<PAGE> 1
As filed with the Securities and Exchange Commission on October 9, 1998
Registration No. 333-___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 94-2579751
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
9162 ETON AVENUE, CHATSWORTH, CALIFORNIA 91311
(Address of Principal Executive Offices) (Zip Code)
1998 STOCK OPTION PLAN
KEY EMPLOYEE STOCK PURCHASE PROGRAM
(Full Title of the Plan)
Copy to:
MARTIN S. MCDERMUT DANIEL G. CHRISTOPHER, ESQ.
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC. GUTH ROTHMAN & CHRISTOPHER LLP
9162 ETON AVENUE 10866 WILSHIRE BOULEVARD, SUITE 1250
CHATSWORTH, CALIFORNIA 91311 LOS ANGELES, CALIFORNIA 90024
(Name and Address of Agent For Service) (310) 234-6922
(818) 709-1244
(Telephone Number, Including Area Code,
of Agent For Service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Proposed Proposed
Title Of Maximum Maximum
Securities Amount Offering Aggregate Amount Of
To Be To Be Price Per Offering Registration
Registered Registered(1) Share(2) Price Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 700,000 $1.125 $787,500 $307.13
========================================================================================================================
</TABLE>
(1) Plus such additional number of shares as may be required pursuant to the
terms of the 1998 Stock Option Plan, or the options granted thereunder, or the
Key Employee Stock Purchase Program, in the event of a stock dividend, stock
split, recapitalization or other similar change in the Common Stock.
(2) The offering price is to be computed pursuant to Rule 457(h) and Rule
457(c). As such, the offering price is the average of the high and the low
price as of October 7, 1998.
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed by the Company under the
Exchange Act with the Commission are incorporated herein by reference: (1) the
Company's Annual Report on Form 10-K/A (Amendment No. 1) for the fiscal year
ended December 31, 1997; (2) the description of the Company's Common Stock set
forth in the Company's Registration Statement on Form 8-A filed with the
Securities and Exchange Commission on June 22, 1993; (3) the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998;
and (4) the Company's Current Report on Form 8-K, dated October 9, 1998.
In addition, all documents subsequently filed by the Registrant
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"), prior to the filing of a post-effective amendment
that indicates that all securities offered have been sold or that deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be part hereof from the date of
filing of such documents.
Any statement incorporated herein shall be deemed to be modified or
superseded for purposes of this Prospectus 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 such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article SEVENTH of the Company's Certificate of Incorporation contains
certain provisions permitted under the DGCL relating to the liability of
directors. The provisions eliminate a director's liability for monetary damages
for a breach of fiduciary duty, except in certain circumstances involving
wrongful acts, such as the breach of a director's duty of loyalty or acts or
omissions that involve intentional misconduct or knowing violation of law. The
Company's Certificate of Incorporation also contains provisions requiring the
Company to indemnify its directors and officers to the fullest extent permitted
by the DGCL.
Section 145 of the DGCL provides, in part, that a corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any suit or proceedings because such person is or was a
director, officer, employee or agent of the corporation or was serving at the
request of the corporation, as a director, officer, employee or agent of another
corporation, against all costs actually and reasonably incurred by him in
connection with such suit or proceedings 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. Similar indemnity is permitted to be provided to such persons
in connection with an action or suit by or in the right of the corporation,
provided such person acted in good faith and in a manner he believed to be in or
not opposed to the best interests of the corporation, and provided further
(unless a court of competent jurisdiction otherwise determines) that such person
shall not have been adjudged liable to the corporation.
<PAGE> 3
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.1(a) Specimen of Common Stock Certificate (1)
4.1(b) Legend re Transfer Restrictions and Repurchase Option
4.2(a) 1998 Stock Option Plan
4.2(b) Form of Stock Option Agreement
4.2(c) Key Employee Stock Purchase Program
5.1 Legal Opinion of Guth Rothman & Christopher LLP
23.1 Consent of Guth Rothman & Christopher LLP (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
</TABLE>
- --------------
(1) Incorporated by reference to the Company's Registration Statement on
Form S-3, as filed with the Securities and Exchange Commission on March
27, 1996 (File No. 333-02001.)
ITEM 9. UNDERTAKINGS.
(a) Rule 415 Offering. 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:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement;
(iii) 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;
provided, however, that paragraphs (a)(1)(i)
and (a)(1)(ii) do not apply if the information
required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are
incorporated by reference in this 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
<PAGE> 4
the securities being registered which remain unsold
at the termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by
Reference. 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 Exchange Act
that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Request for Acceleration of Effective Date or Filing of
Registration Statement on Form S-8. Insofar as indemnification
for liabilities arising under the Securities Act 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
Securities 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 of
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
<PAGE> 5
SIGNATURES
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, in the City of Los Angeles, State of California, on the 9th day of
October, 1998.
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
By:/s/ Fred H. Deindoerfer
---------------------------------------
Fred H. Deindoerfer
Chairman and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Fred H. Deindoerfer and Martin S.
McDermut, jointly and severally, as his true and lawful attorneys-in-fact and
agents, each with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments and post-effective amendments to the Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, thereby ratifying and confirming all that said attorneys-in-fact and
agents or either of them or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue thereof.
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 dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Fred H. Deindoerfer Chairman of the Board of Directors, October 9, 1998
- ------------------------------ President, and Chief Executive Officer
Fred H. Deindoerfer
/s/ Martin S. McDermut Vice President, Finance and October 9, 1998
- ------------------------------ Administration, Chief Financial Officer
Martin S. McDermut
/s/ Donald E. Horacek Controller and Principal October 9, 1998
- ------------------------------ Accounting Officer
Donald E. Horacek
/s/ John A. O'Malley Director October 9, 1998
- ------------------------------
John A. O'Malley
/s/ Steven M. Besbeck Director October 9, 1998
- ------------------------------
Steven M. Besbeck
/s/ Thomas F. Kelley Director October 9, 1998
- ------------------------------
Thomas F. Kelley
</TABLE>
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
4.1(a) Specimen of Common Stock Certificate (1)
4.1(b) Legend re Transfer Restrictions and Repurchase Option
4.2(a) 1998 Stock Option Plan
4.2(b) Form of Stock Option Agreement
4.2(c) Key Employee Stock Purchase Program
5.1 Legal Opinion of Guth Rothman & Christopher LLP
23.1 Consent of Guth Rothman & Christopher LLP (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
</TABLE>
- ---------------
(1) Incorporated by reference to the Company's Registration Statement on
Form S-3, as filed with the Securities and Exchange Commission on March
27, 1996 (File No. 333-002001).
<PAGE> 1
EXHIBIT 4.1(b)
Legend re Transfer Restrictions and Repurchase Options
Pursuant to the terms of the International Remote Imaging Systems,
Inc. Employee Stock Purchase Plan and subject to certain exceptions contained
therein, the shares of stock represented by this certificate (i) may not be
sold, assigned or otherwise transferred for (2) years from the original date of
purchase and, (ii) during such two (2) year period, may be repurchased by
International Remote Imaging Systems, Inc. at the original purchase price under
certain circumstances. Copies of the Employee Stock Purchase Plan may be
obtained without cost upon written request addressed to the Secretary of
International Remote Imaging Systems, Inc. at 9162 Eton Avenue, Chatsworth,
California 91311.
<PAGE> 1
EXHIBIT 4.2(a)
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC
1998 Stock Option Plan
1. PURPOSES OF THE PLAN. The purposes of this 1998 Stock Option Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees, Directors and
Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the legal requirements relating to the
administration of stock option plans under state corporate and securities laws
and the Code.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a Committee appointed by the Board in accordance
with Section 4 of the Plan.
(f) "COMMON STOCK" means the common stock, $.01 par value, of the
Company.
(g) "COMPANY" means International Remote Imaging Systems, Inc.
(h) "CONSULTANT" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
employment or consulting relationship is not interrupted or terminated by the
Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of Incentive Stock
Options, any such leave may not exceed ninety (90) days, unless reemployment
upon the expiration of such leave is guaranteed by contract (including certain
Company policies) or statute; or (ii) transfers between locations of the Company
or between the Company, its Parent, its Subsidiaries or its successor.
(j) "DIRECTOR" means a member of the Board.
1
<PAGE> 2
(k) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person, including Officers and Directors
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation,
the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market
Value of a Share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales are reported) as quoted on
such system or exchange (or the exchange with the greatest volume of
trading in Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such
other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market System thereof) or is regularly quoted by
recognized securities dealers but selling prices are not reported, the
Fair Market Value of a Share of Common Stock shall be the mean between
the high bid and low asked prices for the Common Stock on the last
market trading day prior to the day of determination, as reported in
the Wall Street journal or such other source as the Administrator
deems reliable;
(iii) In the absence of any established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(q) "NOTICE OF GRANT" means a written notice evidencing certain terms
and conditions of an individual Option grant. The Notice of Grant is part of the
Option Agreement.
(r) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means a stock option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(u) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(v) "OPTIONED STOCK" means the Common Stock subject to an Option.
2
<PAGE> 3
(w) "OPTIONEE" means an Employee, Director or Consultant who holds an
outstanding Option.
(x) "PARENT" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(y) "PLAN" means this 1997 Stock Option Plan.
(z) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect to
the Plan.
(aa) "SECTION 162(m)" means Section 162(m) of the Code and the
regulations thereunder, as amended.
(bb) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(cc) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(dd) "TERMINATION EVENT" means (i) any use or disclosure by an
Optionee of confidential information or trade secrets of the Company or any
Parent or Subsidiary in violation of any confidentiality or nondisclosure
agreement by which the Optionee is bound, or (ii) the termination of Optionee's
Continuous Status as an Employee or Consultant for cause as defined pursuant to
applicable law, as a result of a breach of Optionee's employment or consulting
agreement, as a result of theft, fraud or embezzlement, or as a result of any
disclosure or use of confidential information or trade secrets described in part
(i) of this paragraph.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned under the
Plan is Six Hundred Thousand (600,000) Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock. However, should the Company reacquire
Shares which were issued pursuant to the exercise of an Option, such Shares
shall not become available for future grant under the Plan.
If an Option expires or becomes unexercisable without having been exercised
in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated).
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-3,
the Plan may be administered by different bodies with respect to
Directors, Officers who are not Directors, and Employees who are
neither Directors nor Officers.
3
<PAGE> 4
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS
SUBJECT TO SECTION 16(b). With respect to Option grants made to
Directors or to Employees who are also Officers or Directors subject
to Section 16(b) of the Exchange Act, the Plan shall be administered
by (A) the Board, if the Board may administer the Plan in compliance
with the requirements for grants under the Plan to be exempt
acquisitions under Rule 16b-3, or (B) a committee designated by the
Board to administer the Plan, which committee shall consist of
"Non-Employee Directors" within the meaning of Rule 16b-3. Once
appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint additional
members, remove members (with or without cause) and substitute new
members, fill vacancies (however caused), and remove all members of
the Committee and thereafter directly administer the Plan, all to the
extent permitted by the requirements for grants under the Plan to be
exempt acquisitions under Rule 16b-3.
(iii) ADMINISTRATION WITH RESPECT TO COVERED EMPLOYEES SUBJECT TO
SECTION 162(M) OF THE CODE. With respect to Option grants made to
Employees who are also "covered employees" within the meaning of
Section 162(m) of the Code and the regulations thereunder, as amended,
the Plan shall be administered by a committee designated by the Board
to administer the Plan, which committee shall be constituted to
satisfy the requirements applicable to Options intended to qualify as
"performance-based compensation" under Section 162(m). Once appointed,
such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members,
remove members (with or without cause) and substitute new members,
fill vacancies (however caused), and remove all members of the
Committee and thereafter directly administer the Plan, all to the
extent permitted by the rules applicable to Options intended to
qualify as "performance-based compensation" under Section 162(m).
(iv) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With respect
to Option grants made to Employees or Consultants who are neither
Directors nor Officers of the Company, the Plan shall be administered
by (A) the Board or (B) a committee designated by the Board, which
committee shall be constituted to satisfy Applicable Laws. Once
appointed, such Committee shall serve in its designated capacity until
otherwise directed by the Board. The Board may increase the size of
the Committee and appoint additional members, remove members (with or
without cause) and substitute new members, fill vacancies (however
caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by
Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
(ii) to select the Directors, Consultants and Employees to whom
Options may be granted hereunder;
(iii) to determine whether and to what extent Options are granted
hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
4
<PAGE> 5
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the
time or times when Options may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding
any Option or the shares of Common Stock relating thereto based in
each case on such factors as the Administrator, in its sole
discretion, shall determine;
(vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option
was granted;
(viii) to construe and interpret the terms of the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(x) to modify or amend each Option (subject to Section 14(c) of
the Plan);
(xi) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously
granted by the Administrator;
(xii) to institute an Option Exchange Program;
(xiii) to determine the terms and restrictions applicable to
Options; and
(xiv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options.
5. ELIGIBILITY. Nonstatutory Options may be granted to Directors, Employees
and Consultants. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option may
be granted additional Options.
6. LIMITATIONS.
(a) Each Option shall be designated in the Notice of Grant as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value:
(i) of Shares subject to an Optionee's incentive stock options
granted by the Company, any Parent or Subsidiary, which (ii) become
exercisable for the first time during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options shall be treated as Nonstatutory Stock Options.
For purposes of this Section 6(a), incentive stock options shall be
taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined as of the time of
grant.
5
<PAGE> 6
(b) Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
(c) No Officer shall be granted in any fiscal year of the Company
Options to purchase more than Three Hundred Thousand (300,000) Shares. The
foregoing limitation set forth in this Section 6(c) is intended to satisfy the
requirements applicable to Options intended to qualify as "performance-based
compensation" (within the meaning of Section 162(m)). In the event the
Administrator determines that such limitation is not required to qualify Options
as performance-based compensation, the Administrator may modify or eliminate
such limitation.
7. TERM OF THE PLAN. The Plan shall become effective upon its adoption by
the Board and shall continue in effect for a term of ten (10) years unless
terminated earlier under Section 14 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Notice of
Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The price per share exercise price for the Share
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than 110% of the Fair Market Value per Share on
the date of grant; or
(B) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined in the discretion of the Committee,
and may be more or less than the Fair Market Value per Share on the
date of grant.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.
6
<PAGE> 7
(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) a promissory note made by the Optionee in favor of the
Company;
(iii) if permitted by the Administrator, in its sole discretion,
other Shares which (A) in the case of Shares acquired upon exercise of
an option, have been owned by the Optionee for more than six months on
the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(iv) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the Optionee's
broker, if applicable, shall require to effect an exercise of the
Option and delivery to the Company of the sale or loan proceeds
required to pay the exercise price;
(v) any combination of the foregoing methods of payment; or
(vi) such other consideration and method of payment for the
issuance of Shares to the extent permitted by the Administrator and
Applicable Laws.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (1)
written notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, (ii) full payment for the Shares with
respect to which the Option is exercised and (iii) all representations,
indemnifications and documents reasonably requested by the Administrator. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the stock certificate evidencing such Shares is issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. Subject to Section 12, the Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
7
<PAGE> 8
(b) ACCELERATED TERMINATION OF OPTION TERM. Notwithstanding anything
to the contrary contained in the Plan, an Optionee's Options under the Plan
shall terminate and cease to be exercisable immediately upon the occurrence of a
Termination Event with respect to such Optionee.
(c) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In the event
that an Optionee's Continuous Status as an Employee or Consultant terminates
(other than upon the Optionee's death or Disability or as a result of a
Termination Event), the Optionee may exercise his or her Option, but only within
such period of time as is determined by the Administrator, and only to the
extent that the Optionee was entitled to exercise it at the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant). In the case of an Incentive Stock Option, the
Administrator shall determine such period of time (in no event to exceed ninety
(90) days from the date of termination) when the Option is granted. If, at the
date of termination, the Optionee is not entitled to exercise his or her entire
Option, the Shares covered by the unexercisable portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(d) DISABILITY OF OPTIONEE. In the event that an Optionee's Continuous
Status as an Employee or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option at any time within
twelve (12) months from the date of such termination, but 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 the term of such Option as set
forth in the Notice of Grant). If, at the date of termination the Optionee is
not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(e) DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by unexercisable portion
of the Option shall immediately revert to the Plan. If, after death, the
Optionee's estate or a person who acquires the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
11. NON-TRANSFERABILITY OF OPTIONS.
(a) NO TRANSFER. An Option may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee.
(b) DESIGNATION OF BENEFICIARY. An Optionee may file a written
designation of a beneficiary who is to receive any Options that remain
unexercised in the event of the Optionee's death. If an Optionee is married and
the designated beneficiary is not the spouse, spousal consent shall be required
for such designation to be effective. Such designation of beneficiary may be
changed by the Optionee at any time by written notice, subject to the above
spousal consent conditions.
8
<PAGE> 9
(c) EFFECT OF NO DESIGNATION. In the event of the death of the
Optionee and in the absence of a beneficiary validly designated under the Plan
who is living at the time of such Optionee's death, the Company shall deliver
such options to the executor or administrator of the estate of the Optionee, or
if no such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such options to the spouse
or to any one or more dependents or relatives of the participant, or if no
spouse, dependent or relative is known to the Company, then to such other person
as the Company may designate.
12. WITHHOLDING TAXES. Upon (i) the disposition by an Optionee of shares of
Common Stock acquired pursuant to the exercise of an Incentive Stock Option
within two years of the granting of such Incentive Stock Option or within one
year after exercise of such Incentive Stock Option, or (ii) the exercise of a
Nonstatutory Stock Option, the Company shall have the right to require such
Optionee to pay the Company the amount of any taxes which the Company may be
required to withhold with respect to such shares of Common Stock.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR
ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, if the outstanding shares of Common Stock are
increased, decreased, changed into or exchanged for a different number or kind
of shares of securities of the Company through reorganization, recapitalization,
reclassification, stock combination, stock dividend, stock split, reverse stock
split or other similar transaction, an appropriate and proportionate adjustment
shall be made in the maximum number and kind of shares as to which Options may
be granted under this Plan. A corresponding adjustment changing the number or
kind of shares allocated to unexercised Options which have been granted prior to
any such change, shall likewise be made. Any such adjustment in the outstanding
Options shall be made without change in the aggregate purchase price applicable
to the unexercised portion of the Options but with a corresponding adjustment in
the price for each share or other unit of any security covered by the Option.
Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option had not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Administrator may, in the exercise of
its sole discretion in such instances, declare that any Option shall terminate
as of a date fixed by the Administrator and give each Optionee the right to
exercise his or her Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable.
(c) MERGER OR ASSET SALE. In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets of
the Company or a similar event that the Administrator determines, in its
discretion, would materially alter the structure of the Company or its
ownership, the Administrator, upon 30 days prior written notice to the Option
holders, may, in its discretion, do one or more of the following: (i) shorten
the period during which Options are exercisable (provided they remain
exercisable for at least 30 days after the date the notice is given); (ii)
accelerate any vesting schedule to which an Option is subject; (iii) arrange to
have the surviving or successor entity grant replacement options with
appropriate adjustments in the number and kind of securities and option prices;
or (iv) cancel Options upon payment to the Optionees in cash, with respect to
each Option to the extent then exercisable (including any Options as to which
the exercise has been accelerated as contemplated in clause (ii) above), of an
amount equal to the excess of the Fair Market Value of the number of Shares as
to which the Option is then exercisable (at the effective time of the merger,
reorganization, sale of other event) over the aggregate exercise price with
respect to such Shares. The Administrator may also provide for one or more of
the foregoing alternatives in any particular Option Agreement.
9
<PAGE> 10
14. DATE OF GRANT. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator;
provided, however, the date of grant of an Option shall be, for all purposes, no
earlier than the date on which the Optionee commences employment with the
Company. Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend, alter
or suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Company shall obtain shareholder
approval of the Plan and any amendment if and to the extent necessary under
Applicable Law or the rules of any exchange or quotation system on which the
Common Stock is then listed or quoted. The Company may voluntarily obtain
shareholder approval of the Plan and any amendment if and to the extent the
Board determines such approval is desirable, including, without limitation, to
qualify for special treatment of option grants under Rule 16b-3 of the Exchange
Act, Section 422 of the Code or Section 162(m) of the Code.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of an Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable Laws,
the requirements of any stock exchange or quotation system upon which the Shares
may then be listed or quoted, and any other requirements of law or of any
regulatory bodies having jurisdiction over such issuance and delivery, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance. Any securities delivered under the Plan shall be subject to
such restrictions, and the person acquiring such securities shall, if requested
by the Company, provide such assurances and representations to the Company as
the Company may deem necessary or desirable to assure compliance with all
applicable legal requirements. To the extent permitted by Applicable Law, the
Plan and options granted hereunder shall be deemed amended to the extent
necessary to conform to such laws, rules and regulations.
(b) INVESTMENT REPRESENTATION. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell, transfer or
distribute such Shares.
16. LIABILITY OF COMPANY.
(a) INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
10
<PAGE> 11
(b) GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock covered by
an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional shareholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless shareholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 14(b) of the Plan.
(c) RIGHTS OF PARTICIPANTS AND BENEFICIARIES. The Company shall pay
all amounts payable hereunder only to the Optionee or beneficiaries entitled
thereto pursuant to the Plan. The Company shall not be liable for the debts,
contracts or engagements of any Optionee or his or her beneficiaries, and rights
to Shares or cash payments under the Plan may not be taken in execution by
attachment or garnishment, or by any other legal or equitable proceeding while
in the hands of the Company.
17. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. GOVERNING LAW. The Plan shall be governed by, and construed in
accordance with the laws of the State of Delaware (without giving effect to
conflicts of law principles).
11
<PAGE> 1
EXHIBIT 4.2(b)
1998 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the International
Remote Imaging Systems, Inc. 1998 Stock Option Plan (the "PLAN") shall have the
same defined meanings in this Stock Option Agreement (the "AGREEMENT").
PART I
NOTICE OF STOCK OPTION GRANT
("NOTICE OF GRANT")
Employee's Name: ________________________
Employee's Address: ________________________
________________________
________________________
You (also referred to as "EMPLOYEE") have been granted an option to
purchase shares of Common Stock of the Company ("SHARES") subject to the terms
and conditions of the Plan and this Agreement as follows:
Grant Number: ________________
Date of Grant: ________________
Exercise Price per Share: $_______________
Total Number of Shares Covered: ________________
Type of Option: _______ Incentive Stock Option
_______ Nonstatutory Stock Option
Term of Option/Outside
Expiration Date: ________________
Vesting Schedule: Subject to the termination provisions of this Agreement and
the Plan, this Option may be exercised, in whole or in part,
with respect to that portion of this Option which has vested
as of the exercise date. This Option shall vest and become
exercisable in three equal installments on the first, second
and third anniversaries of the grant date. In each case, the
number of Shares that may be purchased pursuant to the
exercise of the Option shall be rounded to the nearest full
Share.
Termination Period: Unless the Option is terminated due to a Termination Event,
this Option may be exercised for ninety (90) days after
termination of employment or consulting relationship, or
such longer period as may be applicable upon death or
Disability of Employee as provided in the Plan but only to
the extent vested as of the date of termination,
1
<PAGE> 2
death or Disability. In no event may the Option be exercised
later than the Term of Option/Outside Expiration Date set
forth above.
PART II
1. GRANT OF OPTION. The Administrator of the Company hereby grants to
Employee (named in the Notice of Grant attached as Part I of this Agreement) an
option (the "OPTION") to purchase a number of Shares, as set forth in the Notice
of Grant, at the exercise price per share set in the Notice of Grant (the
"EXERCISE Price"), subject to the terms and conditions of the Plan hereby
incorporated herein by reference. Subject to Section 15(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and the terms
and conditions of this Agreement, the terms and conditions of the Plan shall
prevail
If designated in the Notice of Grant as an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option under Section 422 of
the Code.
2. EXERCISE OF OPTION.
(a) RIGHT OF EXERCISE. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Agreement. In the event of Employee's
death, Disability or other termination of Employee's employment or consulting
relationship, or in the event of a Termination Event, the exercise of the Option
is governed by the applicable provisions of the Plan and this Agreement.
(b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise notice (the "EXERCISE NOTICE") which shall state the election to
exercise the Option, the number of Shares with respect to which the Option is
being exercised (the "EXERCISED SHARES") and such other representations and
agreements as may be required by the Company pursuant to the provisions of the
Plan. The Exercise Notice shall be signed by Employee and shall be delivered in
person or by certified mail to the Secretary of the Company. The Exercise Notice
shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price and any additional documentation required by the Company.
No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with all relevant provisions of law and the
requirements of any stock exchange upon which the Shares are then listed.
Assuming such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to Employee on the date the Option is exercised with
respect to such Exercised Shares.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of Employee:
(a) cash;
(b) check;
(c) delivery of a properly executed Exercise Notice together with such
other documentation as the Administrator and Employee's broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the Exercise Price; or
2
<PAGE> 3
(d) if permitted by the Administrator in its sole discretion,
surrender of other Shares which have been held by Employee for a period of time
equal to or exceeding six (6) months (or such other period of time as permitted
by Administrator in its sole discretion) which have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Exercised Shares.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in any
manner other than by will or by the laws of descent or distribution and may be
exercised during the lifetime of Employee only by Employee. The terms of the
Plan and this Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of Employee.
5. TERM OF OPTION. This Option may be exercised only prior to or on the
Outside Expiration Date (the "TERM") set forth in the Notice of Grant and may be
exercised during the Term only in accordance with the Plan and the terms of this
Agreement.
6. NOT AN EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Option or in the
Plan shall be construed as an agreement by the Company, express or implied, to
employ Employee or contract for Employee's services, to restrict the right of
the Company to discharge Employee or cease contracting for Employee's services
or to modify, extend or otherwise affect in any manner whatsoever the terms of
any employment agreement or contract for services which may exist between
Employee and the Company.
7. GOVERNING LAW. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Delaware without regard
to the principles of conflicts of law.
By your signature, the signature of your spouse (if any) on the attached
consent and the signature of the Company's representative below, you and the
Company agree that this Option is granted under, and governed by, the terms and
conditions of the Plan and this Agreement. EMPLOYEE HAS RECEIVED COPIES OF THE
PLAN AND THE PROSPECTUS, DATED ______, 1998, RELATING TO SUCH PLAN (THE
"PROSPECTUS"); HAS REVIEWED THE PLAN, THE PROSPECTUS AND THIS AGREEMENT IN THEIR
ENTIRETY; HAS HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO
EXECUTING THIS AGREEMENT AND FULLY UNDERSTANDS ALL PROVISIONS OF THE PLAN AND
AGREEMENT. Employee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions relating to
the Plan and the Agreement.
Employee: International Remote Imaging
Systems, Inc.
__________________________________ By:________________________________
Name:_____________________________ Name:______________________________
Title:_____________________________
3
<PAGE> 4
DESIGNATION OF BENEFICIARY
In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all of my vested Options that are unexercised at
that time.
Name: (print) _____________________________________________
(First) (Middle) (Last)
______________________________ _____________________________________________
Relationship to (Address)
Beneficiary(ies) _____________________________________________
_____________________________________________
Dated:________________________ _____________________________________________
Signature of Employee
4
<PAGE> 1
EXHIBIT 4.2(c)
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
Key Employee Stock Purchase Program
1. Participants. All employees of IRIS but not outside directors) may
participate in the Program, provided that they can show that they are permitted
to do so under applicable securities laws by virtue of their sophistication or
the sophistication of their advisors.
2. Election to Participate. To participate, an employee must specify in writing
on the Company form the amount to be deducted from each payroll check. Without
Company approval in writing, the notice must be delivered to the Secretary of
the Company not less than 30 days prior to the end of a quarter to be effective
at the beginning of the next quarter. Without prior Company approval, no
employee may contribute more than 15% of his annual compensation (consisting of
the employee's base salary plus cash bonuses) in any year.
3. Price per Share. The amount deducted from pay checks due in any month will be
converted into shares of IRIS Common Stock at a price per share equal to 50% of
the greater of (i) the average of the closing prices for IRIS Common Stock on
the American Stock Exchange for the last 10 days of such month or (ii) the
closing price for IRIS Common Stock on the American Stock Exchange on the last
day of such month. Fractional shares will not be issued. If the amount of money
available to purchase shares during any month does not purchase an even number
of shares, it shall be carried forward and used to purchase shares at the end of
the next month.
4. Restriction on Transfer; Option to Repurchase. The shares purchased hereunder
shall not be transferred except following the death of the employee or a Change
in Control (as defined below) for a period of 2 years following the date of
purchase. During the period of the limitation on transfer, the Company will have
the option to repurchase the shares at the original purchase price per share if
the employee terminates employment with the Company either voluntarily or as a
result of a termination for cause. The Company may hold the shares until the
termination of this option and the payment in cash of any applicable withholding
taxes.
5. Issuance of Certificates. Certificates for shares sold during each quarter
will be issued promptly following the end of the quarter. Certificates shall
bear the standard securities act legends, as well as a legend relating to the
restriction on transfer and the option as specified in paragraph 4 above.
6. Administration; Termination; Amendment. Any questions relating to the
administration of this Program shall be determined in good faith by the Board of
Directors of IRIS. This Program will be terminated or amended at any time by the
Board of Directors of IRIS without prior notice to the participants.
7. Tax Effect. This Program is not qualified under Section 401(a) (Qualified
Pension, Profit-Sharing, and Stock Bonus Plans) or Section 423 (Employee Stock
Purchase Plans) of the Internal Revenue Code of 1986. Accordingly, Participant
will still pay taxes, and the Company must withhold on the full amount of the
employee's compensation income.
1
<PAGE> 2
8. Change in Control.
A "Change in Control" means any of the following events: (i) the
dissolution or liquidation of IRIS, (ii) a sale of substantially all the assets
of IRIS, (iii) a reorganization, merger or consolidation of IRIS with one or
more corporations as a result of which the outstanding common stock of IRIS is
converted to cash, securities of another corporation or other property (unless
the principal purpose of such transaction is to change the State of
incorporation of IRIS or the shareholders of IRIS receive in excess of 60% of
the voting stock of such other corporation) or (iv) the acquisition of the
beneficial ownership of more than 35% of the outstanding common stock of IRIS
by any person or group (as defined under the Securities Exchange Act of 1934, as
amended).
2
<PAGE> 1
EXHIBIT 5.1
October 9, 1998
International Remote Imaging Systems, Inc.
9162 Eton Avenue
Chatsworth, California 91311
Re: 1998 Stock Option Plan
Key Employee Stock Purchase Plan
Ladies and Gentlemen:
We have acted as counsel to International Remote Imaging Systems, Inc.,
a Delaware corporation (the "Company"), in connection with its Registration
Statement on Form S-8 (the "Registration Statement") filed with the Securities
and Exchange Commission with respect to the registration of (i) 600,000 shares
of the Company's common stock, $.01 par value, issuable under its 1998 Stock
Option Plan (the "Option Shares"), and (ii) 100,000 shares of the Company's
common stock, $.01 par value, (the "KESPP Shares") issuable pursuant to the
Company's Key Employee Stock Purchase Program.
As such counsel, we have examined such records, documents, certificates
and other instruments as in our judgment are necessary or appropriate in order
to enable us to render this opinion. Based on the foregoing and our examination
of such questions of law as we deem necessary, we are of the opinion that (i)
the Option Shares, when issued in accordance with the 1998 Stock Option Plan and
the Registration Statement, and (ii) the KESPP Shares, when sold and issued in
accordance with the Key Employee Stock Purchase Program and the Registration
Statement, will be validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement. Except as set forth in this paragraph, this opinion is furnished
solely for your benefit and may not be relied upon by, nor copies delivered to,
any other person or entity without our prior written consent.
Sincerely,
/s/ Guth Rothman & Christopher LLP
Guth Rothman & Christopher LLP
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of International Remote Imaging Systems, Inc. ("IRIS") on Form S-8 of our report
dated March 20, 1998 (except for Note 8 as to which the date is March 30, 1998)
on our audits of the consolidated financial statements and financial statement
schedule of IRIS as of December 31, 1997 and 1996, and for the years ended
December 31, 1997, 1996 and 1995, which report appears in the Annual Report on
Form 10-K/A (Amendment No. 1) for the fiscal year ended December 31, 1997.
PRICEWATERHOUSECOOPERS LLP
/s/ PRICEWATERHOUSECOOPERS LLP
Los Angeles, California
October 9, 1998
