<PAGE>
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
DALTEX MEDICAL SCIENCES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14c-5(g) and
0-11.
(1) Title of each class of securities to which transaction
applies: Common Stock
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined): $
(4) Proposed maximum aggregate value of transaction: $
(5) Total fee paid: $
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
INFORMATION STATEMENT
TO THE SHAREHOLDERS OF DALTEX MEDICAL SCIENCES, INC.:
The following actions have been approved by a majority of the shareholders
and the board of directors of Daltex Medical Sciences, Inc.:
1. REVERSE STOCK SPLIT. We have approved a 50-to-1 reverse stock split
of the outstanding common stock.
2. STOCK ISSUANCE AND CHANGE OF CONTROL. An aggregate of up to
8,500,000 shares of our common stock are being sold in a private placement
transaction for up to $1,500,000 in cash.
3. AMENDMENT TO CERTIFICATE OF INCORPORATION. We have approved an
amendment to our Certificate of Incorporation that when effective, will fix the
number of authorized shares of our preferred stock at 5,000,000 shares and the
common stock at 50,000,000 shares and to change our name to ii Group, Inc. The
Certificate of Amendment to be filed with the Secretary of State of the State of
Delaware is attached to this document as Annex A.
4. ELECTION OF DIRECTORS. Four directors have been elected to our Board
of Directors until our next annual meeting or until their successors have been
qualified;
5. STOCK OPTION PLAN. Our 1999 Stock Option Plan has been approved. The
1999 Plan is attached to this document as Annex B.
By the Order of the Board of Directors,
Bruce Hausman
President and Chief Executive Officer
Boca Raton, Florida
October __, 1999
<PAGE>
INFORMATION STATEMENT FOR
OF DALTEX MEDICAL SCIENCES, INC.
We have entered into a stock purchase agreement with MCG Capital Partners,
Ltd., an investment fund affiliated with one of our directors, to sell to the
fund up to 8,500,000 shares of our common stock for $.175 per share or up to
$1,487,500 of cash. These shares will represent up to approximately 85% of our
outstanding shares after our recapitalization. We anticipate that in the future
we will acquire one or more businesses that will result in an additional change
of control. In order to accomplish this transaction, we needed to recapitalize
our authorized capital by amending our Certificate of Incorporation and to
effect a 50-for-1 reverse stock split.
This document provides you with detailed information about the transaction
and the other matters recently approved by our board of directors and a majority
of our shareholders. We encourage you to read the entire document carefully,
including all of its annexes. We especially encourage you to read the "Risk
Factors" section which begins on page 8. You may obtain additional information
about us from documents we have filed with the SEC.
We expect the shareholder action approving the amendment to become
effective on or about October __, 1999. Our board of directors has fixed the
close of business on September 30, 1999 as the record date for the determination
of shareholders who are entitled to give consent and receive this information
statement. Holders of 2,122,524 shares of our preferred stock and common stock,
representing approximately 94% of our outstanding voting power, have approved
the above items. The approval of the amendment will require the written consent
of the holders of a majority of the outstanding shares of our common stock. As
of September 30, 1999, there were 272,654 outstanding shares of our common stock
and approximately 455 holders of record of our common stock and 95,000 shares of
our preferred stock held by four holders that are convertible into 1,900,000
shares of common stock and have a similar number of votes. No meeting of the
shareholders is being held in connection with the approval of the amendment and
no proxies or consents are being solicited in connection with this information
statement.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY
The date of this information statement is October __, 1999
We will mail this document to our shareholders beginning on or about
October __, 1999.
We have not authorized anyone to give any information or make any
representation about the matters discussed in this document that differs from or
adds to the information in this document or any of the Annexes attached to this
document. Therefore, if anyone does give you different or additional
information, you should not rely on it. The information contained in this
document speaks only as of its date unless the information specifically
indicates that another date applies.
WHO CAN HELP ANSWER MY QUESTIONS?
If you have more questions about the stock issuance and the associated change in
control, the amendment to our certificate of incorporation, the election of
directors or the other matters to be voted upon, you should contact Mr. Bruce
Hausman at:
Daltex Medical Sciences, Inc.
7777 Glades Road, Suite 211
Boca Raton, Florida 33434
Telephone: (561) 470-6005
Fax: (561) 488-3419
<PAGE>
SUMMARY
This summary highlights selected information contained elsewhere or
incorporated by reference in this document. This summary may not contain all of
the information that is important to you. Where appropriate, we have included
page references to direct you to a more complete description of the topics
presented in this summary. All share numbers have been adjusted for the 50-for-1
reverse stock split.
THE COMPANY
DALTEX MEDICAL SCIENCES, INC.
7777 Glades Road, Suite 211
Boca Raton, Florida 33431
(561) 470-6005
Daltex is a "blank check" or "blind pool" company. Daltex now seeks
acquisition possibilities throughout the United States and to make acquisitions
or enter into other business endeavors to the extent its limited assets will
allow. The current business objective of Daltex is to effect a merger, exchange
of capital stock, asset acquisition or other business combination with one or
more operating businesses (a "Target Business") which Daltex believes has
significant growth potential.
OTHER INTERESTS OF OFFICERS, DIRECTORS AND DIRECTOR NOMINEES IN THE STOCK
ISSUANCE.
You should be aware of interests which some of our officers and directors
have that are separate from and in addition to the interests of our shareholders
generally. These interests are as follows:
Upon completion of the transaction, C. Lawrence Rutstein, who is an officer
of the general partner of the MCG Fund, will beneficially own 666,672 shares of
our common stock individually and through MCG Partners, Inc. and may be deemed
to own the up to 8,500,000 shares to be owned by the MCG Fund.
Bruce Hausman, our president and a director, was recently issued 15,000
shares of Class A Convertible Preferred Stock, which is convertible into 300,000
shares of common stock, in exchange for the cancellation of $60,000 payable by
Daltex to him. He currently beneficially owns 10,100 shares of common stock.
Our board of directors and the shareholders were aware of these interests
and took them into account when approving the items listed above.
STOCK OWNERSHIP
Prior to the investment, we had 2,272,654 shares of common stock outstanding,
assuming conversion of the outstanding preferred stock. After the investment, we
will have up to 10,772,654 shares of common stock outstanding. The following
chart describes the beneficial ownership before and after these transactions:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Name Shares owned before % Shares owned after %
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MCG Capital Partners, Ltd. 0 0 8,500,000 79.6
- ----------------------------------------------------------------------------------------------
Bruce Hausman 310,100 12.5 310,100 2.9
- ----------------------------------------------------------------------------------------------
MCG Partners,Inc. 600,600 27.6 600,600 5.6
- ----------------------------------------------------------------------------------------------
C. Lawrence Rutstein 666,672 30.7 666,672 6.2
- ----------------------------------------------------------------------------------------------
Other directors and officers 75,468 3.5 75,468 1.0
- ----------------------------------------------------------------------------------------------
Public shareholders 150,130 6.6 150,130 1.4
- ----------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
SUMMARY SELECTED HISTORICAL FINANCIAL DATA
The summary selected historical financial data for Daltex presented
below for each of the two years ended and as of July 31, 1999 and 1998 have been
derived from the audited consolidated financial statements of Daltex as adjusted
for the reverse stock split. The data should be read in conjunction with the
consolidated financial statements, related notes, management's discussion and
analysis, and other financial information which are included in the Form 10-KSB
for the year ended July 31, 1999 being mailed with this document.
<TABLE>
<CAPTION>
1999 1998
--------- -----------
<S> <C> <C>
Revenues -- 272,138
Income from operations before extraordinary item (19,516) 6,169
Extraordinary item: -- 871,760
Net income (loss) (19,516) 877,929
Dividends on Series A convertible preferred stock
from discount at issuance (890,000) --
--------- -----------
Net income (loss) applicable to common shareholders $(909,516) $ 877,929
========= ===========
Basic and diluted net income (loss) per share information:
Net income loss before extraordinary item $ (4.46) $ .00
========= ===========
Extraordinary item $ .00 $ 5.08
========= ===========
Net income (loss) per share $ (4.46) $ 5.08
========= ===========
Weighted average number of common shares 203,996 172,660
========= ===========
</TABLE>
July 31, 1999
-------------
Actual Pro Forma
------ ---------
Balance Sheet Data:
Total current assets...................... $541 $1,200,541
Total assets.............................. 541 1,241,541
Total current liabilities................. 107,682 107,682
Shareholders' equity (deficit)............ (107,141) 1,092,318
3
<PAGE>
MARKET PRICE AND DIVIDEND INFORMATION
Daltex's Common Stock is currently listed on the OTC Bulletin Board
under the symbol "DLTX".
The following tables set forth the range of high- and low-bid prices
for Daltex's Common Stock for each quarterly period beginning August 1, 1997 as
reported by the NASD OTC Bulletin Board. The following over-the-counter market
quotations reflect inter-dealer prices, without retail markup, markdown or
commission, and may not necessarily represent actual transactions. As there has
been limited trading, many of the prices reflect the closest transaction to the
end of the period.
High Low
---- ---
Fiscal 1998
- -----------
1st Quarter Ended October 31, 1997 .14 .125
2nd Quarter Ended January 31, 1998 .125 .08
3rd Quarter Ended April 30, 1998 .125 .07
4th Quarter Ended July 31, 1998 .09 .04
Fiscal 1999
- -----------
1st Quarter Ended October 31, 1998 .015 .015
2nd Quarter Ended January 31, 1999 .013 .013
3rd Quarter Ended April 30, 1999 .04 .04
4th Quarter Ended July 31, 1999 .035 .031
There were approximately 455 record holders of common stock as of
September 1, 1999.
Dividend Policy
We have not paid any cash dividends on our common stock or preferred
stock since our inception. We presently intend to retain future earnings, if
any, to finance the expansion of our business and do not anticipate that any
cash dividends will be paid in the foreseeable future. Future dividend policy
will depend on our earnings, capital requirements, expansion plans, financial
condition and other relevant factors.
RECORD DATE
Our board of directors has fixed the close of business on September 30,
1999 as the record date for determining holders of our common stock entitled to
notice of this information statement.
4
<PAGE>
STOCK ISSUANCE AND CHANGE OF CONTROL
Daltex has been a "shell" company since 1998 and has been seeking to
acquire one or more operating businesses. From time to time, our management has
reviewed prospects for improving shareholder liquidity and enhancing our
long-term growth potential. Daltex is now focusing on Internet and information
technology companies, but does not yet have any definitive agreements with
respect to any acquisition.
In September 1999, MCG Partners, Ltd. an investment fund for which C.
Lawrence Rutstein, a director and principal stockholder of Daltex, is a
shareholder and officer of MCG Management, Inc., the general partner, agreed to
purchase a minimum of 8,000,000 shares and a maximum of 8,500,000 shares of
common stock for $.175 per share or up to $1,487,500 in cash. Prior to this
purchase, the board of directors and a majority of the stockholders of Daltex
agreed to the 50-for-1 reverse stock split. After the split but prior to the
investment, there will be 2,272,654 shares of common stock outstanding, assuming
conversion of the outstanding preferred stock.
At a meeting in September 1999, our board of directors unanimously approved
the terms of the private placement transaction. The board believes that the
terms of the transaction are fair to, and in the best interests of, our
shareholders. In the course of evaluating potential transactions, our management
sought other financing and believes that this represents the best available
financing arrangement.
The board believes that as a result of the recapitalization and investment
by MCG, Daltex is well-positioned to acquire one or more operating businesses
for cash and stock.
Change In Our Ownership Following The Transaction.
Following the investment, MGC Fund will own approximately 79.6% of our
approximately 10,772,000 shares of common stock on a fully diluted basis. Daltex
expects that additional shares will be issued to unaffiliated third parties in
one or more acquisition transactions and that as a result of these transactions,
the MCG Fund will no longer control Daltex.
5
<PAGE>
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED SHARES TO 5,000,000 SHARES OF PREFERRED
STOCK AND 50,000,000 SHARES OF COMMON STOCK AND TO CHANGE THE NAME
Our Board of Directors and a majority of our shareholders has approved an
amendment to our Certificate of Incorporation for the purpose of increasing the
number of Daltex's authorized capital to 5,000,000 shares of preferred stock and
50,000,000 shares of common stock. A copy of this amendment is attached to this
document as Annex A.
Our shareholders do not have preemptive rights to subscribe for or purchase
any of the additional shares of common stock to be authorized. Additional shares
of common stock could be used for any proper corporate purpose, including
acquisitions, raising of additional equity capital, stock dividends or upon the
exercise of stock options. The future issuance of additional shares of common
stock on other than a pro rata basis may dilute the ownership of the current
shareholders, as well as their proportionate voting rights.
After the amendment to our Certificate of Incorporation is effective, no
further approval of the shareholders would be required for the issuance of
shares of common stock as authorized by the amendment and, absent any legal
requirements, it is not contemplated that further approval of the holders of
common stock would be sought for issuance of any shares authorized by the
amendment. Daltex has no present plans to issue any shares of preferred stock.
Other than these issuances, Daltex has no present plans to issue any additional
shares of common stock.
This amendment could make it more difficult to acquire control of Daltex
and thereby discourage attempts to do so, even though our shareholders may deem
such an acquisition desirable. Issuance of shares of common stock could dilute
the ownership interest and voting power of our shareholders who may seek control
of Daltex. Shares of preferred and common stock could be issued in a private
placement to one or more organizations sympathetic to us and opposed to any
take-over bid, or under other circumstances that could make it more difficult
and thereby discourage attempts to acquire control of Daltex. To the extent that
it impedes any such attempts, the amendment may serve to perpetuate our
management.
Although we have from time to time considered the issuance of additional
securities in connection with a strategic alliance or acquisition, we do not
have any present plans, agreements or arrangements for the issuance of shares of
preferred stock or common stock in excess of the number of such shares presently
authorized in connection with any particular transaction. We do not anticipate
soliciting the vote of our shareholders to authorize the issuance of shares of
the common stock unless otherwise required under the Delaware General
Corporation Law, our certificate of incorporation or our bylaws.
Our Board of Directors and a majority of our shareholders has approved
of an amendment to our certificate of incorporation to change our name to
iiGroup, Inc. Our primary focus is now in the Internet and information
technology area and we have changed its name to more accurately reflect its
business.
6
<PAGE>
REVERSE STOCK SPLIT
The Board of Directors and holders of a majority of outstanding shares
have approved a 50-for-1 reverse stock split of Daltex's outstanding common
stock. As a result of the split, the 18,632,699 shares outstanding would become
372,653 shares, the 95,000 shares of Series A Convertible Preferred Stock
currently outstanding will be convertible into 1,900,000 shares and the MCG Fund
will own 8,000,000 shares.
As Daltex has been inactive since 1998 and presently has no assets or
on-going operations, it believes that the acquisition of any Target would
include the issuance of shares of the common stock as part of the purchase
price. Therefore, management believes that the reverse stock split would provide
sufficient authorized but unissued shares of common stock to permit Daltex to
issue a controlling interest in the Company to any Target.
Daltex believes the completion of the reverse stock split may not cause the
trading price of the common stock to increase proportionately although there can
be no assurance since there is currently a limited trading market.
7
<PAGE>
ELECTION OF DIRECTORS
Four directors have been elected to serve until the next annual meeting
of shareholders and until their respective successors will have been elected and
will have qualified or until their earlier resignation, removal from office or
death.
The following table sets forth as the names, ages and positions held
with respect to our directors and executive officers:
<TABLE>
<CAPTION>
Name Age Since Position
---- --- ----- --------
<S> <C> <C> <C>
Louis R.M. Del Guercio, M.D. 69 1983 Chairman of the Board, Director, Member of the
Executive Committee
C. Lawrence Rutstein 55 1997 Director
Herbert J. Mitchele, Jr. 69 1983 Secretary, Treasurer, Chief Financial Officer,
Director, Member of the Executive Committee
Bruce Hausman, Esq. 69 1993 President, Chief Executive Officer, Director, Member
of the Executive Committee
</TABLE>
All directors hold office until the next annual meeting of stockholders
of Daltex or until their successors are elected and quality. Due to its
extremely limited financial resources, Daltex has not held an annual meeting of
stockholders since July 1991. Executive officers hold office until their
successors are elected and qualified, subject to earlier removal by the Board of
Directors.
The principal occupations and business experience of each director and
executive officer are as follows:
Louis R.M. Del Guercio, M.D. has been a director since he co-founded
Daltex in 1983 He is a Professor and the Chairman of the Department of Surgery
at New York Medical College and Chief of Surgery at Westchester County Medical
Center. He is also a Consultant in Surgery to ten hospitals in New York and
Connecticut. Dr. Del Guercio has served on a number of national public advisory
committees concerned with health care issues. He is a Colonel in the U.S. Army
Reserves. Dr. Del Guercio's publications include three books and over 300
scientific articles. Dr. Del Guercio received his B.S. in 1949 from Fordham
University and his M.D. in 1953 from Yale University School of Medicine.
C. Lawrence Rutstein has been a director since December 1997. Between
May 1997 and June 1998 Mr. Rutstein had served as Chairman, CEO and president of
Regenesis Holdings Corporation. Since 1995 he also served as president of
CapQuest Partners, Inc. a company which has made several investments in emerging
software companies. A Harvard Law School graduate, Mr. Rutstein has practiced
corporate, banking and securities law in Philadelphia, Pennsylvania. Mr.
Rutstein previously served as Chief Counsel to the Pennsylvania Department of
Banking from 1971 to 1972, and served as Resident Counsel to a major
Philadelphia bank. From 1989 to 1991 he served as Chairman of the Board of Cedar
Group, Inc., a Nasdaq listed importer and distributor of fasteners. From 1992
until 1994 he was a General Partner of the Memphis Chicks AA baseball club and
during 1995 he was chairman of the Rittenhouse Group, Inc., a private consulting
company. Mr. Rutstein currently serves on the board of directors of Packquistion
Corp. and Future Graph, Inc., privately held companies and Gourmentmarket.com,
Inc.
Herbert J. Mitschele, Jr. has been a director since he co-founded
Daltex in 1983. He was Chairman of the Board of Robert J. Baer, Inc., a
family-owned, ready-mix concrete company headquartered in Roseland, New Jersey,
until his retirement in August, 1993. This company has two other divisions: Baer
Enterprises, Inc., a real estate and trucking company, and Baer Aggregates, a
8
<PAGE>
quarrying company. Mr. Mitschele is owner and President of Ambassador Arabian
Farms, Inc., a horse breeding company. He is a former director of Livingston
National Bank and First Jersey National West, banking institutions, and a
director of Health Full-Life, a health maintenance organization. Mr. Mitschele
graduated from Fordham University with a B.S. degree in Political Science and
Administration in 1951.
Bruce Hausman, Esq. has been President and Chief Executive Officer
since May 18, 1995. He has been a director and member of the Executive Committee
since December 1993. Mr. Hausman served as Principal Executive Officer for
Belding Heminway Company, Inc., a textile manufacturer and distributor from May
1992 to July 1993. He was Senior Vice President of Belding Heminway. from
February 1988 to May 1992. He had served as a director of Plastigone
Technologies, Inc., a biodegradable plastics manufacturing company, from August
1992 until September 1997, and was a director of Circa Pharmaceuticals Inc. from
June 1990 until July 13, 1995, when Circa merged with Watson Pharmaceuticals,
Inc. Mr. Hausman also serves as an honorary trustee of Beth Israel Medical
Center in New York and an honorary trustee of the Schnurmacher Nursing Home, a
division of Beth Israel Medical Center, and was formerly chairman of its quality
assurance committee. Mr. Hausman received his B.A. in Economics from Brown
University in 1951, his M. S. from the School of Business of the University with
a major in Management and Marketing in 1952 and his J. D. from New York Law
School in 1979.
Meetings and Committees of the Board of Directors
During fiscal 1999, the Board of Directors held two telephonic meetings
and took actions by written consent on two occasions. During Fiscal 1999, no
director attended fewer than 75% of the number of meetings of the Board of
Directors held during the period such director served on the Board.
Executive Compensation
Summary Compensation Table
The following table sets forth information concerning the compensation
received by the current Chief Executive Officer of Daltex and the former
President and Chief Operating Officer of Daltex.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
Name and Other Annual All Other
Principal Position Year Salary ($) Bonus ($) Compensation Options (#) Compensation ($)
------------------ ---- ---------- --------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Bruce Hausman, President 1999 -- -- -- -- --
Chief Executive Officer 1998 -- -- -- 5,000 --
1997 -- -- -- -- --
</TABLE>
The following table sets forth information concerning the exercise of stock
options granted to the former and current executive officers named in the table.
9
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at FY/End (#) At FY End ($)
--------------------- -------------
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise (#) Released ($) Unexercisable Unexercisable
---- --------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Bruce Hausman -- -- 10,000 $7,500/0
Harvey S.S. Miller -- -- 5,500 $9,625/0
</TABLE>
(1) Based on a market price of $0.045 as of June 30, 1999.
Other Arrangements
In November 1993, Daltex entered into a consulting arrangement with Mr.
Bruce Hausman, in connection with which Mr. Hausman agreed to serve as a member
of Daltex's Board of Directors and Executive Committee. Mr. Hausman received
compensation consisting of non-qualified stock options to purchase an aggregate
of 5,000 shares of Daltex's Common Stock at an exercise price of $6.50 per
share. Mr. Hausman is also eligible to receive a cash bonus of up to $60,000 to
be granted solely within the discretion of the Board of Directors of Daltex as
Daltex's cash flow permits or upon a change of control of Daltex. On May 18,
1995, the Board of Directors appointed Mr. Hausman to serve as President and
Chief Executive Officer of Daltex. Mr. Hausman receives reimbursement of his
reasonable expenses incurred in the conduct of Daltex's business. On December
23, 1997 the Board of Directors approved repricing of this option to $1.50 per
share.
In March 1996, Mr. Hausman was granted a non-qualified option to
purchase an aggregate of 5,000 shares of Common Stock of Daltex at an exercise
price of $4.50 per share, based on the current market price at that time, in
lieu of cash compensation for Mr. Hausman's services as President and Chief
Executive Officer of Daltex since May 1995. On December 23, 1997 the Board of
Directors approved repricing of this option to $1.50 per share.
Mr. Miller currently holds nonqualified stock options, due to expire in
September 2002, to purchase an aggregate of 5,500 shares of Common Stock at an
exercise price of $0.50.
Compensation of Directors
No compensation of directors has been paid since 1989.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, as of August 31,
1999 with respect to holdings of Daltex's Common Stock by each person known by
Daltex to be the beneficial owner of more than 5% of the total number of shares
of Common Stock and Series A Convertible Preferred Stock outstanding as of such
date and by each current director and by all current directors and officers as a
group. The table also assumes issuance of 8,500,000 shares to the MCG Fund as
described above and has been adjusted for the reverse stock split. Each
beneficial owner has sole voting and investment power with respect to the shares
set forth opposite his name in the following table, except as otherwise
disclosed in the footnotes to the table or in the paragraph following the table:
10
<PAGE>
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percentage of
of Beneficial Owner Beneficial Ownership Outstanding Shares (1)
------------------- --------------------- ----------------------
<S> <C> <C>
Louis R.M. Del Guercio, M.D. 14,686 *
Herbert J. Mitschele, Jr. 9,168(2) *
C. Lawrence Rutstein 666,672(3) 6.2
Bruce Hausman 300,100 2.8
MCG Partners, Inc.
7777 Glades Road, Suite 211
Boca Raton, Florida 33434 600,600(5) 5.6
MCG Capital Partners, Ltd.
7777 Glades Road, Suite 211
Boca Raton, Florida 33434 8,500,000 79.6
Robert Hausman
1900 Corporate Boulevard., Suite 400
Boca Raton, Florida 33431 600,006(6) 5.6
All executive officers and directors
as a group (four persons) 990,626 9.3
</TABLE>
* Less than 1%.
(1) Based on 8,872,654 shares of Common Stock outstanding.
(2) Includes 1,328 shares of Common Stock beneficially owned by Robert J.
Baer, Inc., of which Mr. Mitschele is a control person, and 4,000
shares of Common Stock beneficially owned jointly by Mr. Mitschele and
his wife. The above table does not include: an aggregate of 120 shares
of Common Stock beneficially owned by trusts of which Mr. Mitschele's
daughters are the beneficiaries and his wife is the trustee. Mr.
Mitschele disclaims beneficial ownership of such shares held in trust.
(3) Includes (i) 533,340 shares underlying 26,667 shares of Series A
Convertible Preferred Stock held by MCG Partners, Inc., (ii) 66,666
shares of Common Stock held by MCG Partners, Inc., of which Mr.
Rutstein is an officer, director and principal shareholder, and (iii)
66,666 shares of Common Stock held be Mr. Rutstein. Does not include
8,000,000 shares owned by MCG Capital Partners, Ltd., for which a
company indirectly owned by Mr. Rutstein is the general partner.
(4) Includes 300,000 shares underlying 15,000 shares of Series A
Convertible Preferred Stock and 100 shares owned by Bruce Hausman
through a Keough Plan Account and options to purchase an aggregate of
10,000 shares of Common Stock of Daltex, which options are currently
exercisable.
(5) Includes 533,340 shares underlying 26,667 shares of Series A
Convertible Preferred Stock and 66,666 shares of Common Stock held by
MCG Partners, Inc.
(6) Includes 533,340 shares underlying 26,667 shares of Series A
Convertible Preferred Stock and 66,666 shares of Common Stock.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires Daltex's
directors and executive officers, and persons who own more than ten percent of a
registered class of Daltex's equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
11
<PAGE>
other equity securities of Daltex. Officers, directors and greater than
ten-percent shareholders are required by SEC regulation to furnish Daltex with
copies of all Section 16 (a) forms they file.
To Daltex's knowledge, based solely on review of the copies of such
reports furnished to Daltex, all Section 16(a) filing reports were timely filed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Daltex has adopted a policy that no officer, director or affiliate may
engage in any transactions with Daltex or any of its subsidiaries unless such
transactions have been approved by a majority of Daltex's directors who have no
interest in the transactions. Daltex anticipates that all related party
transactions will be on terms and conditions at least as favorable to Daltex as
Daltex could obtain in dealing with unrelated parties.
In September 1999, the board approved the issuance of 15,000 shares of
Series A Convertible Preferred Stock to Bruce Hausman, Daltex's president, in
exchange for the cancellation of $60,000 of debt owed to him. Each share of
Series A Preferred Stock is convertible into 20 shares of common stock.
Also in September 1999, the board approved the sale of an aggregate of
$30,000 of 6% convertible notes to MCG Partners, Bruce Hausman, Herbert
Mitschele and Louis DelGeurcio, all of whom are affiliated with Daltex. The
notes are due in two years and are convertible into common stock at a conversion
price of $.50 per share. The proceeds from this sale will be used to settle
outstanding obligations.
ADOPTION OF 1999 STOCK OPTION PLAN
Our Board of Directors and a majority of our shareholders have adopted
the 1999 Plan to authorize 2,000,000 shares of common stock for issuance under
the 1999 Plan.
Plan Description
The statements in this document concerning the terms and provisions of
the 1999 Plan are summaries only and do not purport to be complete. All such
statements are qualified in their entirety by reference to the full text of the
1999 Plan, which is attached as Annex B to this document.
The purpose of the 1999 Plan is to advance Daltex's interests by
providing an additional incentive to attract and retain qualified and competent
persons as employees, upon whose efforts and judgment our success is largely
dependent, through the encouragement of stock ownership by these persons.
The 1999 Plan was effective as of September 30, 1999, and unless sooner
terminated by our board of directors in accordance with the terms of the 1999
Plan, will terminate on July 30, 2009. Certain employees, who are selected by
the stock option committee, or if there is no stock option committee by the
Board of Directors, may participate in the 1999 Plan; however, no incentive
stock option, as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code" or "Internal Revenue Code") will be granted to a consultant
who is not also our employee.
The 1999 Plan provides for the issuance of incentive stock options
("Incentive Stock Options") and nonqualified stock options ("Nonqualified Stock
Options"). An Incentive Stock Option is an option to purchase common stock that
meets the definition of "incentive stock option" set forth in Section 422 of the
Code. A Nonqualified Stock Option is an option to purchase common stock that
meets certain requirements in the Plan but does not meet the definition of an
"incentive stock option" set forth in Section 422 of the Code. Nonqualified
Stock Options and Incentive Stock Options are sometimes referred to herein as
"Options."
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The 2,000,000 shares of common stock may be issued pursuant to Options
granted under the 1999 Plan. If any Option granted pursuant to the 1999 Plan
terminates, expires, or is canceled or surrendered, in whole or in part, shares
subject to the unexercised portion may again be issued pursuant to the exercise
of Options granted under the 1999 Plan. The shares acquired upon exercise of
Options granted under the 1999 Plan will be authorized and unissued shares of
common stock.
The 1999 Plan is administered by a committee of two or more directors
(the "Committee") or, if a Committee is not designated by the Board of
Directors, by the Board of Directors as a whole. The Board has authorized the
Compensation Committee to administer the 1999 Plan. The Committee has the right
to determine, among other things, the persons to whom Options are granted, the
number of shares of common stock subject to Options, the exercise price of
Options and the term thereof.
All of our employees, including officers and directors and consultants,
are eligible to receive grants of Options under the 1999 Plan; however, no
Incentive Stock Option may be granted to a consultant who is not also an
employee of the Daltex or any of our subsidiaries. Upon receiving grants of
Options, each holder of the Options (the "Optionee") will enter into an option
agreement with that contains the terms and conditions deemed necessary by the
Committee.
Terms and Conditions of Options
Option Price
For any Option granted under the 1999 Plan, the option price per share of
common stock may be any price not less than par value per share as determined by
the Committee; however, the option price per share of any Incentive Stock Option
may not be less than the Fair Market Value (defined below) of the common stock
on the date such Incentive Stock Option is granted. On September 30, 1999, the
closing price of our common stock as reported by the OTC Bulletin Board Market
was $.002 per share.
Under the 1999 Plan, the "Fair Market Value" is the closing price of
shares on the business day immediately preceding the date of grant; however, if
the shares are not publicly traded, then the Fair Market Value will be as the
Committee will in its sole and absolute discretion determine in a fair and
uniform manner.
Exercise of Options
Each Option is exercisable in such amounts, at such intervals and upon
such terms as the Committee may determine; however, Incentive Stock Options must
vest in three annual installments commencing one year from the date of grant. In
no event may an Option be exercisable after ten years from the date of grant.
Unless otherwise provided in an Option, each outstanding Option may, in the sole
discretion of the Committee, become immediately fully exercisable (i) if there
occurs any transaction (which will include a series of transactions occurring
within 60 days or occurring pursuant to a plan), that has the result that our
shareholders immediately before such transaction cease to own at least 51
percent of our voting stock or of any entity that results from our participation
in a reorganization, consolidation, transaction, liquidation or any other form
of corporate transaction; (ii) if our shareholders approve a plan of
transaction, consolidation, reorganization, liquidation or dissolution in which
we do not survive; or (iii) if our shareholders approve a plan for the sale,
lease, exchange or other disposition of all or substantially all our property
and assets. The Committee may in its sole discretion accelerate the date on
which any Option may be exercised and may accelerate the vesting of any shares
subject to any Option or previously acquired by the exercise of any Option.
Options granted to the officers and directors under the 1999 Plan may not be
exercised unless otherwise expressly provided in any Option, until six months
following the date of grant and if and only if the Optionee is in the employ of
Daltex on such date.
Unless further limited by the Committee in any Option, shares of common
stock purchased upon the exercise of Options must be paid for in cash, by
certified or official bank check, by money order, with already owned shares of
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common stock, or a combination of the above. The Committee, in its sole
discretion, may accept a personal check in full or partial payment. If paid in
whole or in part with shares of already owned common stock, the value of the
shares surrendered is deemed to be their Fair Market Value on the date the
Option is exercised. Proceeds from the sale of common stock pursuant to the
exercise of Options will be added to the general funds of Daltex to be used for
general corporate purposes. Under the 1999 Plan, we may also lend money to an
Optionee to exercise all or a portion of an Option granted under the 1999 Plan.
If the exercise price is paid in whole or in part with Optionee's promissory
note, such note will (i) provide for full recourse to the maker, (ii) be
collateralized by the pledge of shares purchased by Optionee upon exercise of
such Option, (iii) bears interest at a rate of interest no less than the rate of
interest payable by us to our principal lender, and (iv) contain such other
terms as the Committee in its sole discretion will require.
Nontransferability
Options granted under the 1999 Plan are not transferable by an Optionee
other than to a family member or by will or the laws of descent and
distribution, and Options are exercisable during an Optionee's lifetime only by
the Optionee.
Termination of Options
The expiration date of an Option is determined by the Committee at the
time of the grant and is set forth in the applicable stock option agreement. In
no event may an Option be exercisable after ten years from the date it is
granted.
The 1999 P1an provides that if an Optionee's employment is terminated for
any reason other than for cause, an improper termination, mental or physical
disability or death, then the unexercised portion of the Optionee's Options will
terminate three months after the such termination. If an Optionee's employment
is terminated for cause or if there is an improper termination of Optionee's
employment, the unexercised portion of the Optionee's Options will terminate
immediately upon this termination. If an Optionee's employment is terminated by
reason of the Optionee's mental or physical disability, the unexercised portion
of the Optionee's Options will terminate 12 months after such termination. If an
Optionee's employment is terminated by reason of the Optionee's death, the
unexercised portion of the Optionee's Options will terminate 12 months after the
Optionee's death.
The Committee in its sole discretion may by giving written notice cancel,
effective upon the date of the consummation of certain corporate transactions
that would result in an Option becoming fully exercisable, cancel any Option
that remains unexercised on such date. Such notice will be given a reasonable
period of time prior to the proposed date of such cancellation and may be given
either before or after Shareholder approval of such corporate transaction.
Outstanding Options
As of the Record Date, no Options had been granted pursuant to the 1999
Plan.
Federal Income Tax Effects
The 1999 Plan is not qualified under the provisions of Section 401(a) of
the Code, nor is it subject to any of the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
Incentive Stock Options
Incentive Stock Options are "incentive stock options" as defined in
Section 422 of the Internal Revenue Code. Under the Code, an Optionee generally
is not subject to ordinary income tax upon the grant or exercise of an Incentive
Stock Option. However, an employee who exercises an Incentive Stock Option by
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delivering shares of common stock previously acquired pursuant to the exercise
of an Incentive Stock Option is treated as making a Disqualifying Disposition
(defined below) of these shares if the employee delivers the shares before the
expiration of the holding period applicable to these shares. The applicable
holding period is the longer of two years from the date of grant or one year
from the date of exercise. The effect of this provision is to prevent
"pyramiding" the exercise of an Incentive Stock Option (i.e., the exercise of
the Incentive Stock Option for one share and the use of that share to make
successive exercise of the Incentive Stock Option until it is completely
exercised) without the imposition of current income tax.
The amount by which the fair market value of the shares acquired at the
time of exercise of an Incentive Stock Option exceeds the purchase price of the
shares under such Option will be treated as an adjustment to the Optionee's
alternative minimum taxable income for purposes of the alternative minimum tax.
If, however, there is a Disqualifying Disposition in the year in which the
Option is exercised, the maximum amount of the item of adjustment for such year
is the gain on the disposition of the shares. If there is Disqualifying
Disposition in a year other than the year of exercise, the dispositions will not
result in an adjustment for the other year.
If, subsequent to the exercise of an Incentive Stock Option (whether paid
for in cash or in shares), the Optionee holds the shares received upon exercise
for a period that exceeds (a) two years from the date such Incentive Stock
Option was granted or, if later, (b) one year from the date of exercise (the
"Required Holding Period"), the difference (if any) between the amount realized
from the sale of such shares and their tax basis to the holder will be taxed as
long-term capital gain or loss. If the holder is subject to the alternative
minimum tax in the year of disposition, the holder's tax basis in his or her
shares will be increased for purposes of determining his alternative minimum tax
for that year, by the amount of the item of adjustment recognized with respect
to such shares in the year the Option was exercised.
In general, if, after exercising an Incentive Stock Option, an employee
disposes of the acquired shares before the end of the Required Holding Period (a
"Disqualifying Disposition"), an Optionee would be deemed to receive ordinary
income in the year of the Disqualifying Disposition, in an amount equal to the
excess of the fair market value of the shares at the date the Incentive Stock
Option was exercised over the exercise price. If the Disqualifying Disposition
is a sale or exchange which would permit a loss to be recognized under the Code
(were a loss in fact to be sustained), and the sales proceeds are less than the
fair market value of the shares on the date of exercise, the Optionee's ordinary
income would be limited to the gain (if any) from the sale. If the amount
realized upon disposition exceeds the fair market value of the shares on the
date of exercise, the excess would be treated as short-term or long-term capital
gain, depending on whether the holding period for such shares exceeded one year.
We are not allowed an income tax deduction for the grant or exercise of an
Incentive Stock Option or the disposition, after the Required Holding Period, of
shares acquired upon exercise. In the event of a Disqualifying Disposition, we
will be allowed to deduct an amount equal to the ordinary income to be
recognized by the Optionee, provided that such amount is an ordinary and
necessary business expense to us and is reasonable, and we satisfy our
withholding obligation for this income.
Nonqualified Stock Options
An Optionee granted a Nonqualified Stock Option under the 1999 Plan will
generally recognize, at the date of exercise of such Nonqualified Stock Option,
ordinary income equal to the difference between the exercise price and the fair
market value of the shares of common stock subject to the Nonqualified Stock
Option. This taxable ordinary income will be subject to Federal income tax
withholding. We will be allowed to deduct an amount equal to the ordinary income
to be recognized by the Optionee, provided that such amount is an ordinary and
necessary business expense to us and is reasonable, and we satisfy our
withholding obligation for this income.
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If an Optionee exercises a Nonqualified Stock Option by delivering other
shares, the Optionee will not recognize gain or loss with respect to the
exchange of such shares, even if their then fair market value is different from
the Optionee's tax basis. The Optionee, however, will be taxed as described
above with respect to the exercise of the Nonqualified Stock Option as if he had
paid the exercise price in cash, and we likewise generally will be entitled to
an equivalent tax deduction. Provided a separate identifiable stock certificate
is issued therefor, the Optionee's tax basis in that number of shares received
on such exercise which is equal to the number of shares surrendered on such
exercise will be equal to his tax basis in the shares surrendered and his
holding period for such number of shares received will include his holding
period for the shares surrendered. The Optionee's tax basis and holding period
for the additional shares received on exercise of a Nonqualified Stock Option
paid for, in whole or in part, with shares will be the same as if the Optionee
had exercised the Nonqualified Stock Option solely for cash.
The above discussion is only a summary of the potential tax consequences
relevant to the Optionees or to the Daltex, and may not describe tax
consequences based on particular circumstances. It is based on federal income
tax law and interpretational authorities as of the date of this document, which
are subject to change at any time.
OTHER MATTERS
The information contained in this document is to our best knowledge, and
the information contained herein with respect to the directors, nominees for
director, executive officers and principal shareholders is based upon
information, which these individuals have provided to us.
SHAREHOLDER PROPOSALS
Any proposals of shareholders to be presented at the 2000 Annual
Meeting of Shareholders must be received by Daltex no later than May 31, 2000
for inclusion in Daltex's proxy statement relating to such meeting, subject to
the rules and regulations of the Commission.
By Order Of The Board Of Directors,
BRUCE HAUSMAN
President and Chief Executive Officer
Boca Raton, Florida
October __, 1999
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Annex A
CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION
OF
DALTEX INDUSTRIES CORP.
The undersigned, Bruce Hausman, President of Daltex Medical Sciences,
Inc., a Delaware corporation organized and existing under and by virtue of the
Delaware General Corporation Law (the "Corporation"), does hereby certify:
1. The name of the Corporation is Daltex Medical Sciences, Inc.
2. The following plan of recapitalization shall be adopted:
(a) Each 50 shares of common stock shall be issued and
outstanding on the effective date of this Certificate of
Amendment shall be combined into and become one share of
common stock;
(b) No fractional shares of common stock shall be issued to the
holders thereof by reason of the aforesaid combination and
instead the Company shall pay to the holders of fractional
shares an amount equal to the fair market value thereof at the
effective date of this Certificate of Amendment and shall be
paid at such time as any holder shall surrender such holder's
existing certificate in exchange for a new certificate
representing the combined shares of common stock;
(c) Following the effective date of this Certificate of
Amendment, each presently outstanding certificate for common
stock shall thereafter be deemed to represent only that
number of shares determined as provided above; and
(d) The number of shares of common stock reserved for issuance
upon exercise of options or warrants shall automatically be
adjusted to reflect the combination of shares provided for
above.
3. The following provisions of the Certificate of Incorporation of the
Corporation are amended in the following particulars:
Article I is deleted and replaced with the following:
ARTICLE I
CORPORATE NAME
The name of this Corporation Shall be ii Group, Inc.
Article IV is deleted and replaced with the following:
ARTICLE IV
CAPITAL STOCK
The maximum number of shares that this Corporation shall be authorized to issue
and have outstanding at any one time shall be fifty five million (55,000,000)
shares which are to be divided into two classes as follows:
50,000,000 shares of common stock with a par value of $.01 per share;
and
5,000,000 shares of preferred stock, with a par value of $.01 per
share.
Series of preferred stock may be created and issued from time to time,
with such designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions providing for the creation and
issuance of such series of preferred stock as adopted by the Board of Directors
pursuant to the authority in this paragraph given.
Series A Convertible Preferred Stock
1. Designation and Amount. The shares of such series shall be
designated as Series A Convertible Preferred Stock (the "Series A Convertible
Preferred Stock") and the number of shares constituted in the Series A
Convertible Preferred Stock shall be 150,000. Such number of shares may be
increased or decreased by the resolution of the Board of Directors; provided
that no decrease shall reduce the number of shares of Series A Convertible
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series A Convertible Preferred Stock.
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2. Liquidation, Dissolution or Winding Up. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of shares of Series A Convertible Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders, before any payment shall be made
to the holders of Junior Stock by reason of their ownership thereof, an amount
equal to $1.00 per share of Series A Convertible Preferred Stock plus the amount
of any accrued but unpaid dividends (if declared) and interest thereon. If upon
any such liquidation, dissolution or winding up of the Corporation the remaining
assets of the Corporation available for distribution to stockholders shall be
insufficient to pay the holders of shares of Series A Convertible Preferred
Stock the full amount to which they shall be entitled, the holders of shares of
Series A Convertible Preferred Stock shall share ratably in any distribution of
the remaining assets and funds of the Corporation in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to
such shares were paid in full.
3. Voting.
(a) Number of Votes; Voting with Common Stock. Each
holder of outstanding shares of Series A Convertible Preferred Stock shall be
entitled to the number of votes equal to twenty (20) times the number of shares
of Series A Convertible Preferred Stock held by such holder at each meeting of
stockholders of the Corporation (and written actions of stockholders in lieu of
meetings) with respect to any and all matters presented to the stockholders of
the Corporation for their action or consideration. Except as provided by law, or
by the provisions of the following subsections of this Section 3, holders of
Series A Convertible Preferred Stock shall vote together with holders of common
stock and not as separate classes, on any matter coming before shareholders.
(b) Adverse Effects. The Corporation shall not amend,
alter or repeal preferences, rights, powers or other terms of the Series A
Convertible Preferred Stock so as to affect adversely the Series A Convertible
Preferred Stock without the written consent or affirmative vote of the holders
of at least 66-2/3% of the then outstanding shares of Series A Convertible
Preferred Stock given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a class. For this purpose, without limiting
the generality of the foregoing the authorization or issuance of any series of
Preferred Stock which is on a parity with or has preference or priority over the
Series A Convertible Preferred stock as to the right to receive either dividends
or amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall be deemed to affect adversely the Series A Convertible
Preferred Stock.
(c) Mergers, etc. The consent of the holders of not
less than 66-2/3% of the outstanding Series A Convertible Preferred Stock,
voting separately as a single class, in person or by proxy, either in writing
without a meeting or at a special or annual meeting of shareholders called for
the purpose, shall be necessary for the Corporation to sell all or substantially
all of the Corporation's assets or effect any merger, consolidation, share
exchange or similar transaction to which the Corporation is a party, or to enter
into any other transaction resulting in the acquisition of a majority of the
then outstanding voting stock of the Corporation by another corporation or
entity.
4. Optional Conversion. The holders of the Series A
Convertible Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each share of Series A
Convertible Preferred stock shall be convertible, at the option of the holder
thereof, without the payment of additional consideration by the holder thereof,
at any time and from time to time, into twenty (20) shares of Common Stock (the
"Conversion Rate"). The Conversion Rate shall be subject to adjustment as
provided below. In the event of a liquidation of the Corporation, the Conversion
Rights shall terminate immediately prior to the payment of any amounts
distributable on liquidation to the holders of Series A Convertible Preferred
Stock.
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(b) Fractional Shares. No fractional shares of Common
Stock shall be issued upon conversion of the Series A Convertible Preferred
Stock. In lieu of fractional shares, the Corporation shall pay by a whole share
of Common Stock.
(c) Mechanics of Conversion.
(i) In order to convert shares of Series A
Convertible Preferred Stock into shares of Common Stock, the holder shall
surrender the certificate or certificates for such shares of Series A
Convertible Preferred Stock at the principal office of the Corporation, together
with written notice that such holder elects to convert all or any number of the
shares represented by such certificate or certificates. Such notice shall state
such holder's name or the names of the nominees in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. If required
by the Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by a written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or his
or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the Corporation shall be the conversion date
("Conversion Date"). The Corporation shall, as soon as practicable after the
Conversion Date, issue and deliver at the place requested by such holder, or to
his nominees, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled, together with cash in lieu of any
fraction of a share.
(ii) The Corporation shall at all times during
which the Series A Convertible Preferred Stock shall be outstanding reserve and
keep available out of its authorized but unissued stock, for the purpose of
effecting the conversion of the Series A Convertible Preferred Stock, such
number of its duly authorized shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding Series A Convertible
Preferred Stock. Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value of the shares of Common
Stock issuable upon conversion of the Series A Convertible Preferred Stock, the
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at such adjusted
Conversion Price.
(iii) All shares of Series A Convertible
Preferred Stock surrendered for conversion as herein provided shall no longer be
deemed to be outstanding, and all rights with respect to such shares, including
the rights, if any, to receive dividends, notices and to vote, shall immediately
cease and terminate on the Conversion Date, except only the right of the holders
thereof to receive shares of Common Stock and cash in lieu of fractional shares
in exchange therefor. Any shares of Series A Convertible Preferred Stock so
converted shall be retired and canceled and shall not be reissued, and the
Corporation may from time to time take such appropriate action as may be
necessary to reduce the number of shares of authorized Series A Convertible
Preferred Stock accordingly.
(d) Adjustment for Stock Splits and Combinations. If
the Corporation shall at any time or from time to time after the date on which
any Series A Convertible Preferred Stock is first issued ("the Original Issue
Date") effect a subdivision of the outstanding Common Stock, the Conversion Rate
then in effect immediately before that subdivision shall be proportionately
adjusted. If the Corporation shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock, the
Conversion Rate then in effect immediately before the combination shall be
proportionately adjusted. Any adjustment under this paragraph shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(e) Adjustments for Certain Dividends and
Distributions. In the event the Corporation at any time or from time to time
after the Original Issue Date shall make or issue a dividend or other
distribution payable in shares of Common Stock, then and in each such event the
Conversion Rate shall be increased as of the time of such issuance, by
multiplying the Conversion Rate by a fraction,
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(i) the numerator of which shall be the total
number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance plus the number of shares of Common Stock issuable in
payment of such dividend or distribution, and
(ii) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance.
(f) Adjustments for Other Dividends and
Distributions. In the event the Corporation at any time or from time to time
after the Original Issue Date shall make or issue a dividend or other
distribution payable in securities of the Corporation other than shares of
Common Stock, then and in each such event provision shall be made so that the
holders of shares of the Series A Convertible Preferred Stock shall receive upon
conversion thereof in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Corporation that they
would have received had their Series A Convertible Preferred Stock been
converted into Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and including the conversion date,
retained such securities receivable by them as aforesaid during such period
given application to all adjustments called for during such period, under this
paragraph with respect to the rights of the holders of the Series A Convertible
Preferred Stock.
(g) Adjustment for Reclassification, Exchange, or
Substitution. If the Common Stock issuable upon the conversion of the Series A
Convertible Preferred Stock shall be changed into the same or a different number
of shares of any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares or stock dividend provided for above, or a reorganization, merger,
consolidation, share exchange or sale of assets for below), then and in each
such event the holder of each share of Series A Convertible Preferred Stock
shall have the right thereafter to convert such share into the kind and amount
of shares of stock and other securities and property receivable upon such
reorganization, reclassification, or other change, by holders of the number of
shares of Common Stock into which such shares of Series A Convertible Preferred
Stock might have been converted immediately prior to such reorganization,
reclassification, or change, all subject to further adjustment as provided
herein.
(h) Adjustment for Merger or Reorganization, etc. In
case of any consolidation, merger or share exchange of the Corporation with or
into another corporation or the sale of all or substantially all of the assets
of the Corporation to another corporation to which the holders of Series A
Convertible Preferred Stock shall have consented in accordance with Section 3
hereof, then each share of Series A Convertible Preferred Stock shall thereafter
be convertible into the kind and amount of shares of stock or other securities
or property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such Series A Convertible Preferred
Stock would have been entitled upon such consolidation, merger or sale; and, in
such case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions in this Section 4
set forth with respect to the rights and interest thereafter of the holders of
the Series A Convertible Preferred Stock, to the end that the provisions set
forth in this Section 4 (including provisions with respect to changes in and
other adjustments of the Conversion Price) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the Series A Convertible
Preferred Stock.
(i) No Impairment. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, share exchange, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid. the
observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 3 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A Convertible Preferred Stock
against impairment.
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(j) Certificate as to Adjustments. Upon the
occurrence of each adjustment or readjustment of the Conversion Rate pursuant to
this Section 4, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of Series A Convertible Preferred Stock a certificate setting forth
such adjustment and showing in detail the facts upon which such adjustment or
readjustment is based and shall file a copy of such certificate with its
corporate records. The Corporation shall, upon the written request at any time
of any holder of Series A Convertible Preferred Stock, furnish or cause to be
furnished to such holder a similar certificate setting forth (1) such
adjustments and readjustments, (2) the Conversion Rate then in effect, and (3)
the number of shares of Common Stock and the amount, if any, of other property
which then would be received upon the conversion of Series A Convertible
Preferred Stock. Despite such adjustment or readjustment, the form of each or
all stock certificate representing Series A Convertible Preferred Stock, if the
same shall reflect the initial or any subsequent conversion price, need not be
changed in order for the adjustments or readjustments to be valued in accordance
with the provisions of this Certificate of Designation, which shall control.
(k) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or
any other distribution) on its Common Stock;
(ii) that the Corporation subdivides or combines
its outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock
of the Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock consolidation, merger or
share exchange of the Corporation into or with another corporation, or of the
sale of all or substantially all of the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation; then the Corporation shall cause
to be filed at its principal office and shall cause to be mailed to the holders
of the Series A Convertible Preferred Stock at their last addresses as shown on
the records of the Corporation, at least 20 days prior to the record date
specified in (A) below or 20 days before the date specified in (B) below, a
notice stating:
(A) the record date of such dividend,
distribution, subdivision or combination, or, if a record is not to be taken,
the date as to which the holders of Common Stock of record to be entitled to
such dividend, distribution, subdivision or combination are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, share exchange, sale, dissolution, liquidation or winding
up is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or winding up.
5. Sinking Fund. There shall be no sinking fund for the
payment of dividends or liquidation preference on Series A Convertible Preferred
Stock or the redemption of any shares thereof.
6. No Mandatory Redemption. The Series A Convertible Preferred
Stock is not subject to mandatory redemption by the Corporation.
4. The foregoing amendments were adopted by a majority of the
shareholders by written consent dated September 30, 1999 and by the directors of
the Corporation at a meeting held on September 23, 1999 in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned President of the
Corporation has executed this Certificate of Amendment this _____________ day of
October, 1999.
DALTEX MEDICAL SCIENCES, INC.
By:_______________________________________
Bruce Hausman, President
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Annex B
DALTEX MEDICAL SCIENCES, INC.
1999 STOCK OPTION PLAN
As Approved by the Board of Directors on July 30, 1999
1. Purpose. The purpose of the Daltex Medical Sciences, Inc. 1999 Stock
Option Plan (the "Plan") is to advance the interests of Daltex Medical Sciences,
Inc., a Delaware corporation (the "Company"), by providing an additional
incentive to attract, retain and motivate highly qualified and competent persons
who are key to the Company, and upon whose efforts and judgment the success of
the Company and its Subsidiaries is largely dependent, including key employees,
consultants, independent contractors, advisory board members, Officers and
Directors, by authorizing the grant of options to purchase Common Stock of the
Company to persons who are eligible to participate hereunder, thereby
encouraging stock ownership in the Company by such persons, all upon and subject
to the terms and conditions of this Plan.
2. Definitions. As used herein, the following terms shall have the
meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean any of the following:
(i) a determination by the Company that there has been a willful,
reckless or grossly negligent failure by the Optionee to perform
his or her duties as an employee of the Company;
(ii) a determination by the Company that there has been a willful
breach by the Optionee of any of the material terms or provisions
of any employment agreement between such Optionee and the Company;
(iii) any conduct by the Optionee that either results in his or her
conviction of a felony under the laws of the United States of
America or any state thereof, or of an equivalent crime under the
laws of any other jurisdiction;
(iv) a determination by the Company that the Optionee has committed an
act or acts involving fraud, embezzlement, misappropriation,
theft, breach of fiduciary duty or material dishonesty against the
Company, its properties or its personnel;
(v) any act by the Optionee that the Company determines to be in
willful or wanton disregard of the Company's best interests, or
which results, or is intended to result, directly or indirectly,
in improper gain or personal enrichment of the Optionee at the
expense of the Company;
(vi) a determination by the Company that there has been a willful,
reckless or grossly negligent failure by the Optionee to comply
with any rules, regulations, policies or procedures of the
Company, or that the Optionee has engaged in any act, behavior or
conduct demonstrating a deliberate and material violation or
disregard of standards of behavior that the Company has a right to
expect of its employees; or
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(vii) if the Optionee, while employed by the Company and for two years
thereafter (or such shorter period as may be stated in any
employment, confidentiality or noncompete agreement with the
Optionee), violates a confidentiality and/or noncompete agreement
with the Company, or fails to safeguard, divulges, communicates,
uses to the detriment of the Company or for the benefit of any
person or persons, or misuses in any way, any Confidential
Information; provided, however, that, if the Optionee has entered
into a written employment agreement with the Company which remains
effective and which expressly provides for a termination of such
Optionee's employment for "cause," the term "Cause" for purposes
of this Plan shall have the meaning as set forth in the Optionee's
employment agreement in lieu of the definition of "Cause" set
forth in this Section 2(b).
(c) "Change of Control" shall mean the acquisition by any person or
group (as that term is defined in the Securities Exchange Act of
1934 (the "Exchange Act"), and the rules promulgated pursuant to
that act) in a single transaction or a series of transactions of
35% or more in voting power of the outstanding stock of the
Company and a change of the composition of the Board of Directors
so that, within two years after the acquisition took place, a
majority of the members of the Board of Directors of the Company,
or of any corporation with which the Company may be consolidated
or merged, are persons who were not directors or officers of the
Company or one of its Subsidiaries immediately prior to the
acquisition, or to the first of a series of transactions which
resulted in the acquisition of 35% or more in voting power of the
outstanding stock of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean the stock option or compensation committee
appointed by the Board or, if not appointed, the Board.
(f) "Common Stock" shall mean the Company's Common Stock, par value
$.01 per share.
(g) "Confidential Information" shall mean any and all information
pertaining to the Company's financial condition, clients,
customers, prospects, sources of prospects, customer lists,
trademarks, trade names, service marks, service names, "know-how,"
trade secrets, products, services, details of client or consulting
contracts, management agreements, pricing policies, operational
methods, site selection, results of operations, costs and methods
of doing business, owners and ownership structure, marketing
practices, marketing plans or strategies, product development
techniques or plans, procurement and sales activities, promotion
and pricing techniques, credit and financial data concerning
customers and business acquisition plans, that is not generally
available to the public.
(h) "Director" shall mean a member of the Board.
(i) "Employee" shall mean any person, including Officers, Directors,
consultants and independent contractors, who is either employed or
engaged by the Company or any parent or Subsidiary of the Company
within the meaning of Code Section 3401(c) or the regulations
promulgated thereunder.
(j) "Fair Market Value" of a Share on any date of reference shall be
the Closing Price of a share of Common Stock on the business day
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immediately preceding such date, unless the Committee in its sole
discretion shall determine otherwise in a fair and uniform manner.
For this purpose, the "Closing Price" of the Common Stock on any
business day shall be (i) if the Common Stock is listed or
admitted for trading on any United States national securities
exchange, or if actual transactions are otherwise reported on a
consolidated transaction reporting system, the last reported sale
price of the Common Stock on such exchange or reporting system, as
reported in any newspaper of general circulation, (ii) if the
Common Stock is quoted on the National Association of Securities
Dealers Automated Quotations System ("Nasdaq), or any similar
system of automated dissemination of quotations of securities
prices in common use, the closing sales price or, if not available
the mean between the closing high bid and low asked quotations for
such day of the Common Stock on such system, or (iii) if neither
clause (i) nor (ii) is applicable, the mean between the high bid
and low asked quotations for the Common Stock as reported by the
National Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for the Common
Stock on at least five of the 10 preceding days. If the
information set forth in clauses (i) through (iii) above is
unavailable or inapplicable to the Company (e.g., if the Company's
Common Stock is not then publicly traded or quoted), then the
"Fair Market Value" of a Share shall be the fair market value
(i.e., the price at which a willing seller would sell a Share to a
willing buyer when neither is acting under compulsion and when
both have reasonable knowledge of all relevant facts) of a share
of the Common Stock on the business day immediately preceding such
date as the Committee in its sole and absolute discretion shall
determine in a fair and uniform manner.
(k) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Code.
(l) "Non-Employee Directors" shall have the meaning set forth in Rule
16b-3(b)(3)(i) (17 C.F.R. ss.240.16(b)-3(b)(3)(i)) under the
Securities Exchange Act of 1934, as amended.
(m) "Non-Statutory Stock Option" or "Nonqualified Stock Option" shall
mean an Option which is not an Incentive Stock Option.
(n) "Officer" shall mean the Company's Chairman, chief executive
officer, president, principal financial officer, principal
accounting officer (or, if there is no such accounting officer,
the controller), any vice-president of the Company in charge of a
principal business unit, division or function (such as sales,
administration or finance), any other officer who performs a
policy-making function, or any other person who performs similar
policy-making functions for the Company. Officers of Subsidiaries
shall be deemed Officers of the Company if they perform such
policy-making functions for the Company. As used in this
paragraph, the phrase "policy-making function" does not include
policy-making functions that are not significant. Unless specified
otherwise in a resolution by the Board, an "executive officer"
pursuant to Item 401(b) of Regulation S-K (17 C.F.R.
ss.229.401(b)) shall be only such person designated as an
"Officer" pursuant to the foregoing provisions of this paragraph.
(o) "Option" (when capitalized) shall mean any stock option granted
under this Plan.
(p) "Optionee" shall mean a person to whom an Option is granted under
this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.
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(q) "Plan" shall mean this 1999 Stock Option Plan of the Company,
which Plan shall be effective upon approval by the Board, subject
to approval, within 12 months of the date thereof by holders of a
majority of the Company's issued and outstanding Common Stock of
the Company.
(r) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(s) "Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(t) "Share" or "Shares" shall mean a share or shares, as the case may
be, of the Common Stock, as adjusted in accordance with Section 10
of this Plan.
(u) "Subsidiary" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company
if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain
owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in
such chain.
3. Shares and Options. Subject to adjustment in accordance with Section
10 hereof, the Company may grant to Optionees from time to time Options to
purchase an aggregate of up to 2,000,000 Shares from Shares held in the
Company's treasury or from authorized and unissued Shares. If any Option granted
under this Plan shall terminate, expire, or be canceled, forfeited or
surrendered as to any Shares, the Shares relating to such lapsed Option shall be
available for issuance pursuant to new Options subsequently granted under this
Plan. Upon the grant of any Option hereunder, the authorized and unissued Shares
to which such Option relates shall be reserved for issuance to permit exercise
under this Plan. Subject to the provisions of Section 14 hereof, an Option
granted hereunder shall be either an Incentive Stock Option or a Non-Statutory
Stock Option as determined by the Committee at the time of grant of such Option
and shall clearly state whether it is an Incentive Stock Option or Non-Statutory
Stock Option.
4. Limitations. Options otherwise qualifying as Incentive Stock Options
hereunder will not be treated as Incentive Stock Options to the extent that the
aggregate Fair Market Value (determined at the time the Option is granted) of
the Shares, with respect to which Options meeting the requirements of Code
Section 422(b) are exercisable for the first time by any individual during any
calendar year (under all stock option or similar plans of the Company and any
Subsidiary), exceeds $100,000.
5. Conditions for Grant of Options.
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee,
provided such terms are not inconsistent with this Plan or any
applicable law. Optionees shall be those persons selected by the
Committee from the class of all regular Employees of the Company
or its Subsidiaries, including Employee Directors and Officers who
are regular or former regular employees of the Company, as well as
consultants to the Company. Any person who files with the
Committee, in a form satisfactory to the Committee, a written
waiver of eligibility to receive any Option under this Plan shall
not be eligible to receive any Option under this Plan for the
duration of such waiver.
(b) In granting Options, the Committee shall take into consideration
the contribution the person has made, or is expected to make, to
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the success of the Company or its Subsidiaries and such other
factors as the Committee shall determine. The Committee shall also
have the authority to consult with and receive recommendations
from Officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee may from
time to time in granting Options under this Plan prescribe such
terms and conditions concerning such Options as it deems
appropriate, including, without limitation, (i) the exercise price
or prices of the Option or any installments thereof, (ii)
prescribing the date or dates on which the Option becomes and/or
remains exercisable, (iii) providing that the Option vests or
becomes exercisable in installments over a period of time, and/or
upon the attainment of certain stated standards, specifications or
goals, (iv) relating an Option to the continued employment of the
Optionee for a specified period of time, or (v) conditions or
termination events with respect to the exercisability of any
Option, provided that such terms and conditions are not more
favorable to an Optionee than those expressly permitted herein;
provided, however, that to the extent not canceled pursuant to
Section 9(b) hereof, upon a Change of Control, any Options that
have not vested shall vest upon such Change in Control.
(c) The Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other
benefits related to their employment with the Company or its
Subsidiaries. Neither this Plan nor any Option granted under this
Plan shall confer upon any person any right to employment or
continuance of employment (or related salary and benefits) by the
Company or its Subsidiaries.
6. Exercise Price. The exercise price per Share of any Option shall be
any price determined by the Committee but shall not be less than the par value
per Share; provided, however, that in no event shall the exercise price per
Share of any Incentive Stock Option be less than the Fair Market Value of the
Shares underlying such Option on the date such Option is granted and, in the
case of an Incentive Stock Option granted to a 10% shareholder, the per Share
exercise price will not be less than 110% of the Fair Market Value in accordance
with Section 14 of this Plan. Re-granted Options, or Options which are canceled
and then re-granted covering such canceled Options, will, for purposes of this
Section 6, be deemed to have been granted on the date of the re-granting.
7. Exercise of Options.
(a) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option
price of the Shares as to which the Option is exercised has been
made, (iii) the Optionee has agreed to be bound by the terms,
provisions and conditions of any applicable shareholders'
agreement, and (iv) arrangements that are satisfactory to the
Committee in its sole discretion have been made for the Optionee's
payment to the Company of the amount that is necessary for the
Company or the Subsidiary employing the Optionee to withhold in
accordance with applicable Federal or state tax withholding
requirements. Unless further limited by the Committee in any
Option, the exercise price of any Shares purchased pursuant to the
exercise of such Option shall be paid in cash, by certified or
official bank check, by money order, with Shares or by a
combination of the above; provided, however, that the Committee in
its sole discretion may accept a personal check in full or partial
payment of any Shares. If the exercise price is paid in whole or
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in part with Shares, the value of the Shares surrendered shall be
their Fair Market Value on the date the Option is exercised. The
Company in its sole discretion may, on an individual basis or
pursuant to a general program established by the Committee in
connection with this Plan, lend money to an Optionee to exercise
all or a portion of the Option granted hereunder. If the exercise
price is paid in whole or part with the Optionee's promissory
note, such note shall (i) provide for full recourse to the maker,
(ii) be collateralized by the pledge of the Shares that the
Optionee purchases upon exercise of such Option, (iii) bear
interest at a rate no less than the rate of interest payable by
the Company to its principal lender, and (iv) contain such other
terms as the Committee in its sole discretion shall require.
Additionally, any Option may be exercised pursuant to a "cashless"
or "net issue" exercise provision set forth therein. No Optionee
shall be deemed to be a holder of any shares subject to an Option
unless and until a stock certificate or certificates for such
shares are issued to the person(s) under the terms of this Plan.
No adjustments shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or property) or
distributions or other rights for which the record date is prior
to the date such stock certificate is issued, except as expressly
provided in Section 10 hereof.
(b) No Optionee shall be deemed to be a holder of any Shares subject
to an Option unless and until a stock certificate or certificates
for such Shares are issued to such person(s) under the terms of
this Plan. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior
to the date such stock certificate is issued, except as expressly
provided in Section 10 hereof.
8. Exercisability of Options. Any Option shall become exercisable in
such amounts, at such intervals, upon such events or occurrences and upon such
other terms and conditions as shall be provided in an individual Option
agreement evidencing such Option, except as otherwise provided in Section 5(b)
or this Section 8.
(a) The expiration date(s) of an Option shall be determined by the
Committee at the time of grant, but in no event shall an Option be
exercisable after the expiration of 10 years from the date of
grant of the Option.
(b) Unless otherwise expressly provided in any Option as approved by
the Committee, notwithstanding the exercise schedule set forth in
any Option, each outstanding Option, may, in the sole discretion
of the Committee, become fully exercisable upon the date of the
occurrence of any Change of Control, but, unless otherwise
expressly provided in any Option, no earlier than six months after
the date of grant, and if and only if Optionee is in the employ of
the Company on such date.
(c) The Committee may in its sole discretion accelerate the date on
which any Option may be exercised and may accelerate the vesting
of any Shares subject to any Option or previously acquired by the
exercise of any Option.
9. Termination of Option Period.
(a) Unless otherwise expressly provided in any Option, the unexercised
portion of any Option shall automatically and without notice
immediately terminate and become forfeited, null and void at the
time of the earliest to occur of the following:
(i) three months after the date on which the Optionee's employment is
terminated for any reason other than by reason of (A) Cause, (B)
the termination of the Optionee's employment with the Company by
such Optionee following less than 30 days' prior written notice to
the Company of such termination (an "Improper
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Termination"), (C) a mental or physical disability (within the
meaning of Section 22(e) of the Code) as determined by a medical
doctor satisfactory to the Committee, or (D) death;
(ii) immediately upon (A) the termination by the Company of the
Optionee's employment for Cause, or (B) an Improper Termination;
(iii) one year after the date on which the Optionee's employment is
terminated by reason of a mental or physical disability (within
the meaning of Code Section 22(e)) as determined by a medical
doctor satisfactory to the Committee; or
(iv) the later of (A) 12 months after the date of termination of the
Optionee's employment by reason of death of the employee, or (B)
three months after the date on which the Optionee shall die if
such death shall occur during the one-year period specified in
Subsection 9(a)(iii) hereof.
(b) The Committee in its sole discretion may, by giving written notice
("cancellation notice"), cancel effective upon the date of the
consummation of any corporate transaction described in Subsection
10(d) hereof, any Option that remains unexercised on such date.
Such cancellation notice shall be given a reasonable period of
time prior to the proposed date of such cancellation and may be
given either before or after approval of such corporate
transaction.
(c) Upon Optionee's termination of employment as described in this
Section 9, or otherwise, any Option (or portion thereof) not
previously vested or not yet exercisable pursuant to Section 8 of
this Plan or the vesting schedule set forth in such Option shall
be immediately canceled.
10. Adjustment of Shares.
(a) If at any time while this Plan is in effect or unexercised Options
are outstanding, there shall be any increase or decrease in the
number of issued and outstanding Shares through the declaration of
a stock dividend or through any recapitalization resulting in a
stock split, combination or exchange of Shares (other than any
such exchange or issuance of Shares through which Shares are
issued to effect an acquisition of another business or entity or
the Company's purchase of Shares pursuant to a plan of repurchase
approved by the Board or to exercise a "call" purchase option),
then and in such event:
(i) appropriate adjustment shall be made in the maximum number of
Shares available for grant under this Plan, so that the same
percentage of the Company's issued and outstanding Shares shall
continue to be subject to being so optioned;
(ii) appropriate adjustment shall be made in the number of Shares and
the exercise price per Share thereof then subject to any
outstanding Option, so that the same percentage of the Company's
issued and outstanding Shares shall remain subject to purchase at
the same aggregate exercise price; and
(iii) such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and
conclusive.
(b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with
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respect to the option price or the number of Shares subject to the
Options, or both, when, in the Committee's sole discretion, such
adjustments become appropriate by reason of a corporate
transaction described in Subsection 10(d) hereof, or otherwise.
(c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities
convertible into or exchangeable for shares of its capital stock
of any class, either in connection with a direct or underwritten
sale or upon the exercise of rights or warrants to subscribe
therefor or purchase such Shares, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number of or exercise price of
Shares then subject to outstanding Options granted under this
Plan.
(d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under this Plan shall not affect in
any manner the right or power of the Company to make, authorize or
consummate (i) any or all adjustments, reclassifications,
recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or
consolidation of the Company or to which the Company is a party;
(iii) any issuance by the Company of debt securities, or preferred
or preference stock that would rank senior to or above the Shares
subject to outstanding Options; (iv) any purchase or issuance by
the Company of Shares or other classes of Common Stock or common
equity securities; (v) the dissolution or liquidation of the
Company; (vi) any sale, transfer, encumbrance, pledge or
assignment of all or any part of the assets or business of the
Company; or (vii) any other corporate act or proceeding, whether
of a similar character or otherwise.
(e) The Optionee shall receive written notice within a reasonable time
prior to the consummation of such action advising the Optionee of
any of the foregoing. The Committee may, in the exercise of its
sole discretion, in such instances declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee
the right to exercise his or her Option.
11. Transferability of Options. No Option granted hereunder shall be
sold, pledged, assigned, hypothecated, disposed or otherwise transferred by the
Optionee other than by will, the laws of descent and distribution or to a family
member or trust for the Optionee or a member of Optionee's family, unless
otherwise authorized by the Board, and no Option shall be exercisable during the
Optionee's lifetime by any person other than the Optionee.
12. Issuance of Shares. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(i) a representation and warranty by the Optionee to the Company, at
the time any Option is exercised, that he is acquiring the Shares
to be issued to him for investment and not with a view to, or for
sale in connection with, the distribution of any such Shares; and
(ii) (A) an agreement and undertaking to comply with all of the terms,
restrictions and provisions set forth in any then applicable
shareholders' or other agreement relating to the Shares,
including, without limitation, any restrictions on sale or
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transferability, any rights of first refusal and any option of the
Company to "call" or purchase such Shares under then applicable
agreements; and
(B) any restrictive legend or legends, to be
embossed or imprinted on Share certificates, that are, in the discretion of the
Committee, necessary or appropriate to comply with the provisions of any
securities law or other restriction applicable to the issuance of the Shares.
13. Administration of this Plan.
(a) This Plan shall be administered by a Committee which shall consist
of not less than two Non-Employee Directors. The Committee shall
have all of the powers of the Board with respect to this Plan. Any
member of the Committee may be removed at any time, with or
without cause, by resolution of the Board and any vacancy
occurring in the membership of the Committee may be filled by
appointment by the Board.
(b) Subject to the provisions of this Plan, the Committee shall have
the authority, in its sole discretion, to: (i) grant Options, (ii)
determine the exercise price per Share at which Options may be
exercised, (iii) determine the Optionees to whom, and time or
times at which, Options shall be granted, (iv) determine the
number of Shares to be represented by each Option, (v) determine
the terms, conditions and provisions of each Option granted (which
need not be identical) and, with the consent of the holder
thereof, modify or amend each Option, (vi) defer (with the consent
of the Optionee) or accelerate the exercise date of any Option,
and (vii) make all other determinations deemed necessary or
advisable for the administration of this Plan, including
repricing, canceling and regranting Options.
(c) The Committee, from time to time, may adopt rules and regulations
for carrying out the purposes of this Plan. The Committee's
determinations and its interpretation and construction of any
provision of this Plan shall be final, conclusive and binding upon
all Optionees and any holders of any Options granted under this
Plan.
(d) Any and all decisions or determinations of the Committee shall be
made either (i) by a majority vote of the members of the Committee
at a meeting of the Committee or (ii) without a meeting by the
unanimous written approval of the members of the Committee.
(e) No member of the Committee, or any Officer or Director of the
Company or its Subsidiaries, shall be personally liable for any
act or omission made in good faith in connection with this Plan.
14. Incentive Options for 10% Shareholders. Notwithstanding any other
provisions of this Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly or indirectly (through attribution under
Section 424(d) of the Code) at the date of grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or of
its Subsidiary) at the date of grant unless the exercise price of such Option is
at least 110% of the Fair Market Value of the Shares subject to such Option on
the date the Option is granted, and such Option by its terms is not exercisable
after the expiration of 10 years from the date such Option is granted.
15. Interpretation.
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(a) This Plan shall be administered and interpreted so that all
Incentive Stock Options granted under this Plan will qualify as
Incentive Stock Options under Section 422 of the Code. If any
provision of this Plan should be held invalid for the granting of
Incentive Stock Options or illegal for any reason, such
determination shall not affect the remaining provisions hereof,
and this Plan shall be construed and enforced as if such provision
had never been included in this Plan.
(b) This Plan shall be governed by the laws of the State of Florida.
(c) Headings contained in this Plan are for convenience only and shall
in no manner be construed as part of this Plan or affect the
meaning or interpretation of any part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender shall
be a reference to such other gender as is appropriate.
(e) Time shall be of the essence with respect to all time periods
specified for the giving of notices to the Company hereunder, as
well as all time periods for the expiration and termination of
Options in accordance with Section 9 hereof (or as otherwise set
forth in an option agreement).
(f) It is intended that this Plan shall be administered in
accordance with the disinterested administration requirements of Rule 16b-3
promulgated by the Securities and Exchange Commission ("Rule 16b-3"), or any
successor rule thereto. To the extent any provision of this Plan or action by
the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee. Notwithstanding
the above, it shall be the responsibility of each Optionee, not of the Company
or the Committee, to comply with the requirements of Section 16 of the
Securities Exchange Act; and neither the Company nor the Committee shall be
liable if this Plan or any transaction under this Plan fails to comply with the
applicable conditions of Rule 16b-3 or any successor rule thereto, or if any
such person incurs any liability under Section 16 of the Securities Exchange
Act.
Market Standoff or Lock-Up Agreements. Each Optionee, if so requested by the
Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act, shall not sell or otherwise transfer any shares of Common Stock
acquired upon exercise of Options during the period as may be agreed to by the
Company and such underwriters (the "Lock-Up Period) following the effective date
of such registration. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restriction until the end of such
Lock-Up Period.
16. Amendment and Discontinuation of this Plan. Either the Board or the
Committee may from time to time amend this Plan or any Option without the
consent or approval of the shareholders of the Company; provided, however, that,
except to the extent provided in Section 9, no amendment or suspension of this
Plan or any Option issued hereunder shall substantially impair any Option
previously granted to any Optionee without the consent of such Optionee.
17. Termination Date. This Plan shall terminate 10 years after the date
of adoption by the Board of Directors.
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