva, Switzerland
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(Address of Principal Executive Offices) (Zip Code)
FIRSTQUOTE INC. 1997 STOCK OPTION PLAN
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(Full title of the plan)
Neil Gibbons
12 Avenue Des Morgines
1213 Petit Lancy
Geneva, Switzerland
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(Name and address of agent for service)
4122 879-0879
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(Telephone number, including area code, of agent for service)
Calculation of Registration Fee
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Title of securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered offering price aggregate registration fee
per unit offering price
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,150,000 shs.(2) $6.47(1) $7,440,500 $2,069
$.001 par value
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) In accordance with Rules 457(c) and 457(h) under the Securities Act of
1933, as amended, we computed the registration fee on 1,150,000 shares of
our common stock underlying options based upon the average of the high and
low prices for our common stock on July 28, 1999.
(2) Pursuant to Rule 416, we are also registering the additional shares that
may become issuable pursuant to anti-dilution provisions of the various
options.
<PAGE>
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
FIRSTQUOTE INC.
Common Stock
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FIRSTQUOTE INC. 1997 STOCK OPTION PLAN
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1,150,000 Shares of Common Stock, $.001 Par Value
This Prospectus relates to shares of our common stock ($.001 par value per
share) which we may issue from time to time to our employees, officers,
directors, consultants and independent contractors upon their exercise of stock
options granted to them under our 1997 Stock Option Plan ("Plan"). The purchase
price of the shares of common stock issued upon exercise of options granted
under our Plan will be determined from time to time based upon the market price
of the common stock in accordance with the terms of our Plan. We suggest that
you retain this Prospectus for further reference.
Neither the Securities and Exchange Commission nor any other regulatory body has
approved or disapproved these securities or passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
--------------------------------------
This Prospectus only covers the sale of those shares purchased upon the exercise
of stock options granted under our Plan. This Prospectus does not cover the
resales of those shares. However, persons ordinarily may publicly resell the
shares of common stock acquired hereunder without registration under the
Securities Act of 1933, as amended (the "Act"). Our affiliates, however, may
not publicly resell shares acquired hereunder without compliance with Rule 144
promulgated under the Act or registration under the Act.
--------------------------------------
The date of this Prospectus is August 3, 1999.
<PAGE>
TABLE OF CONTENTS
PAGE
THE COMPANY............................................................... 1
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INFORMATION ABOUT OUR 1997 STOCK OPTION PLAN.............................. 1
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Introduction......................................................... 1
General Purpose...................................................... 1
ERISA................................................................ 1
Shares Available..................................................... 1
Administration....................................................... 2
Eligibility.......................................................... 2
Grant of Options..................................................... 2
Exercise of Options.................................................. 2
Nontransferability................................................... 3
Termination of Employment............................................ 3
Death or Disability.................................................. 3
Duration, Amendment and Termination.................................. 3
Options Outstanding.................................................. 3
INCOME TAX CONSEQUENCES................................................... 4
- -----------------------
US Federal Law....................................................... 4
German Law........................................................... 6
Swiss Law............................................................ 6
RESTRICTIONS ON RESALE.................................................... 6
- ----------------------
LEGAL MATTERS............................................................. 6
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EXPERTS................................................................... 7
- -------
AVAILABLE INFORMATION..................................................... 7
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i
<PAGE>
PART I
Item 1. Plan Information
THE COMPANY
-----------
We were incorporated in the State of Delaware in July 1996 under the name
Virtual Telecom, Inc. In April 1999, we changed our name to FirstQuote Inc.
Our executive offices are located at 12 Avenue des Morgines, 1213 Petit Lancy,
Geneva, Switzerland; telephone (4122) 879-0879.
INFORMATION ABOUT OUR STOCK OPTION PLAN
---------------------------------------
Introduction
Set forth below is a summary of our Second Amended and Restated 1997 Stock
Option Plan (the "Plan"), which highlights the principal features of that plan.
In addition to our Plan, we have also entered into stock option agreements with
each of the individuals who have been granted options. You may obtain a copy of
the Plan and the form of the stock option agreements by writing or calling our
Chief Executive Officer at the address and phone number listed above.
General Purpose
Our Board of Directors adopted our 1997 Stock Option Plan on April 28,
1997. On March 19, 1998, our Board of Directors approved our Amended and
Restated 1997 Stock Option Plan for purposes of (i) increasing the number of
authorized shares of common stock from 500,000 shares to 750,000 shares, and
(ii) providing for a minimum vesting period of 12 months on all options granted
under the Plan. On December 7, 1998, our Board of Directors adopted the Second
Amended and Restated 1997 Stock Option Plan for purposes of increasing the
number of authorized shares of common stock from 750,000 shares to 1,150,000
shares. The purpose of the Plan is to provide our officers, directors,
employees, consultants and independent contractors added incentive for high
levels of performance and unusual efforts to increase our earnings. The Plan
provides these individuals with an opportunity to acquire, maintain and increase
a proprietary interest in our success. The Plan also encourages those employees
to continue their employment with us. We are permitted to grant two different
types of options under the Plan, incentive stock options ("ISO's") under Section
422 of the U.S. Internal Revenue Code of 1986, as amended (the "Code") and non-
qualified stock options ("NSO's"). Both of these types of options are discussed
in greater detail below.
ERISA
The Plan is not an "employee pension benefit plan" as defined in Section
3(2) of the U.S. Employee Retirement Income Security Act ("ERISA") and is not
qualified as a profit sharing plan as described in Section 401 of the Code.
Shares Available
We have reserved a total of 1,150,000 shares of common stock for issuance
under the Plan. These shares may include authorized but unissued shares or
shares we reacquired at any time.
If a person fails to exercise an option granted under the Plan before it
expires or if an option terminates for any reason, we will be able to use the
shares which are subject to that option to grant further options under the Plan.
The number of shares of common stock reserved for issuance under the Plan is
subject to equitable adjustments for any recapitalizations, mergers,
consolidations, stock dividends, split-ups, combinations, exchanges or any other
similar changes which may be required to prevent dilution. Similarly, our Stock
Option Committee, which administers the Plan, in its sole discretion, may adjust
the number of shares a selected person is permitted to acquire if an increase or
decrease in the amount of outstanding capital stock occurs prior to that
person's exercise of an option granted pursuant to the Plan.
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<PAGE>
Administration
The Plan is administered by our Stock Option Committee ("Committee"), which
consists of our Board of Directors. The Committee members act in the capacity
of plan administrators. The Committee has the authority to determine who will
be granted options and the time or times those selected persons will be granted
and may exercise all or any part of those options, provided, however, that the
Plan provides for a minimum vesting period of 12 months on all options granted
under the Plan. The Committee also determines the number of shares to be
subject to each option, the purchase price of the shares of common stock covered
by each option and the method of payment of such price. The Committee also has
the authority to construe and interpret the Plan, decide all questions and
settle all controversies and disputes which may arise in connection with the
Plan and prescribe, amend and rescind rules and regulations relating to
administration of the Plan.
Eligibility
Only our officers, employees and directors who are also our employees or
employees of any of our subsidiaries are eligible to receive grants of ISO's.
Our officers, employees and directors (whether or not they are also employees)
as well as our consultants, independent contractors or our other service
providers are eligible to receive grants of NSO's.
The Committee may consider any factors it believes will accomplish the
purpose of the Plan when it determines (i) the number of shares to be covered by
each option, (ii) the purchase price for such shares and the method of payment
of such price, (iii) the individuals who will receive options, (iv) the terms
and provisions of the option agreements, and (v) the times at which such options
shall be granted.
Grant of Options
The exercise price for the options granted under the Plan is specified in
each stock option agreement. The Plan does not specify any maximum or minimum
amount of options which may be granted to any person. However, the Code states
that ISO's may not be granted if the sum of (i) aggregate fair market value
(determined at the time the ISO's are granted) of the stock subject to all stock
options we granted under the Plan which are first exercisable during the same
calendar year plus (ii) the aggregate fair market value (determined at the time
the options are granted) of all stock subject to all other incentive stock
options we granted to such optionee which are exercisable for the first time
during such calendar year, exceeds $100,000.
Options may be exercised for a term up to ten (10) years from the date it
is granted. However, if a person owns more than 10% of the total combined voting
power of all classes of our stock or the stock of our subsidiaries, that
person's options must expire no later than five (5) years after the date it is
granted.
Exercise of Options
ISO's
-----
The Committee shall determine the exercise price for each share which an
optionee is entitled to purchase under an ISO. The minimum exercise price for
an ISO shall be the fair market value per share on the date we grant the ISO.
For those persons who own more than ten percent (10%) of the total combined
voting power of all classes of our stock, including the stock of our
subsidiaries, the minimum exercise price for an ISO shall be one hundred ten
percent (110%) of the fair market value per share of common stock on the date we
grant the ISO.
NSO's
-----
The Committee shall determine the exercise price for each share which an
optionee is entitled to purchase under an NSO. The minimum exercise price for
an NSO shall be eighty-five percent (85%) of the fair market value per share on
the date we grant the NSO.
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<PAGE>
For both ISO's and NSO's, the Committee determines the fair market value of
the shares.
The Committee shall also determine the consideration and the method of
payment of the shares issued upon exercise of an option. The consideration may
consist of cash, shares of our common stock or such other consideration and
method of payment for the shares as may be permitted under applicable state and
federal laws.
Nontransferability
A person who receives options under the Plan may not transfer those options
during his lifetime. A person who receives options may transfer those options
after his death by will or under the laws of descent and distribution.
Termination of Employment
If an employee who has received options ceases to be employed by, or ceases
to have a relationship with us or any of our subsidiaries for any reason other
than death, disability or cause, all options granted under the Plan will
terminate not later than three (3) months thereafter. If we have terminated his
employment with us or any of our subsidiaries for cause, all options granted to
him shall expire immediately. However, the Committee may, in its sole
discretion, waive the expiration of the Option within thirty (30) days of his
termination.
Death or Disability
If a holder of options dies or becomes disabled (as defined in Section
22(e)(3) of the Code) he (or his descendants) shall have one year to purchase
all or any part of the shares of common stock he was entitled to purchase on the
date his employment terminated due to his death or disability. In no case,
however, may the option holder exercise options more than ten (10) years after
the date the options were granted.
Duration, Amendment and Termination
Unless previously terminated, the Plan will terminate on April 28, 2007. No
options may be granted after that date under the Plan. (Options granted before
the Plan terminates but exercisable afterwards will not be affected). The
Committee may at any time and from time to time modify, amend, suspend or
terminate the Plan. However, the Committee may not:
. increase the maximum number of shares which may be purchased pursuant to
options granted under the Plan, either in the aggregate or by an option
holder, except in limited circumstances;
. change the designation of the class of employees eligible to receive ISO's
. extend the term of the Plan or the maximum option period under the Plan
. decrease the minimum ISO exercise price; or
. cause ISO's issued under the Plan to fail to meet the requirements of
incentive stock options under Section 422 of the Code.
An option holder must consent to any amendment of the Plan which would adversely
affect his rights as an option holder.
Options Outstanding
As of August 3, 1999, we have granted under the Plan options to purchase a
total of 655,000 shares of common stock, all at an exercise prices of $2.00 per
share, to our employees, officers, directors and consultants
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<PAGE>
INCOME TAX CONSEQUENCES
-----------------------
This section of the Prospectus contains a discussion regarding the income
tax consequences of the Plan under US Federal, German and Swiss law. This
discussion is intended only as a broad discussion of the general rules under
income tax laws in these jurisdictions applicable to the grant and exercise of
options and the acquisition and disposition of common stock acquired pursuant to
the exercise of options. Specific situations may be subject to different rules
and may result in different tax consequences. You are strongly urged to consult
your tax advisor with specific reference to your tax situation.
US Federal Law
ISO's Under the Plan
--------------------
Grant and Exercise of ISO's. In general, an optionee realizes no
income upon the grant of Plan ISO's (assuming these options qualified as
"incentive stock options" under the Code when they were granted) or upon the
exercise of ISO's. But see, "Alternative Minimum Tax," below. The amount paid by
the optionee for the common stock received pursuant to the exercise of ISO's
will generally constitute his or her basis (or cost) for tax purposes. The
holding period for such common stock generally begins on the date the optionee
exercises ISO's. See below for a discussion of the exceptions to these general
rules when the optionee uses previously acquired stock of the Company to
exercise ISO's.
Alternative Minimum Tax. Although no current taxable income is
realized upon the exercise of ISO's, Section 56(b)(3) of the Code provides that
the excess of the fair market value on the date of exercise of the common stock
acquired pursuant to such exercise over the option price is an item of tax
adjustment. As such, the exercise of ISO's may result in the optionee being
subject to the "Alternative Minimum Tax" for the year ISO's are exercised. The
"Alternative Minimum Tax" is calculated on a taxpayer's adjusted gross income,
subject to special adjustments, plus specified items of tax preference minus
specified itemized deductions. The resulting amount is the alternative minimum
taxable income.
If the shares are disposed of in a "disqualifying disposition" -- that is,
within one year of exercise or two years from the date of the option grant -- in
the year in which the ISO is exercised, the maximum amount that will be included
as Alternative Minimum Tax income is the gain on the disposition of the ISO
stock. In the event there is a disqualifying disposition in a year other than
the year of exercise, the income on the disqualifying disposition will not be
considered income for Alternative Minimum Tax purposes. In addition, the basis
of the ISO stock for determining gain or loss for Alternative Minimum Tax
purposes will be the exercise price for the ISO stock increased by the amount
that Alternative Minimum Tax income was increased due to the earlier exercise of
the ISO. Alternative Minimum Tax incurred by reason of the exercise of the ISO
does not result, for regular income tax purposes, in an increase in basis of the
shares acquired upon exercise. The alternative minimum tax attributable to the
exercise of an ISO may be applied as a credit against regular tax liability in a
subsequent year, subject to certain limitations. The gain recognized upon a
sale or exchange of shares acquired through the exercise of the ISO's will be
limited to the excess of the amount received in the sale or exchange over the
fair market value of the shares at the time the ISO was exercised.
The application of the Alternative Minimum Tax for each optionee will
depend on such optionee's total income and deductions for the year of exercise.
As such, the extent to which, if any, the tax adjustment item generated by the
exercise of ISO's in conjunction with any other tax adjustment items or
alternative minimum tax adjustments may result in an Alternative Minimum Tax
liability for any optionee cannot be determined. Accordingly, each optionee
should consult his or her own tax counsel to determine the potential impact of
the Alternative Minimum Tax on his or her exercise of ISO's.
Employment and Holding Requirements of ISO's. The Code requires that
the optionee remain an employee of the Company or its subsidiaries at all times
during the period beginning on the date that the ISO's are granted and ending on
the day three (3) months (or one (1) year in the case of permanent and total
disability) before the date that each ISO is exercised. Under the Plan, upon
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<PAGE>
termination of employment for any reason other than cause, disability or death
the options terminate three (3) months after the termination date unless by
their terms the options terminate earlier. If termination occurs as a result of
disability or death, the options will expire one (1) year after such termination
unless they expire before that date by their terms. Therefore, if the options
constituted incentive stock options at grant, permissible exercises after
termination automatically meet the employment requirements.
In order for an optionee exercising ISO's to qualify for the income tax
free treatment set forth in the preceding section such optionee must not dispose
of the common stock acquired pursuant to the exercise of ISO's within two (2)
years from the date the ISO's were granted, nor within one (1) year after the
exercise of the ISO's. If the optionee meets these employment and holding
requirements, any future gain or loss realized and recognized from the sale or
exchange of the common stock should be long-term capital gain or loss, if the
stock is held as a capital asset. If the optionee disposes of the shares of
common stock acquired upon exercise of an ISO within two years from the granting
of options or one year after the exercise of options (collectively, an "early
disposition"), any gain will constitute, in the year of disposition, ordinary
compensation income to the extent of the excess of the fair market value of the
common stock on its acquisition date over the price paid for it by the optionee.
Any additional gain will be treated as capital gain. If the optionee disposes of
the shares of common stock at a loss, such loss will be a capital loss.
For purposes of this section, the transfer of common stock by reason of the
optionee's death does not constitute a disposition of the common stock. In
addition, the transferee of the common stock is not subject to the holding and
employment requirements.
If the Recipient disposes of options instead of exercising them, the
incentive stock option rules discussed herein have no application. The
recipient-transferor will recognize either long or short-term capital gain or
loss and the purchaser will not be subject to any of these rules.
NSO's Under the Plan
--------------------
In general, an optionee who receives an NSO realizes income either at the
date of grant or at the date of exercise, but not at both. Unless the NSO has a
"readily ascertainable fair market value" at the date of grant, the optionee
recognizes no income on the date of grant and the compensatory aspects are held
open until the NSO is exercised. In this case, upon exercise, the optionee will
have compensation income to the extent of the difference between the fair market
value of the stock at the time of exercise and the exercise price paid by the
optionee.
An NSO is deemed to have a "readily ascertainable fair market value" if (a)
the NSO's are actively traded on an established market or (b) the fair market
value can be measured with reasonable accuracy which means that (i) the NSO's
are transferable, (ii) the NSO's are exercisable immediately in full, (iii) the
NSO's and underlying stock are not subject to restrictions which have a
significant effect on the NSO's value and (iv) the fair market value of the
"option privilege" is readily ascertainable.
Exercise of Options Through Use of Previously Acquired Common Stock of the
--------------------------------------------------------------------------
Company
-------
Under the Plan, in some circumstances an optionee may be allowed to use
previously acquired common stock to exercise both ISO's and NSO's. Such
previously acquired common stock may include common stock acquired pursuant to
an earlier partial exercise of options. Generally the Internal Revenue Service
(the "Service") recognizes that an exchange of common stock for other common
stock does not constitute a taxable disposition of any shares of common stock.
The Service treats such exchanges as two transactions. First, to the extent of
the number of previously acquired shares of common stock, a share for share
exchange occurs with each new share of common stock ("Carryover shares")
succeeding to the cost basis and holding period of the old shares of common
stock. Second, the remaining new shares of common stock are deemed acquired at
a zero cost with their holding period commencing on the date of acquisition
("Noncarryover shares").
The foregoing rules generally apply to the use of previously acquired
common stock to acquire common stock under the Plan. An optionee may use common
stock owned at the date options are exercised to acquire common stock upon
exercise of the options. However, despite a "carryover" holding
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<PAGE>
period, all of the new shares of common stock are still subject to the holding
requirements discussed above. If optionee disposes of such common stock acquired
pursuant to the exercises of ISO's before the later of two years from the
granting or one year from exercise, an early disposition occurs first to the
extent of the Noncarryover shares and then to the extent of the Carryover
shares.
In addition, if an optionee uses common stock acquired through a previous
partial exercise of options ("First Stock") to acquire new common stock through
an exercise of options ("Second Stock") before the First Stock has met the above
holding requirements, the First Stock will be treated as having been disposed of
in an early disposition. Therefore, the optionee will have to recognize
ordinary compensation to the excess of the fair market value of the First Stock
on its acquisition dates over its price paid. Despite the early disposition,
any excess gain is not recognized, but is deferred and carried over to the
Second Stock. If the First Stock is used to acquire other common stock which is
not subject to either the Plan, no early disposition will generally occur and
the tax free exchange rules may apply.
German Law
Both ISOs and NSOs receive the same tax treatment under German law. In
either case, the holder of the option does not realize income upon the issuance
of the option. However, upon the exercise of the option, the holder realizes
ordinary income, taxable at full rates, on the difference between the option
price and the market price on the date of exercise. Under German law, capital
gains on stock are tax-free if the investment has been held for at least 6
months. Accordingly, after incurring the initial tax burden upon exercise of
their options, option holders do not incur additional taxation on future gains
realized from share exchanges, assuming the requisite holding period is met.
Swiss Law
Stock options are covered by Federal Tax Administration Circular Letters of
November 8, 1973, May 19, 1990, and April 30, 1997. Under Swiss law, the grant
of options under the Plan produces taxable income, so-called up-front taxation.
In determining the taxable base, in the absence of any restrictions in the Plan,
Swiss federal taxation will treat as taxable income the fair value of the option
based on a calculation of the difference between the fair market value of the
common shares underlying the options on the date of grant and the exercise price
of the options. However, the exercise of the option does not produce taxable
income to the employee. Accordingly, if the exercise price of the options is
below fair market value on the date of grant, the employee bears a risk of
incurring tax at the moment of the issuance of the option, and then having no
deduction or credit should the shares either decline in value after exercise of
the option or before exercise of the option, in which case the options would not
be exercised.
Note that for Swiss residents, state income taxation is also applied. The
particular state tax implications should be verified by each optionee on an
individual basis.
RESTRICTIONS ON RESALE
----------------------
We are subject to Section 16(b) of the Securities Exchange Act of 1934, as
amended. Section 16(b) allows us to recover any profit realized by any of our
officers or directors from any purchase and sale, or sale and purchase, of our
common stock within any period of less than six months. Further, our affiliates
who acquire shares of our common stock pursuant to an option described in this
prospectus will not be able to rely on this prospectus to resell those shares.
Accordingly, our affiliates who exercise options must insure that the resale of
their shares complies with an available exemption from the registration
provisions of the Federal securities law, such as Rule 144 under the Securities
Act of 1933, as amended.
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<PAGE>
LEGAL MATTERS
-------------
Our corporate attorneys, Oppenheimer Wolff & Donnelly LLP, Newport Beach,
California, will issue an opinion about the legality of the offered securities
for us.
EXPERTS
-------
Arthur Andersen LLP, independent public accountants, audited our financial
statements and schedules as of December 31, 1998 and 1997 and for the fiscal
years ended December 31, 1998 and 1997, which are incorporated by reference in
this prospectus. These documents are incorporated by reference herein in
reliance upon their authority as experts in accounting and auditing.
Item 2. Registrant Information and Employee Plan Annual Information
AVAILABLE INFORMATION
---------------------
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's offices located at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. This Prospectus does not contain
all the information set forth in the Registration Statement and exhibits thereto
which we have filed with the SEC under the Act, to which reference is hereby
made.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) the Securities Exchange Act of 1934:
1. The Company's Annual Report on Form 10-KSB/A for the fiscal year ended
December 31, 1998
2. The Company's Quarterly Report on Form 10-QSB for the quarter ended March
31, 1999.
You may request a copy of these filings at no cost by writing or telephoning
us at the following address: Mark Benn, Chief Financial Officer, 12 Avenue des
Morgines, 1213 Petit Lancy, Geneva, Switzerland; (4122) 879-0879.
Item 4. Description of Securities.
Inapplicable.
Item 5. Interests of Named Experts and Counsel.
Inapplicable.
Item 6. Indemnification of Directors and Officers.
Delaware Statutes
-----------------
Section 145 of the Delaware General Corporation Law, as amended, provides for
the indemnification of the Company's officers, directors, employees and agents
under certain circumstances as follows:
"(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner hereasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he
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<PAGE>
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any
-9-
<PAGE>
such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees). (Last amended by Ch.261,L.'94,eff.7-1-94.)"
Certificate of Incorporation
- ----------------------------
The Company's Certificate of Incorporation provides that the directors of the
Company shall be protected from personal liability to the fullest extent
permitted by law. The Company's Bylaws also contain a provision for the
indemnification of the Company's directors (see "Indemnification of Directors
and Officers - Bylaws" below).
Bylaws
- ------
The Company's Bylaws provide for the indemnification of the Company's
directors, officers, employees, or agents under certain circumstances as
follows:
"7.1 Authorization For Indemnification. The Corporation may indemnify, in
---------------------------------
the manner and to the full extent permitted by law, any person (or the estate,
heirs, executors, or administrators of any person) who was or is a party to, or
is threatened to be made a party to any threatened, pending or
-10-
<PAGE>
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that such person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful.
7.2 Advance of Expenses. Costs and expenses (including attorneys' fees)
-------------------
incurred by or on behalf of a director or officer in defending or investigating
any action, suit, proceeding or investigation may be paid by the Corporation in
advance of the final disposition of such matter, if such director or officer
shall undertake in writing to repay any such advances in the event that it is
ultimately determined that he is not entitled to indemnification. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board deems appropriate. Notwithstanding the
foregoing, no advance shall be made by the Corporation if a determination is
reasonably and promptly made by the Board by a majority vote of a quorum of
disinterested directors, or (if such a quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs) by independent legal
counsel in a written opinion, or by the stockholders, that, based upon the facts
known to the Board or counsel at the time such determination is made, (a) the
director, officer, employee or agent acted in bad faith or deliberately breached
his duty to the Corporation or its stockholders, and (b) as a result of such
actions by the director, officer, employee or agent, it is more likely than not
that it will ultimately be determined that such director, officer, employee or
agent is not entitled to indemnification.
7.3 Insurance. The Corporation may purchase and maintain insurance on behalf
---------
of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise or as a member of any committee or similar
body against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of this Article or applicable law.
7.4 Non-exclusivity. The right of indemnity and advancement of expenses
---------------
provided herein shall not be deemed exclusive of any other rights to which any
person seeking indemnification or advancement of expenses from the Corporation
may be entitled under any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office. Any agreement for
indemnification of or advancement of expenses to any director, officer, employee
or other person may provide rights of indemnification or advancement of expenses
which are broader or otherwise different from those set forth herein."
-11-
<PAGE>
Indemnity Agreements
- --------------------
The Company's Bylaws provide that the Company may indemnify directors,
officers, employees or agents to the fullest extent permitted by law and the
Company has agreed to provide such indemnification to its directors pursuant to
written indemnity agreements.
Item 7. Exemption from Registration Claimed.
Inapplicable.
Item 8. Exhibits.
Exhibit Number Description
- -------------- -----------
5.1 Opinion of Oppenheimer Wolff & Donnelly LLP re: legality of
shares.
10.16 Second Amended and Restated FirstQuote Inc. 1997 Stock Option
Plan
23.1 Consent of Oppenheimer Wolff & Donnelly LLP (filed as Exhibit
5.1 herein).
23.2 Consent of Arthur Andersen LLP
Item 9. Undertakings.
A. The undersigned registrant hereby undertakes to file during
any period in which offers or sales of the securities 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 or
any material change to such information set forth in the Registration Statement.
B. The undersigned registrant hereby undertakes that, for
purposes 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.
C. The undersigned registrant hereby undertakes 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.
D. 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 section
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.
E. 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 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.
-12-
<PAGE>
SIGNATURES
----------
The Registrant
- --------------
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized on July 29, 1999.
FIRSTQUOTE INC.
a Delaware corporation
By: /s/ Neil Gibbons
----------------------------
Neil Gibbons, President,
Chief Executive Officer and Director
By: /s/ Mark Benn
----------------------------
Mark Benn
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Neil G. Gibbons
- ------------------------------ President and Chief Executive July 29, 1999
Neil G. Gibbons Officer and Director
/s/ Daniel Huber
- ------------------------------ Vice President and Director July 29, 1999
Daniel Huber
- ------------------------------ Director July __, 1999
Stuart Townsend
/s/ William Cordeiro
- ------------------------------ Director July 29, 1999
William Cordeiro
/s/ Bryan Wood
- ------------------------------ Director July 29, 1999
Bryan Wood
/s/ Frank Verschoor
- ------------------------------ Director July 29, 1999
Frank Verschoor
- ------------------------------ Director July __, 1999
Paul Goossens
</TABLE>
-13-
<PAGE>
EXHIBIT 5.1
OPPENHEIMER WOLFF & DONNELLY LLP
500 Newport Center Drive
Suite 700
Newport Beach, California 92660
(949) 719-6000
(949) 719-6040 (Fax)
July 27, 1999
FirstQuote Inc.
12 Ave. Des Morgines
1213 Petit Lancy
Geneva, Switzerland
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen:
As counsel for FirstQuote Inc., a Delaware corporation (the "Company"), we
have examined its Certificate of Incorporation, as amended, Bylaws and such
other corporate records, documents and proceedings, and such questions of law as
we have deemed relevant for the purpose of this opinion. We have also, as such
counsel, examined the Registration Statement on Form S-8 of the Company as filed
with the Securities and Exchange Commission, covering the registration under the
Securities Act of 1933, as amended, of a total 1,150,000 shares of $.001 par
value common stock ("Common Stock"), including the exhibits and form of
Prospectus (the "Prospectus") pertaining thereto, and any amendments thereto
(collectively, the "Registration Statement").
Upon the basis of such examination, we are of the opinion that:
1. The Company is a corporation duly authorized and validly existing in good
standing under the laws of the State of Delaware, with all requisite power to
conduct the business described in the Registration Statement.
2. The shares of the Company's Common Stock registered pursuant to the
Registration Statement have been duly and validly authorized and, subject to the
payment therefor pursuant to the terms contemplated in the final Prospectus,
such shares of Common Stock will be duly and validly issued as fully paid and
non-assessable securities of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Oppenheimer Wolff & Donnelly LLP
<PAGE>
EXHIBIT 10.16
FIRSTQUOTE INC.
SECOND AMENDED AND RESTATED
1997 STOCK OPTION PLAN
On April 28, 1997, the Board of Directors of FirstQuote Inc. approved the
Virtual Telecom, Inc. 1997 Stock Option Plan. On March 19, 1998, the Board of
Directors approved this Amended and Restated Virtual Telecom, Inc. 1997 Stock
Option Plan for purposes of (i) increasing the number off authorized shares of
Common Stock from 500,000 shares to 750,000 shares, and (ii) providing for a
minimum vesting period of 12 months on all Options granted under the Plan. On
December 7, 1998, the Board of Directors approved the Second Amended and
Restated Stock Option Plan for purposes of increasing the authorized number of
shares of Common Stock from 750,000 shares to 1,150,000 shares. In April 1999,
Virtual Telecom, Inc. changed its name to FirstQuote Inc.
1. PURPOSE. The purpose of the Second Amended and Restated Virtual
-------
Telecom, Inc. 1997 Stock Option Plan (the "Plan") is to strengthen Virtual
Telecom, Inc., a Delaware corporation ("Corporation"), by providing to
employees, officers, directors, consultants and independent contractors of the
Corporation or any of its subsidiaries (including dealers, distributors, and
other business entities or persons providing services on behalf of the
Corporation or any of its subsidiaries) added incentive for high levels of
performance and unusual efforts to increase the earnings of the Corporation. The
Plan seeks to accomplish this purpose by enabling specified persons to purchase
shares of the common stock of the Corporation, $.001 par value, thereby
increasing their proprietary interest in the Corporation's success and
encouraging them to remain in the employ or service of the Corporation.
2. CERTAIN DEFINITIONS. As used in this Plan, the following words and
-------------------
phrases shall have the respective meanings set forth below, unless the
context clearly indicates a contrary meaning:
2.1 "Board of Directors": The Board of Directors of the Corporation.
------------------
2.2 "Committee": The Committee which shall administer the Plan shall
---------
consist of the entire Board of Directors.
2.3 "Fair Market Value Per Share": The fair market value per share of
---------------------------
the Shares as determined by the Committee in good faith. The Committee is
authorized to make its determination as to the fair market value per share of
the Shares on the following basis: (i) if the Shares are traded only otherwise
than on a securities exchange and are not quoted on the National Association of
Securities Dealers' Automated Quotation System ("NASDAQ"), but are quoted on the
bulletin board, the greater of (a) the average of the daily closing prices of
the Shares over the thirty (30) trading days preceding the date of grant of an
Option, as quoted on the bulletin board, or (b) the closing sale price of the
Shares on the date of grant, as published on the bulletin board;" (ii) if the
Shares are traded on a securities exchange or on the NASDAQ, the greater of
1
<PAGE>
(a) the average of the daily closing prices of the Shares during the ten (10)
trading days preceding the date of grant of an Option, as quoted in the Wall
Street Journal, or (b) the daily closing price of the Shares on the date of
grant of an Option, as quoted in the Wall Street Journal; or (iii) if the Shares
are traded only otherwise than as described in (i) or (ii) above, or if the
Shares are not publicly traded, the value determined by the Committee in good
faith based upon the fair market value as determined by completely independent
and well qualified experts.
2.4 "Option": A stock option granted under the Plan.
------
2.5 "Incentive Stock Option": An Option intended to qualify for
----------------------
treatment as an incentive stock option under Code Sections 421 and 422,
and designated as an Incentive Stock Option.
2.6 "Nonqualified Option": An Option not qualifying as an Incentive
-------------------
Stock Option.
2.7 "Optionee": The holder of an Option.
--------
2.8 "Option Agreement": The document setting forth the terms and
----------------
conditions of each Option.
2.9 "Shares": The shares of common stock $.001 par value of the
------
Corporation.
2.10 "Code": The Internal Revenue Code of 1986, as amended.
----
2.11 "Subsidiary": Any corporation of which fifty percent (50%) or
----------
more of total combined voting power of all classes of stock of such corporation
is owned by the Corporation or another Subsidiary (as so defined).
3. ADMINISTRATION OF PLAN.
----------------------
3.1 In General. This Plan shall be administered by the Committee. Any
----------
action of the Committee with respect to administration of the Plan shall be
taken pursuant to (i) a majority vote at a meeting of the Committee (to be
documented by minutes), or (ii) the unanimous written consent of its members.
3.2 Authority. Subject to the express provisions of this Plan, the
---------
Committee shall have the authority to: (i) construe and interpret the Plan,
decide all questions and settle all controversies and disputes which may arise
in connection with the Plan and to define the terms used therein; (ii)
prescribe, amend and rescind rules and regulations relating to administration of
the Plan; (iii) determine the purchase price of the Shares covered by each
Option and the method of payment of such price, individuals to whom, and the
time or times at which, Options shall be granted and exercisable and the number
of Shares covered by each Option; (iv) determine the terms and provisions of the
respective Option Agreements (which need not be identical); (v) determine the
duration and purposes of leaves of absence which may be granted to
2
<PAGE>
participants without constituting a termination of their employment for purposes
of the Plan; and (vi) make all other determinations necessary or advisable to
the administration of the Plan. Determinations of the Committee on matters
referred to in this Section 3 shall be conclusive and binding on all parties
howsoever concerned. With respect to Incentive Stock Options, the Committee
shall administer the Plan in compliance with the provisions of Code Section 422
as the same may hereafter be amended from time to time. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option.
4. ELIGIBILITY AND PARTICIPATION.
-----------------------------
4.1 In General. Only officers, employees and directors who are also
----------
employees of the Corporation or any Subsidiary shall be eligible to receive
grants of Incentive Stock Options. Officers, employees and directors (whether
or not they are also employees) of the Corporation or any Subsidiary, as well as
consultants, independent contractors or other service providers of the
Corporation or any Subsidiary shall be eligible to receive grants of
Nonqualified Options. Within the foregoing limits, the Committee, from time to
time, shall determine and designate persons to whom Options may be granted.
All such designations shall be made in the absolute discretion of the Committee
and shall not require the approval of the stockholders. In determining (i) the
number of Shares to be covered by each Option, (ii) the purchase price for such
Shares and the method of payment of such price (subject to the other sections
hereof), (iii) the individuals of the eligible class to whom Options shall be
granted, (iv) the terms and provisions of the respective Option Agreements, and
(v) the times at which such Options shall be granted, the Committee shall take
into account such factors as it shall deem relevant in connection with
accomplishing the purpose of the Plan as set forth in Section 1. An individual
who has been granted an Option may be granted an additional Option or Options if
the Committee shall so determine. No Option shall be granted under the Plan
after April 28, 2007, but Options granted before such date may be exercisable
after such date.
4.2 Certain Limitations. In no event shall Incentive Stock Options be
-------------------
granted to an Optionee such that the sum of (i) aggregate fair market value
(determined at the time the Incentive Stock Options are granted) of the Shares
subject to all Options granted under the Plan which are exercisable for the
first time during the same calendar year, plus (ii) the aggregate fair market
value (determined at the time the options are granted) of all stock subject to
all other incentive stock options granted to such Optionee by the Corporation,
its parent and Subsidiaries which are exercisable for the first time during such
calendar year, exceeds One Hundred Thousand Dollars ($100,000). For purposes of
the immediately preceding sentence, fair market value shall be determined as of
the date of grant based on the Fair Market Value Per Share as determined
pursuant to Section 2.3.
3
<PAGE>
5. AVAILABLE SHARES AND ADJUSTMENTS UPON CHANGES
---------------------------------------------
IN CAPITALIZATION.
-----------------
5.1 Shares. Subject to adjustment as provided in Section 5.2 below,
------
the total number of Shares to be subject to Options granted pursuant to this
Plan shall not exceed One Million One Hundred Fifty Thousand (1,150,000) Shares.
Shares subject to the Plan may be either authorized but unissued shares or
shares that were once issued and subsequently reacquired by the Corporation; the
Committee shall be empowered to take any appropriate action required to make
Shares available for Options granted under this Plan. If any Option is
surrendered before exercise or lapses without exercise in full or for any other
reason ceases to be exercisable, the Shares reserved therefore shall continue to
be available under the Plan.
5.2 Adjustments. As used herein, the term "Adjustment Event" means an
-----------
event pursuant to which the outstanding Shares of the Corporation are increased,
decreased or changed into, or exchanged for a different number or kind of shares
or securities, without receipt of consideration by the Corporation, through
reorganization, merger, recapitalization, reclassification, stock split, reverse
stock split, stock dividend, stock consolidation or otherwise. Upon the
occurrence of an Adjustment Event, (i) appropriate and proportionate adjustments
shall be made to the number and kind of shares and exercise price for the shares
subject to the Options which may thereafter be granted under this Plan, (ii)
appropriate and proportionate adjustments shall be made to the number and kind
of and exercise price for the shares subject to the then outstanding Options
granted under this Plan, and (iii) appropriate amendments to the Option
Agreements shall be executed by the Corporation and the Optionees if the
Committee determines that such an amendment is necessary or desirable to reflect
such adjustments. If determined by the Committee to be appropriate, in the event
of an Adjustment Event which involves the substitution of securities of a
corporation other than the Corporation, the Committee shall make arrangements
for the assumptions by such other corporation of any Options then or thereafter
outstanding under the Plan. Notwithstanding the foregoing, such adjustment in an
outstanding Option shall be made without change in the total exercise price
applicable to the unexercised portion of the Option, but with an appropriate
adjustment to the number of shares, kind of shares and exercise price for each
share subject to the Option. The determination by the Committee as to what
adjustments, amendments or arrangements shall be made pursuant to this Section
5.2, and the extent thereof, shall be final and conclusive. No fractional Shares
shall be issued under the Plan on account of any such adjustment or arrangement.
6. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
6.1 Intended Treatment as Incentive Stock Options. Incentive Stock
---------------------------------------------
Options granted pursuant to this Plan are intended to be "incentive stock
options" to which Code Sections 421 and 422 apply, and the Plan shall be
construed and administered to implement that intent. If all or any part of an
Incentive Stock Option shall not be an "incentive stock option" subject to
Sections 421 or 422 of the Code, such Option shall nevertheless be valid and
carried into effect. All Options granted under this Plan shall be subject to the
terms and conditions set forth in this Section 6 (except as provided in Section
5.2) and to such other terms and conditions as the Committee shall determine to
be appropriate to accomplish the purpose of the Plan as set forth in Section 1.
4
<PAGE>
6.2 Amount and Payment of Exercise Price.
------------------------------------
6.2.1 Exercise Price. The exercise price per Share for each
--------------
Share which the Optionee is entitled to purchase under a Nonqualified Option
shall be determined by the Committee but shall not be less than eighty-five
percent (85%) of the Fair Market Value Per Share on the date of the grant of the
Nonqualified Option. The exercise price per Share for each Share which the
Optionee is entitled to purchase under an Incentive Stock Option shall be
determined by the Committee but shall not be less than the Fair Market Value Per
Share on the date of the grant of the Incentive Stock Option; provided, however,
that the exercise price shall not be less than one hundred ten percent (110%) of
the Fair Market Value Per Share on the date of the grant of the Incentive Stock
Option in the case of an individual then owning (within the meaning of Code
Section 425(d)) more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation or of its parent or Subsidiaries.
6.2.2 Payment of Exercise Price. The consideration to be paid for
-------------------------
the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Committee and may consist of promissory
notes, shares of the common stock of the Corporation or such other consideration
and method of payment for the Shares as may be permitted under applicable state
and federal laws.
6.3 Exercise of Options.
-------------------
6.3.1 Each Option granted under this Plan shall be subject to
vesting on terms and conditions to be determined by the Committee in its sole
discretion; provided, however, that no Option granted under this Plan shall be
exercisable for a minimum of 12 months from the date of grant. Each Option
granted under this Plan shall be otherwise exercisable at such times and under
such conditions as may be determined by the Committee at the time of the grant
of the Option and as shall be permissible under the terms of the Plan. In no
event shall an Option be exercisable after the expiration of ten (10) years from
the date it is granted, and in the case of an Optionee owning (within the
meaning of Code Section 425(d)), at the time an Incentive Stock Option is
granted, more than ten percent (10%) of the total combined voting power of all
classes of stock of the Corporation or of its parent or Subsidiaries, such
Incentive Stock Option shall not be exercisable later than five (5) years after
the date of grant.
6.3.2 An Optionee may purchase less than the total number of
Shares for which the Option is exercisable, provided that a partial exercise of
an Option may not be for less than One Hundred (100) Shares and shall not
include any fractional shares.
6.4 Nontransferability of Options. All Options granted under this
-----------------------------
Plan shall be nontransferable, either voluntarily or by operation of law,
otherwise than by will or the laws of descent and distribution, and shall be
exercisable during the Optionee's lifetime only by such Optionee.
6.5 Effect of Termination of Employment or Other Relationship. Except
---------------------------------------------------------
as otherwise determined by the Committee in connection with the grant of
Nonqualified Options,
5
<PAGE>
the effect of termination of an Optionee's employment or other relationship
with the Corporation on such Optionee's rights to acquire Shares pursuant to the
Plan shall be as follows:
6.5.1 Termination for Other than Death, Disability or Cause. If an
-----------------------------------------------------
Optionee ceases to be employed by, or ceases to have a relationship with, the
Corporation for any reason other than for death, disability or cause, such
Optionee's Options shall expire not later than three (3) months thereafter.
During such three (3) month period and prior to the expiration of the Option by
its terms, the Optionee may exercise any Option granted to him, but only to the
extent such Options were exercisable on the date of termination of his
employment or relationship and except as so exercised, such Options shall expire
at the end of such three (3) month period unless such Options by their terms
expire before such date. The decision as to whether a termination for a reason
other than disability, cause or death has occurred shall be made by the
Committee, whose decision shall be final and conclusive, except that employment
shall not be considered terminated in the case of sick leave or other bona fide
leave of absence approved by the Corporation.
6.5.2 Death or Disability. If an Optionee ceases to be employed by,
-------------------
or ceases to have a relationship with, the Corporation by reason of disability
(within the meaning of Code Section 22(e)(3)) or death, such Optionee's Options
shall expire not later than one (1) year thereafter. During such one (1) year
period and prior to the expiration of the Option by its terms, the Optionee may
exercise any Option granted to him, but only to the extent such Options were
exercisable on the date the Optionee ceased to be employed by, or ceased to have
a relationship with, the Corporation by reason of disability or death and except
as so exercised, such Options shall expire at the end of such one (1) year
period unless such Options by their terms expire before such date. The decision
as to whether a termination by reason of disability has occurred shall be made
by the Committee, whose decision shall be final and conclusive.
6.5.3 Termination for Cause. If an Optionee's employment by, or
---------------------
relationship with, the Corporation is terminated for cause, such Optionee's
Option shall expire immediately; provided, however, the Committee may, in its
sole discretion, within thirty (30) days of such termination, waive the
expiration of the Option by giving written notice of such waiver to the Optionee
at such Optionee's last known address. In the event of such waiver, the Optionee
may exercise the Option only to such extent, for such time, and upon such terms
and conditions as if such Optionee had ceased to be employed by, or ceased to
have a relationship with, the Corporation upon the date of such termination for
a reason other than disability, cause, or death. Termination for cause shall
include termination for malfeasance or gross misfeasance in the performance of
duties or conviction of illegal activity in connection therewith or any conduct
detrimental to the interests of the Corporation. The determination of the
Committee with respect to whether a termination for cause has occurred shall be
final and conclusive.
6.6 Withholding of Taxes. As a condition to the exercise, in whole or
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in part, of any Options the Board of Directors may in its sole discretion
require the Optionee to pay, in addition to the purchase price of the Shares
covered by the Option an amount equal to any Federal, state or local taxes that
may be required to be withheld in connection with the exercise of such Option.
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6.7 No Rights to Continued Employment or Relationship. Nothing
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contained in this Plan or in any Option Agreement shall obligate the Corporation
to employ or have another relationship with any Optionee for any period or
interfere in any way with the right of the Corporation to reduce such Optionee's
compensation or to terminate the employment of or relationship with any Optionee
at any time.
6.8 Time of Granting Options. The time an Option is granted,
------------------------
sometimes referred to herein as the date of grant, shall be the day the
Corporation executes the Option Agreement; provided, however, that if
appropriate resolutions of the Committee indicate that an Option is to be
granted as of and on some prior or future date, the time such Option is granted
shall be such prior or future date.
6.9 Privileges of Stock Ownership. No Optionee shall be entitled to
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the privileges of stock ownership as to any Shares not actually issued and
delivered to such Optionee. No Shares shall be purchased upon the exercise of
any Option unless and until, in the opinion of the Corporation's counsel, any
then applicable requirements of any laws or governmental or regulatory agencies
having jurisdiction and of any exchanges upon which the stock of the Corporation
may be listed shall have been fully complied with.
6.10 Securities Laws Compliance. The Corporation will diligently
--------------------------
endeavor to comply with all applicable securities laws before any Options are
granted under the Plan and before any Shares are issued pursuant to Options.
Without limiting the generality of the foregoing, the Corporation may require
from the Optionee such investment representation or such agreement, if any, as
counsel for the Corporation may consider necessary or advisable in order to
comply with the Securities Act of 1933 as then in effect, and may require that
the Optionee agree that any sale of the Shares will be made only in such manner
as is permitted by the Committee. The Committee in its discretion may cause the
Shares underlying the Options to be registered under the Securities Act of 1933,
as amended, by the filing of a Form S-8 Registration Statement covering the
Options and Shares underlying such Options. Optionee shall take any action
reasonably requested by the Corporation in connection with registration or
qualification of the Shares under federal or state securities laws.
6.11 Option Agreement. Each Incentive Stock Option and Nonqualified
----------------
Option granted under this Plan shall be evidenced by the appropriate written
Stock Option Agreement ("Option Agreement") executed by the Corporation and the
Optionee in a form substantially the same as the appropriate form of Option
Agreement attached as Exhibit I or II hereto (and made a part hereof by this
reference) and shall contain each of the provisions and agreements specifically
required to be contained therein pursuant to this Section 6, and such other
terms and conditions as are deemed desirable by the Committee and are not
inconsistent with the purpose of the Plan as set forth in Section 1.
7. PLAN AMENDMENT AND TERMINATION.
------------------------------
7.1 Authority of Committee. The Committee may at any time
----------------------
discontinue granting Options under the Plan or otherwise suspend, amend or
terminate the Plan and may, with the consent of an Optionee, make such
modification of the terms and conditions of such
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Optionee's Option as it shall deem advisable; provided that, except as permitted
under the provisions of Section 5.2, the Committee shall have no authority to
make any amendment or modification to this Plan or any outstanding Option
thereunder which would: (i) increase the maximum number of shares which may be
purchased pursuant to Options granted under the Plan, either in the aggregate or
by an Optionee (except pursuant to Section 5.2); (ii) change the designation of
the class of the employees eligible to receive Incentive Stock Options; (iii)
extend the term of the Plan or the maximum Option period thereunder; (iv)
decrease the minimum Incentive Stock Option price or permit reductions of the
price at which shares may be purchased for Incentive Stock Options granted under
the Plan; or (v) cause Incentive Stock Options issued under the Plan to fail to
meet the requirements of incentive stock options under Code Section 422. An
amendment or modification made pursuant to the provisions of this Section 7
shall be deemed adopted as of the date of the action of the Committee effecting
such amendment or modification and shall be effective immediately, unless
otherwise provided therein, subject to approval thereof (1) within twelve (12)
months before or after the effective date by stockholders of the Corporation
holding not less than a majority vote of the voting power of the Corporation
voting in person or by proxy at a duly held stockholders meeting when required
to maintain or satisfy the requirements of Code Section 422 with respect to
Incentive Stock Options, and (2) by any appropriate governmental agency. No
Option may be granted during any suspension or after termination of the Plan.
7.2 Ten (10) Year Maximum Term. Unless previously terminated by the
--------------------------
Committee, this Plan shall terminate on April 28, 2007, and no Options shall be
granted under the Plan thereafter.
7.3 Effect on Outstanding Options. Amendment, suspension or
-----------------------------
termination of this Plan shall not, without the consent of the Optionee, alter
or impair any rights or obligations under any Option theretofore granted.
8. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of April 28,
----------------------
1997, the date the Plan was adopted by the Board of Directors, subject to the
approval of the Plan by the affirmative vote of a majority of the issued and
outstanding Shares of common stock of the Corporation represented and voting at
a duly held meeting at which a quorum is present within twelve (12) months
thereafter. The Committee shall be authorized and empowered to make grants of
Options pursuant to this Plan prior to such approval of this Plan by the
stockholders; provided, however, in such event the Option grants shall be made
subject to the approval of both this Plan and such Option grants by the
stockholders in accordance with the provisions of this Section 8.
9. MISCELLANEOUS PROVISIONS.
------------------------
9.1 Exculpation and Indemnification. The Corporation shall indemnify
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and hold harmless the Committee from and against any and all liabilities, costs
and expenses incurred by such persons as a result of any act, or omission to
act, in connection with the performance of such persons' duties,
responsibilities and obligations under the Plan, other than such liabilities,
costs and expenses as may result from the gross negligence, bad faith, willful
conduct and/or criminal acts of such persons.
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9.2 Governing Law. The Plan shall be governed and construed in
-------------
accordance with the laws of the State of Delaware and the Code.
9.3 Compliance with Applicable Laws. The inability of the Corporation
-------------------------------
to obtain from any regulatory body having jurisdiction authority deemed by the
Corporation's counsel to be necessary to the lawful issuance and sale of any
Shares upon the exercise of an Option shall relieve the Corporation of any
liability in respect of the non-issuance or sale of such Shares as to which such
requisite authority shall not have been obtained.
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Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated March 30, 1999 included or incorporated by reference in the annual
report on Form 10-KSB, into the Company's Form S-8 Registration Statement.
ARTHUR ANDERSEN SA
Geneva, Switzerland
July 30, 1999
