SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES ACT OF 1934
(AMENDMENT No.__)
Filed by the Registrant[ X ] Filed by a party other than the Registrant[ ] Check
the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting materials pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
Imaging Diagnostic Systems, Inc.
(Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
Payment of Filing Fee (Check the Appropriate Box):
<S> <C> <C> <C>
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3). RECORD DATE OCTOBER 11, 2000
[ ] Fee computed on table below per Exchange Act Rules MAILING DATE OCTOBER 27, 2000
14a-6(i)(4) and 0-11. MEETING DATE NOVEMBER 20, 2000
(1) Title of each class of securities to which
transaction applies:______________________ LIST OF EXHIBITS
(2) Aggregate number of securities to which A) Form of Employment Agreements
transaction applies:______________________ including Amended Stock Option Agreements
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange
Act Rule 0-11 __/
(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: October 16, 2000
</TABLE>
<PAGE>
IMAGING DIAGNOSTIC SYSTEMS, INC.
6531 NW 18th Court
Plantation, Florida 33313
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 20, 2000
TO THE STOCKHOLDERS OF IMAGING DIAGNOSTIC SYSTEMS, INC.
NOTICE IS HEREBY GIVEN that the Fiscal Year 2001 Annual Meeting of
Stockholders of Imaging Diagnostic Systems, Inc., a Florida corporation (the
"Company"), will be held on Friday, November 20, 2000, at 9:00 a.m. at our
corporate offices, located at 6531 NW 18th Court, Plantation, Florida, for the
following purposes:
1. To elect seven directors to serve a one-year term expiring upon the Fiscal
Year 2002 Annual Meeting of Stockholders or until his/her successor is duly
elected and qualified;
2. To ratify the three executive officers' employment and amended stock option
agreements;
3. To ratify the Company's Board of Directors' appointment of Margolies, Fink
and Wichrowski, CPA's as independent auditors for the Company for the
fiscal year ending June 30, 2001; and
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on Wednesday,
October 11, 2000, as the record date for the determination of stockholders
entitled to notice of and to vote at this Annual Meeting and at any adjournment
or postponement thereof.
By Order of the Board of Directors
/s/ Allan L. Schwartz
Allan L. Schwartz, Secretary
Plantation, Florida
October 16, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. HOWEVER,
TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO MARK, SIGN, DATE
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE PREPAID
ENVELOPE ENCLOSED FOR THAT PURPOSE. ANY STOCKHOLDER ATTENDING THE MEETING MAY
VOTE IN PERSON EVEN IF HE OR SHE RETURNED A PROXY. PLEASE NOTE, HOWEVER, THAT IF
A BROKER HOLDS YOUR SHARES OF RECORD, OR BANK OR OTHER NOMINEE AND YOU WISH TO
VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN
YOUR NAME.
2
<PAGE>
IMAGING DIAGNOSTIC SYSTEMS, INC.
6531 NW 18th Court
Plantation, Florida 33313
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Imaging Diagnostic Systems,
Inc. (the "Company") for the Fiscal Year 2001 Annual Meeting of Stockholders to
be held on Monday, November 20, 2000, at 9:00 a.m. at our corporate offices,
located at 6531 NW 18th Court, Plantation, Florida, or any adjournment or
adjournments thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Company intends to mail this Proxy Statement and
the accompanying proxy card on or about October 27, 2000 to all stockholders
entitled to vote at the Annual Meeting.
RECORD DATE; OUTSTANDING SHARES
Only stockholders of record at the close of business on Wednesday,
October 11, 2000 (the "Record Date"), are entitled to receive notice of and to
vote at the meeting. On the Record Date, there were outstanding 108,953,817
shares of Common Stock.
REVOCABILITY OF PROXIES
If a person who has executed and returned a proxy is present at the
meeting and wishes to vote in person, he or she may elect to do so and thereby
suspend the power of the proxy holders to vote his or her proxy. A proxy also
may be revoked before it is exercised by filing with the Secretary of the
Company a duly signed revocation of proxy bearing a later date.
VOTING AND SOLICITATION
Each share of Common Stock issued and outstanding on the record date
shall have one vote on the matters presented herein, except that with respect to
the election of directors, each share of Common Stock is entitled to one vote
for a nominee for each director position. Stockholders do not have the right to
cumulate votes in the election of directors.
SOLICITATION
We will bear the entire cost of the solicitation of proxies including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
3
<PAGE>
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. Original solicitation of proxies by
mail may be supplemented by telephone, facsimile, e-mail, telegram or personal
solicitation by directors, officers, or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services, but Jersey Transfer & Trust Co. will be paid a fee,
estimated to be about $2,000 if it renders solicitation services.
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock
of the Company as of October 11, 2000, as to (a) each person known to the
Company who beneficially owns more than 5% of the outstanding shares of its
Common Stock; (b) each current director, nominee for director and named
executive officer; and (c) all executive officers and directors of the Company
as a group.
Name and Address Number of Shares Owned % of Outstanding
of Beneficial Owner Beneficially (1)(2) Shares of Common Stock
------------------- ---------------------- ----------------------
Richard J. Grable 18,284,774(3) 16.6%
6531 NW 18th Court
Plantation, FL 33313
Linda B. Grable 18,284,774(4) 16.6%
6531 NW 18th Court
Plantation, FL 33313
Allan L. Schwartz 4,971,527(5) 4.5%
6531 NW 18th Court
Plantation, FL 33313
Irving H. Schwab 100,000 0.09%
Great Neck, NY
David E. Danovitch -0- 0%
New York, NY
John R. Liegey -0- 0%
New York, NY
Phil E. Pearce -0- 0%
Charlotte, NC
Stanley A. Hirschman -0- 0%
Plano, TX
All officers, directors 23,356,301(6) 21.2%
And director nominees
as a group (8 persons)
(1) Except as indicated in the footnotes to this table, based on information
provided by such persons, the persons named in the table above have sole
voting power and investment power with respect to all shares of common
stock shown beneficially owned by them.
4
<PAGE>
(2) Percentage of ownership is based on 108,953,817 shares of common stock
outstanding as of October 11, 2000 plus each person's options that are
exercisable within 60 days. Shares of common stock subject to stock options
that are exercisable within 60 days as of October 11, 2000 are deemed
outstanding for purposes of computing the percentage of that person and the
group.
(3) Includes 500,000 shares subject to options and 4,681,264 shares owned by
the wife of Richard J. Grable, Linda B. Grable, of which he disclaims
beneficial ownership.
(4) Includes 500,000 shares subject to options and 12,603,507 shares owned by
the husband of Linda B. Grable, Richard J. Grable, of which she disclaims
beneficial ownership.
(5) Includes 500,000 shares subject to options and 9,000 shares owned by the
wife of Allan L. Schwartz, Carolyn Schwartz, of which he disclaims
beneficial ownership.
(6) Includes 1,000,000 shares subject to options held by Linda and Richard
Grable and 500,000 shares subject to options held by Allan Schwartz. Also
includes 9,000 shares owned by the wife of Allan L. Schwartz, Carolyn
Schwartz, of which he disclaims beneficial ownership.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires that the Company's directors and executive officers,
and persons who own more than 10% of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% beneficial owners are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended June 30, 2000, its officers,
directors and greater than 10% beneficial owners complied with all applicable
Section 16(a) filing requirements.
PROPOSAL 1
ELECTION OF DIRECTORS
The following table sets forth certain information concerning nominee directors.
<TABLE>
<CAPTION>
Name Age Position Date Elected or Appointed
---- --- -------- --------------------------
<S> <C> <C> <C>
Richard J. Grable 58 Chief Executive Officer and Director 1994
Linda B. Grable 63 Chairman of the Board and President 1994
Allan L. Schwartz 58 Executive Vice-President, Chief 1994
Financial Officer and Director
Irving H. Schwab 57 Director 2000
David E. Danovitch 38 Director 2000
Phil E. Pearce 71 Nominee for Director
Stanley A. Hirschman 54 Nominee for Director
</TABLE>
5
<PAGE>
Seven directors are to be elected at the meeting. All seven directors
are to be elected for the term expiring in Fiscal Year 2002. Information on the
nominees follows:
Richard J. Grable: Mr. Grable is Chief Executive Officer and Director of
Research and Development and is the inventor of the CTLM(TM) device. He is
considered a pioneer in the Optical Imaging field with over 25 years experience.
Mr. Grable is a graduate of the University of Miami School of Business with a
Masters Degree in Business Administration. He has over 30 years of electronic
design experience and has been directly involved in the development and sales of
CT, Nuclear Medicine and Ultrasound instrumentation since 1972. He has over
sixteen years of experience of preparing and filing 510(k)'s, Investigation
Device Exemptions, and Premarket Notification documents for the Food and Drug
Administration. He holds two United States Patents and is co-inventor for one
other medical device. He is a member of the Institute of Electrical &
Electronics Engineers, Optical Society of America, the American Association for
the Advancement of Science, the New York Academy of Science, and a member and
guest speaker of the International Society for Optical Engineering. Mr. Grable
has been a Director and Officer of the Company since its inception.
Linda B. Grable: Mrs. Grable is President, Chairman of the Board and
Director of Imaging Diagnostic Systems, Inc. since its inception. She has played
a major role in raising over 35 Million dollars in debt and equity funding for
the research and development of the CTLM(TM)device. She has over 35 years
experience in negotiating funding with banking institutions for both medical and
real estate development businesses. Mrs. Grable has over 20 years of executive
experience in the medical device industry, for both sales and marketing in the
U.S. and foreign countries. She is a graduate of Ohio State University and holds
a BA in Journalism and Marketing. She is also fluent in Spanish. Mrs. Grable has
been a Director and Officer of the Company since its inception.
Allan L. Schwartz: Mr. Schwartz is Executive Vice-President and CFO of the
Company and is responsible for its financial affairs. He is an operationally
oriented executive with a wide range of management, marketing, field
engineering, construction, and business development experience. Prior to joining
IDSI, he developed the Chronometric Trading System for analyzing stock market
trends using neural networks and developed pre-engineered homes for export to
Belize, C.A. for S.E. Enterprises of Miami. FL. In 1991 he formed Tron
Industries, Inc. for the development of low-voltage neon novelty items and
self-contained battery powered portable neon. He is a graduate of C.W. Post
College of Long Island University with a B.S. in Business Administration.
Previous innovations by Mr. Schwartz before relocating to Florida have included
the use of motion detection sensors in commercial burglar alarm systems for
Tron-Guard Security Systems. Inc. and the use of water reclamation systems with
automatic carwash equipment. Mr. Schwartz has been a Director and Officer of the
Company since its inception.
Irving H. Schwab: Mr. Schwab of Great Neck, NY has been involved in
healthcare advertising and marketing for over 25 years. During the most recent
seven years, he has been an industry consultant and President of Pathways in
Business Planning. In the 15 years prior to that, he was a senior officer for
6
<PAGE>
William Douglas McAdams, the healthcare marketing and advertising firm. In both
firms, he has organized strategic planning processes for phase III and IV
products, directed launch planning and implementation, assisted in the
regulatory processes and oversaw the development of advertising, promotion and
public relations programs for the ethical and consumer pharmaceuticals and
medical devices. In his career, he has been involved with many of the top 25
healthcare companies and selected start-ups. Among them are Pfizer, American
Home Products, Johnson and Johnson, Novartis, Schering Plough and Searle. He
holds a B.S. and M.A. with areas of concentration in Economics, Chemistry and
Psychology.
David E. Danovitch: Mr. Danovitch was appointed by the Board of Directors
in August 2000 to replace Dr. Robert Kagan who resigned effective August 1,
2000. Since January 2000, he has been a senior partner of NewWest Associates,
LLC, an international consulting firm, and Del Rey Investments, LLC, a
merchant-banking firm, both based in New York, New York. From January 2000 to
present, Mr. Danovitch was a Managing Director of Cambridge Partners, a merchant
banking firm which focused on misunderstood or misfinanced companies and assets.
From 1995 to 1997, he was a founding principal of Snowden Capital, Inc., a New
York City-based investment banking firm. From 1993 to1994, he served as Chief of
Staff to Gerald Mczarne, a Senior Vice President of IBM. Mr. Danovitch is an
attorney and member of the District of Columbia, Massachusetts and New York
bars. He holds an A.B. from Kenyon College, a J.D. from Suffolk University Law
School and a LL.M.-Taxation from Boston University School of Law.
Phil E. Pearce: Mr. Pearce has been an independent business consultant with
Phil E. Pearce & Associates since 1990, Chairman and Director of Financial
Express Corporation since 1990 and since 1988 has been a principal of
Pearce-Henry Capital Corp. All of these companies are based in New York City.
Prior to 1988, Mr. Pearce was Senior Vice President and a director of E.F.
Hutton, Chairman of the Board of Governors of the National Association of
Securities Dealers and was closely involved in the formation of the Nasdaq Stock
Market, a Governor of the New York Stock Exchange and a member of the Advisory
Council to the United States Securities and Exchange Commission on the
Institutional Study of the Stock Markets. Mr. Pearce also is a director of RX
Medical Services, Inc., an operator of medical diagnostic facilities and
clinical laboratories, InfoPower International, Inc., a software development
company, StarBase Corporation, a software development company and China Premium
Food Corporation. Mr. Pearce is a graduate of the University of South Carolina
(B.A. 1953) and attended the Wharton School of Investment Banking at the
University of Pennsylvania.
Stanley A. Hirschman: Mr. Hirschman is President of CPointe Associates,
Inc., a Plano, Texas executive management and consulting firm which he founded
in 1996 and which specializes in solutions for emerging companies with
technology-based products. He is chairman of the board of China Premium Food
Corporation (NASD: CHPF), director of ObjectSoft Corporation and former Chairman
of the Board of Mustang.com (NASD: MSTG). His client list has included SBC
Wireless, Northern Telecom (Nortel), MindSpring Enterprises, RetailHighway.com
and Xybernaut Corporation. Mr. Hirschman took a hands-on role in the planning
and execution of the strategic initiative to increase Mustang.Com shareholder
value resulting in the recent announcement of the acquisition of the company by
Quintus Corporation. Prior to establishing CPointe Associates, he was Vice
President Operations, Software Etc., Inc., a 396 retail store software chain,
7
<PAGE>
from 1989 until 1996. He has held senior executive management positions with
T.J. Maxx, Gap Stores and Banana Republic. He is active in community affairs and
serves on the Advisory Board of the Salvation Army Adult Rehabilitation Centers.
Compensation of Directors
Each director who is not an employee of the Company receives $500 plus
reasonable reimbursement for travel expenses for each Board meeting attended.
Under a deferred compensation plan, directors may elect to defer with interest
all or part of such compensation for varying periods of time. Outside directors
will be eligible to receive options to purchase 50,000 shares per year of the
Company's common stock, vesting at 12,500 shares per quarter of service to the
Company. The shares shall be issued pursuant to the Company's 2000 Non-Statutory
Stock Option Plan.
Family Relationships
Mr. Richard J. Grable and Mrs. Linda B. Grable are husband and wife.
Further, Richard J. Grable and Linda B. Grable are each "Control Persons" as a
result of their control of a majority voting power of the Company's outstanding
stock. Both parties disclaim, however, any beneficial interest or ownership in
the shares owned by the other party other than that which may be attributed to
him/her by operation of law.
Board Meetings and Committees
The Board of Directors met 7 times during the fiscal year ended June
30, 2000. The Company has no standing Committees. A quorum of directors were
present for all board meetings.
Required Vote
Each nominee receiving affirmative votes from a majority of the shares
of the Company's Common Stock present and entitled to vote at the Annual Meeting
on this matter shall be elected as a Director.
The Board of Directors of the Company recommends a vote FOR the
election of the nominees named above. Proxies solicited by the Board of
Directors will be voted FOR the named nominees unless instructions are
given to the contrary.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the compensation awarded to, earned by or paid to
our Chief Executive Officer and other executive officers for services rendered
to us during fiscal 2000, 1999 and 1998. No other person during these years, who
served as one of our executive officers, had a total annual salary and bonus in
excess of $100,000.
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensatio Long-Term Compensation
<S> <C> <C> <C> <C> <C>
Name & Principal
Position Year Salary(2) Other Annual Restricted Securities/Underlying
Compensation Stock Awards Option/SARs (1)
Richard J. Grable, CEO 1998 $286,225 534,602
and Director 1999 $286,225 458,333
2000 $286,225 793,255
Linda B Grable, 1998 $119,070 534,602
President and Director 1999 $119,070 458,333
2000 $119,070 793,255
Allan L. Schwartz, 1998 $119,070 534,602
Exec. V.P., CFO and 1999 $119,070 458,333
Director 2000 $119,070 793,255
</TABLE>
1. The aggregate dollar value of the 1998, 1999 and 2000 options, based
on the averaged high and low price on June 30, 2000 are as follows:
Richard J. Grable -$2,715,009; Linda B. Grable-$2,715,009; and Allan L
Schwartz-$2,715,009.
2. The salaries include compensation, which has been accrued and not paid
as of June 30, 2000 in the amounts as follows: Richard J. Grable
$47,704, Linda B. Grable $19,890 and Allan L. Schwartz $19,845.
Subsequent to the fiscal year the amounts owned to the officers for
accrued compensation were paid.
EMPLOYMENT AGREEMENTS
We entered into five-year employment agreements commencing August 30, 1999 with
Mr. Richard J. Grable, Mr. Allan L. Schwartz and Ms. Linda B. Grable that expire
on August 29, 2004. According to the terms of their respective employment
agreements, base annual salaries, after giving effect to cost of living
adjustments, are as follows: Richard J. Grable, $286,224.96; Linda B. Grable,
$119,069.52; and Allan L. Schwartz, $119,069.52. In addition, Messrs. Grable and
Schwartz and Ms. Grable each receive a car allowance of $500 per month. Each
employment agreement provides for bonuses, health insurance, car allowance, and
related benefits, and a cost of living adjustment of 7% per annum. The
agreements also provide for severance payment of full salary and benefits for
the greater of three years or the remaining term of the agreement upon
termination without cause. No bonuses have been paid to date. The Form of
Employment Agreement is annexed to this proxy statement and marked Exhibit A.
The following table sets forth certain information with regard to the
Options/SAR grants by the Company to management for the fiscal year ended June
30, 2000. No options were exercised by management during fiscal 2000.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
No. of Securities % of Total Options
Underlying Granted to Exercise or Market Price
Options Employees In Base Price On Date of Expiration
Name Granted Fiscal Year ($/Share) Grant Date
<S> <C> <C> <C> <C> <C>
Richard J. Grable 293,255 9% $.34 $.31 7/5/04
500,000 16% $.23 $.21 8/30/04
Linda B. Grable 293,255 9% $.34 $.31 7/5/04
500,000 16% $.23 $.21 8/30/04
Allan L. Schwartz 293,255 9% $.34 $.31 7/5/04
500,000 16% $.23 $.21 8/30/04
</TABLE>
(1) 293,255 shares granted to each executive officer under employment and option
agreements dated July 5, 1994 which expired July 4, 1999.
9
<PAGE>
Stock Option Plans
For the fiscal year ended June 30, 2000, all of our executive officers were
participants in our 1995 stock option plan. The plan was approved by our board
of directors and adopted by the stockholders at the March 1995 annual meeting.
The plan provides for the granting, exercising and issuing of incentive options
pursuant to Internal Revenue Code, Section 422. We may grant incentive stock
options to purchase up to 5% of our issued and outstanding common stock at any
time. Our Board of Directors has direct responsibility for the administration of
the plan.
On August 30, 1999, we established an equity incentive plan. The maximum number
of shares that could be granted under this plan is 15,000,000 shares of common
stock and 5,000,000 shares of preferred stock. The series, rights and
preferences of the preferred stock were to be determined by our Board of
Directors. This plan also included any stock available for future stock rights
under our 1995 stock option plan. On January 3, 2000 the Board of Directors
decided to replace this equity incentive plan and adopted our 2000 Non-Statutory
Stock Option Plan so as to provide a critical long-term incentive for employees,
non-employee directors, consultants, attorneys and advisors of the Company. On
May 10, 2000 our stockholders approved the 2000 Non-Statutory Stock Option Plan.
The Board of Directors believes that our policy of granting stock options to
such persons will continue to provide us with a critical advantage in attracting
and retaining qualified candidates. In addition, the Stock Option Plan is
intended to provide us with maximum flexibility to compensate plan participants.
It is expected that such flexibility will be an integral part of our policy to
encourage employees, non-employee directors, consultants, attorneys and advisors
to focus on the long-term growth of stockholder value. The Board of Directors
believes that important advantages to us are gained by an option program such as
the 2000 Non-Statutory Stock Option Plan which includes incentives for
motivating our employees, while at the same time promoting a closer identity of
interest between our employees, non-employee directors, consultants, attorneys
and advisors on the one hand, and the stockholders on the other.
According to their stock option agreements, which are part of their new
employment agreements, Mr. Richard J. Grable, Mr. Allan L. Schwartz and Mrs.
Linda B. Grable each have an option to purchase 2,500,000 shares of common stock
or preferred stock. These options are granted and vest in equal installments
over a five-year period. Beginning August 30, 1999, the officers may exercise
their options to purchase 500,000 shares at an exercise price of $.23 per share
(110% of the fair market value of the shares on the date of grant, August 30,
1999). On each subsequent anniversary date, August 30th or thereafter until
expiration, the officers may exercise their stock options for 500,000 shares at
the grant price of 110% of the fair market value of the shares on that date.
These stock option agreements terminate on August 30, 2004. The new employment
and stock option agreements were approved by the Board of Directors and are
being submitted to our stockholders for ratification at the annual meeting.
10
<PAGE>
Fiscal Year-End Option Values. The following table sets forth certain
information concerning the number and value of securities underlying exercisable
and un-exercisable stock options as of the fiscal year ended June 30, 2000 by
the Name Executive Officers.
Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of
Securities Number of Securities Value of Unexercised
Underlying Underlying Unexercised "In-The-Money" Options
Options/SARs Value Options at Fiscal Year End at Fiscal Year End
Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Grable 0 $ 0 1,251,588 0 $1,426,790 $ 0
Linda B. Grable 0 $ 0 1,251,588 0 $1,426,790 $ 0
Allan L. Schwartz 0 $ 0 1,251,588 0 $1,426,790 $ 0
</TABLE>
PROPOSAL 2
RATIFICATION OF EXECUTIVE OFFICERS EMPLOYMENT AGREEMENTS
The five-year employment agreements with the three executive officers expired on
July 5, 1999. The Company entered into new five year employment agreements on
August 30, 1999 under the same terms, salary and conditions as the previous
agreements, i.e. base salaries $286,224.96, $119,069.52 and $119,069.52 per
annum to Richard J. Grable, Linda B. Grable and Allan L. Schwartz respectively,
plus benefits, as more fully described above.
New stock option agreements were signed in conjunction with the employment
agreements which provide each executive officer the right to exercise options
for 500,000 common shares on the anniversary date of the employment agreement at
110% of fair market value on the anniversary date of the grant.
This Proxy Statement contains only a summary of the employment and stock option
agreements, and stockholders should carefully review the full text of the
agreements before voting their shares on this proposal.
The Company's Board of Directors, including a majority of its outside directors,
approved the executives' employment and stock option agreements in September
2000, subject to shareholder ratification at the annual meeting. In approving
the agreements, the Board determined that their terms were reasonable and fair
to the Company in light of the value of the services provided by the executives,
the risks taken by the executives and the compensation levels generally
available in the marketplace for executives at comparable companies.
11
<PAGE>
Annexed to this proxy statement as Exhibit A are the forms of the employment
agreement and stock option agreement as executed by each of the Company's three
officers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE EXECUTIVE OFFICERS' EMPLOYMENT AND STOCK OPTION AGREEMENTS
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Margolies, Fink and Wichrowski CPA
as independent public accountants of the Company with respect to its operations
for the fiscal year 2001, subject to ratification by the holders of Common Stock
of the Company. The firm has audited the Company's financial statements since
1994. Representatives of the firm are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire and will
be available to respond to appropriate questions.
There will be presented at the Annual Meeting a proposal for the
ratification of this appointment, which the Board of Directors believes is
advisable and in the best interests of the stockholders. If the appointment of
Margolies, Fink and Wichrowski, CPA is not ratified, the matter of appointment
of independent public accountants will be considered by the Board of Directors.
The Board of Directors of the Company recommends a vote FOR the
appointment of Margolies, Fink and Wichrowski, CPA as the Company's
independent accountants for the fiscal year ending June 30, 2001.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
The Company anticipates that the Fiscal Year 2002 Annual Meeting will
be held on or about October 25, 2001 and that the proxy materials for the Fiscal
2002 Annual Meeting will be mailed on or before September 15, 2001. If any
stockholder wishes a proposal to be considered for inclusion in the Fiscal 2002
Proxy Statement, this material must be received by the Chief Executive Officer
no later than August 15, 2001.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Allan L. Schwartz
Allan L. Schwartz, Secretary
12
<PAGE>
APPENDIX A
IMAGING DIAGNOSTIC SYSTEMS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON November 20, 2000
The undersigned hereby appoints Richard J. Grable and Allan L. Schwartz
and each of them, as attorneys and proxies of the undersigned, with full power
of substitution, to vote all of the shares of stock of Imaging Diagnostic
Systems, Inc. which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of Imaging Diagnostic Systems, Inc. to be held at the
Company's offices, located at 6531 NW 18th Court, Plantation, Florida, on
November 20, 2000, at 9:00 a.m., local time, and at any and all continuations
and adjournments thereof, with all powers that the undersigned would possess
if personally sent, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as to
any and all other matters that may properly come before the meeting.
(Continued, and to be signed on the other side)
Please mark your votes as this [X]
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 & 3, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
FOR WITHOLD FOR
PROPOSAL 1: To elect seven directors [ ] [ ]
to hold office until the Fiscal Year 2002
Annual Meeting of Stockholders.
Nominees: Richard J. Grable, Linda B. Grable, Allan L. Schwartz,
Irving H. Schwab, David E. Danovitch, Phil E. Pearce and Stanley A. Hirschman
Instruction: To withhold authority to vote for any nominee, write
the nominee's name in the space provided below.
------------------------------------------
13
<PAGE>
FOR
PROPOSAL 2: To ratify executive officers FOR AGAINST ABSTAIN
employment and stock option agreements
[ ] [ ] [ ]
FOR
PROPOSAL 3: To ratify selection of FOR AGAINST ABSTAIN
Margolies, Fink and Wichrowski CPA,
as independent public accountants [ ] [ ] [ ]
of the Company for its fiscal
year ending June 30, 2001.
I PLAN TO ATTEND THE MEETING [ ]
ADMISSION TO ANNUAL MEETING WILL BE BY TICKET ONLY TO STOCKHOLDERS OF RECORD ON
RECORD DATE. ADMISSION TICKETS WILL BE MAILED TO THE ADDRESS ENTERED BELOW:
Name:_________________________________________________________
Street Address:_______________________________________________
City:_______________________________State:____Zip:____________
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorney-in-fact should add their titles. If signer is a
corporation, please give full corporate name and have a duly authorized officer,
stating title. If signer is a partnership, please sign in partnership name by
authorized person.
Signature____________________________________ Date________________
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
14
<PAGE>
EXHIBIT A
EMPLOYMENT AGREEMENT AS EXECUTED BY EACH OF THE COMPANY'S THREE OFFICERS FOR THE
TERM AND ANNUAL SALARIES INDICATED IN PROXY STATEMENT UNDER PROPOSAL THREE.
THIS EMPLOYMENT AGREEMENT dated August 30, 1999, between Imaging
Diagnostic Systems, Inc. (the "Company"), and ______________________(the
"Executive").
WHEREAS, the Company desires to employ Executive and to ensure the
continued availability to the Company of the Executive's services, and the
Executive is willing to accept such employment and render such services, all
upon and subject to the terms and conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, and intending to be legally bound, the
Company and the Executive agree as follows:
1. TERM OF EMPLOYMENT.
------------------
(a) Term. The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company, for a period
commencing on the date of this Agreement and ending five years from the
date hereof (the "Term").
(b) Continuing Effect. Notwithstanding any termination of this
Agreement at the end of the Term or otherwise, the provisions of
Sections 6 and 7 shall remain in full force and effect and the
provisions of Sections 6(b) and 7 shall be binding upon the legal
representatives, successors and assigns of the Executive, except as
otherwise provided in Section 5(d).
2. DUTIES.
------
(a) General Duties. The executive shall serve as
________________________ of the Company, with duties and
responsibilities that are customary for such executives. The Executive
will also perform services for such subsidiaries as may be necessary.
The Executive will use his best efforts to performs his duties and
discharge his responsibilities pursuant to this Agreement competently,
carefully and faithfully.
(b) Devotion of Time. The Executive will devote all of his
time, attention and energies during normal business hours (exclusive of
periods of sickness and disability and of such normal holiday and
vacation periods as have been established by the Company) to the
affairs of the Company. The Executive will not enter the employ of or
serve as a consultant to, or in any way perform any services with or
without compensation to, any other persons, business or organization
15
<PAGE>
without the prior consent of the Board of Directors of the Company;
provided, that the Executive shall be permitted to devote a limited
amount of his time, without compensation, to charitable or similar
organizations.
3. COMPENSATION AND EXPENSES.
-------------------------
(a) Salary. For the services of the Executive to be rendered
under this Agreement, the Company will pay the Executive an annual base
salary of $_______________ during the Term, subject to annual cost of
living increases based upon changes in the Consumer Price Index
published by the Bureau of Labor Statistics (or similar successor
index) for the region in which the Executive resides, but in no event
shall the cost of living increase be less than 7% per annum. The annual
salary under this Section 3(a) will be reduced, however, to the extent
that the Executive elects to defer any portion thereof under the terms
of any deferred compensation or savings plan maintained by the Company.
The Company will pay the Executive his annual salary in equal
installments no less frequently than twice a month.
(b) Bonus. For the services to be rendered by the Executive
under this Agreement, the Company's Board of Directors, on a yearly
basis, shall determine a bonus to be paid to Employee, based upon a
percentage of the adjusted consolidated net earnings of the Company for
each calendar year of Executive's employment, such sum to be computed
as follows:
(i)The adjusted consolidated net earnings of the Company shall be
determined in accordance with accepted accounting practice by the
independent accounting firm employed by the Company as its auditors,
within 90 days after the end of each fiscal year.
(ii) This computation of net earnings and of the Executive's
percentage compensation, made in the manner here provided, shall be
final and binding upon the Company and the Executive, and the Company
shall pay such compensation to the Executive within 120 days after the
end of the fiscal year in question. The Bonus may be paid in cash,
stock, or options, by mutual agreement of the Executive and the
Company.
(iii) For purposes of computing the Executive's percentage
compensation, the adjusted consolidated net earnings of the Company
shall be determined after full allowance for, and deduction of the
following: (a) all federal, state and municipal taxes; (b)
depreciation for the period based on the amount of depreciation set
forth in the annual report of the Company to its stockholders for the
fiscal year which includes such period.
(c) Expenses. In addition to any compensation received
pursuant to Section 3(a), (b) and (c), the Company will reimburse or
advance funds to the Executive for all reasonable travel, entertainment
and miscellaneous expenses incurred in connection with the performance
of his duties under this Agreement, provided that the Executive
properly accounts for such expenses to the Company in accordance with
the Company's practices. Such reimbursement or advances will be made in
accordance with policies and procedures of the Company in effect from
time to time relating to reimbursement of or advances to executive
officers.
16
<PAGE>
4. BENEFITS.
--------
(a) Vacation. For each 12-month period during the Term, the
Executive will be entitled to six weeks of vacation without loss of
compensation or other benefits to which he is entitled under this
Agreement, to be taken at such times as the Executive may select and
the affairs of the Company may permit.
(b) Employee Benefit Programs. Without limiting the
compensation to which the Executive is entitled pursuant to the
provisions of Section 3 or this Section 4, during the Term, the
Executive will be entitled to participate in any pension, insurance or
other employee benefit plan that is maintained at that time by the
Company for its executive officers, including programs of life and
medical insurance and reimbursement of membership fees in civic, social
and professional organizations.
(c) Incentive Stock Options. The Executive shall receive
incentive options to purchase up to an aggregate of 2,500,000 shares
of the Company's common or preferred stock, the terms and conditions
of which are more fully set forth in that certain Stock Option
Agreement dated August 30, 1999. (Amended August 30, 2000)
(d) Miscellaneous Benefits. The Company shall also provide
Executive with the following: (a) a $500 per month automobile
allowance, and (b) telephone card, cellular phone, and major credit
card.
5. TERMINATION.
-----------
(a) Termination Without Cause. The Company may terminate the
Executive's employment pursuant to the terms of this Agreement without
cause. Such termination will become effective upon the date specified
in such notice, provided that such date is at least 60 days from the
date of such notice. Upon any such termination without cause:
(i) for the remainder of the term of this Agreement or for a
period of 36 months following such termination, whichever is greater, the
Company will continue to pay the Executive his annual salary pursuant to
Section 3(a) and his Bonus pursuant to Section 3(b), and
(ii) the Company will continue to maintain for such period,
for the benefit of the Executive, the employee benefit programs referred
to in Section 4(b) that were in effect on the date of such termination.
(b) Termination for Cause. The Company may terminate the
Executive's employment pursuant to the terms of this Agreement at any
time for cause by given written notice of termination. Such termination
will become effective upon the giving of such notice, except that
termination based upon clause (v) below shall not become effective
17
<PAGE>
unless the Executive shall fail to correct such breach within 30 days
of receipt of written notice thereof provided pursuant to the preceding
sentence. Upon any such termination for cause, the Executive shall have
no right to compensation, commission, bonus or reimbursement under
Section 3, or to participate in any employee benefit programs under
Section 4 for any period subsequent to the effective date of
termination. For purposes of this Section 5(b), "cause" shall mean: (i)
the Executive is convicted of a felony which is related to the
Executive's employment or the business of the Company; (ii) the
Executive, in carrying out his duties hereunder, has been found in a
civil action by the Company, to have committed willful gross negligence
or willful gross misconduct resulting, in either case, in material harm
to the Company; (iii) the Executive misappropriates Company funds or
otherwise defrauds the Company; (iv) the Executive materially breaches
any provision of Section 6 or Section 7; and (v) the Executive
materially fails to perform his duties under Section 2 resulting in
material harm to the Company.
(c) Death or Disability. Excepting for the conditions and
obligations contained in this Section 5(c), this Agreement and the
obligations of the Company hereunder will terminate upon the death or
disability of the Executive. For purposes of this Section 5(c),
"disability" shall mean that for a period of six months in any 12-month
period the Executive is incapable of substantially fulfilling the
duties set forth in Section 2 because of physical, mental or emotional
incapacity resulting from injury, sickness or disease.
Upon termination by death or disability, the Company will pay the
Executive or his legal representative, as the case may be: (i) his
annual salary at such time pursuant to Section 3(a) through the date of
such termination of employment; and (ii) the Executive's share of the
Bonus as set forth in Section 3(b) of this Agreement. ;
(d) Special Termination. In the event that (i) the Executive,
with or without change in title or formal corporate action, shall no
longer exercise all of the duties and responsibilities and shall no
longer possess substantially all the authority set forth in Section 2;
or (ii) the Company materially breaches this Agreement or the
performance of its duties and obligations hereunder; or (iii) any
entity or person not now an executive officer of the Company becomes
either individually or as part of a group the beneficial owner of 20%
or more of the Company's common stock, the Executive, by written notice
to the Company, may elect to deem the Executive's employment hereunder
to have been terminated by the Company without cause under Section 5(a)
hereof, in which event the Executive shall be entitled to the
compensation payable pursuant to clauses (i)-(iii) of Section 5(a).
(e) Voluntary Termination. The Executive, on 30 days prior
written notice to the Company, may terminate his employment
voluntarily (i) at any time following termination of the initial Term
or (ii) at any time following the death or disabling illness of a
member of the Executive's immediate family or similar personal,
non-business related occurrence as a result of which the Executive
concludes he must devote a substantial amount of his time and energies
to his family or other personal matter and not to his business
activities so as to preclude his fulfilling his obligations under this
Agreement. Upon any such termination, the Company will pay the
Executive (i) his annual salary at such time pursuant to Section 3(a)
through the date of such termination of employment; and (ii) any bonus
which would have been payable through the date of termination pursuant
to Section 3(b).
18
<PAGE>
(f) Continuing Effect. Notwithstanding any termination of the
Executive's employment as provided in this Section 5 or otherwise, the
provisions of Sections 6 and 7 shall remain in full force and effect.
6. NON-COMPETITION AGREEMENT.
(a) Competition with the Company. Until termination of his
employment and for a period of 12 months commencing on the date of
termination, the Executive, directly or indirectly, in association with
or as a stockholder, director, officer, consultant, employee, partner,
joint venturer, member or otherwise of or through any person, firm,
corporation, partnership, association or other entity, will not compete
with the Company or any of its affiliates in the offer, sale or
marketing of products or services that are competitive with the
products or services offered by the Company, within any metropolitan
area in the United States or elsewhere in which the Company is then
engaged in the offer and sale of competitive products or services;
provided, however, the foregoing shall not prevent Executive from
accepting employment with an enterprise engaged in two or more lines of
business, one of which is the same or similar to the Company's business
(the "Prohibited Business") if Executive's employment is totally
unrelated to the Prohibited Business; provided, further, the foregoing
shall not prohibit Executive from owning up to 5% of the securities of
any publicly-traded enterprise provided Executive is not an employee,
director, officer, consultant to such enterprise or otherwise
reimbursed for services rendered to such enterprise.
(b) Solicitation of Customers. During the periods in which the
provisions of Section 6(a) shall be in effect, the Executive, directly
or indirectly, will not seek Prohibited Business from any Customer (as
defined below) on behalf of any enterprise or business other than the
Company, refer Prohibited Business from any Customer to any enterprise
or business other than the Company or receive commissions based on
sales or otherwise relating to the Prohibited Business from any
Customer, or any enterprise or business other than the Company. For
purposes of this Section 6(b), the term "Customer" means any person,
firm, corporation, partnership, association or other entity to which
the Company or any of its affiliates sold or provided goods or services
during the 24-month period prior to the time at which any determination
is required to be made as to whether any such person, firm,
corporation, partnership, association or other entity is a Customer.
(c) Solicitation of Employees. During the periods in which the
provisions of Section 6(a) shall be in effect, the Executive, will not
directly or indirectly, solicit employees of the Company for employment
by any person, enterprise, business, company, partnership, joint
venture or other entity. For the purposes of this Agreement, the term
"Employee " means any person, firm, corporation, partnership,
association or other entity which the Company, or any of its
affiliates, employed during the during the 24-month period prior to the
time at which any determination is required to be made as to whether
any such person, firm, corporation, partnership, association or other
entity is an Employee.
19
<PAGE>
(d) No Payment. The Executive acknowledges and agrees that no
separate or additional payment will be required to be made to him in
consideration of his undertakings in this Section 6.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
-----------------------------------------
The Executive acknowledges that during his employment he will learn and
will have access to confidential information regarding the Company and
its affiliates, including without limitation (i) confidential or secret
plans, programs, documents, agreements or other material relating to
the business, services or activities of the Company and its affiliates
and (ii) trade secrets, market reports, customer investigations,
customer lists and other similar information that is proprietary
information of the Company or its affiliates (collectively referred to
as "confidential information"). The Executive acknowledges that such
confidential information as is acquired and used by the Company or its
affiliates is a special, valuable and unique asset. All records, files,
materials and confidential information obtained by the Executive in the
course of his employment with the Company are confidential and
proprietary and shall remain the exclusive property of the Company or
its affiliates, as the case may be. The Executive will not, except in
connection with and as required by his performance of his duties under
this Agreement, for any reason use for his own benefit or the benefit
of any person or entity with which he may be associated or disclose any
such confidential information to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever
without the prior written consent of the board of directors of the
Company, unless such confidential information previously shall have
become public knowledge through no action by or omission of the
Executive.
8. EQUITABLE RELIEF.
----------------
(a) The Company and the Executive recognize that the services
to be rendered under this Agreement by the Executive are special,
unique and of extraordinary character, and that in the event of the
breach by the Executive of the terms and conditions of this Agreement
or if the Executive, without the prior consent of the board of
directors of the Company, shall leave his employment for any reason and
take any action in violation of Section 6 or Section 7, the Company
will be entitled to institute and prosecute proceedings in any court of
competent jurisdiction referred to in Section 8(b) below, to enjoin the
Executive from breaching the provisions of Section 6 or Section 7. In
such action, the Company will not be required to plead or prove
irreparable harm or lack of an adequate remedy at law. Nothing
contained in this Section 8 shall be construed to prevent the Company
from seeking such other remedy in arbitration in case of any breach of
this Agreement by the Executive, as the Company may elect.
(b) Any proceeding or action must be commenced in the federal
courts, or in the absence of federal jurisdiction in state court, in
either case in Florida where the Company maintains its principal
offices. The Executive and the Company irrevocably and unconditionally
submit to the jurisdiction of such courts and agree to take any and all
future action necessary to submit to the jurisdiction of such courts.
The Executive and the Company irrevocably waive any objection that they
20
<PAGE>
now have or hereafter irrevocably waive any objection that they now
have or hereafter may have to the laying of venue of any suit, action
or proceeding brought in any such court and further irrevocably waive
any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Final judgment against
the Executive or the Company in any such suit shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment, a
certified or true copy or which shall be conclusive evidence of the
fact and the amount of any liability of the Executive or the Company
therein described, or by appropriate proceedings under any applicable
treaty or otherwise.
9. ASSIGNABILITY. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the assets and business of the Company. The Executive's
obligations hereunder may not be assigned or alienated and any attempt to do so
by the Executive will be void.
21
<PAGE>
10. SEVERABILITY.
(a) The Executive expressly agrees that the character,
duration and geographical scope of the provisions set forth in this
Agreement are reasonable in light of the circumstances, as they exist
on the date hereof. Should a decision, however, be made at a later date
by a court of competent jurisdiction that the character, duration or
geographical scope of such provisions is unreasonable, then it is the
intention and the agreement of the Executive and the Company that this
Agreement shall be construed by the court in such a manner as to impose
only those restrictions on the Executive's conduct that are reasonable
in the light of the circumstances and as are necessary to assure to the
Company the benefits of this Agreement. If, in any judicial proceeding,
a court shall refuse to enforce all of the separate covenants deemed
included herein because taken together they are more extensive than
necessary to assure to the Company the intended benefits of this
Agreement, it is expressly understood and agreed by the parties hereto
that the provisions of this Agreement that, if eliminated, would permit
the remaining separate provisions to be enforced in such proceeding
shall be deemed eliminated, for the purposes of such proceeding, from
this Agreement.
(b) If any provision of this Agreement otherwise is deemed to
be invalid or unenforceable or is prohibited by the laws of the state
or jurisdiction where it is to be performed, this Agreement shall be
considered divisible as to such provision and such provision shall be
inoperative in such state or jurisdiction and shall not be part of the
consideration moving from either of the parties to the other. The
remaining provisions of this Agreement shall be valid and binding and
of like effect as though such provision were not included.
11. NOTICES AND ADDRESSES. All notices, offers, acceptance and any
other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted delivery, by facsimile delivery or, if mailed,
postage prepaid, by certified mail, return receipt requested, as follows:
To the Company: Imaging Diagnostic Systems, Inc.
6531 NW 18th Court
Plantation Florida 33313
To the Executive: _____________________
_____________________
_____________________
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
22
<PAGE>
12. COUNTERPART. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
13. ARBITRATION. Except for any controversy or claim seeking equitable
relief as provided in Section 8 of this Agreement, any controversy or claim
arising out of or relating to this Agreement, or to the interpretation, breach
or enforcement thereof or any other dispute between the parties, shall be
submitted to one arbitrator and settled by arbitration in Fort Lauderdale,
Florida, in accordance with the rules, then obtaining, of the American
Arbitration Association. Any reward made by such arbitrator shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
14. ATTORNEY'S FEES. In the event that there is any controversy or
claim arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding is commenced to
enforce the provisions of this Agreement, the prevailing party shall be entitled
to a reasonable attorney's fee, costs and expenses.
15. GOVERNING LAW. This Agreement and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the party or
parties against which enforcement or the change, waiver discharge or termination
is sought.
17. ADDITIONAL DOCUMENTS. The parties hereto shall execute such
additional instruments as may be reasonably required by their counsel in order
to carry out the purpose and intent of this Agreement and to fulfill the
obligations of the parties hereunder.
18. SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date and year first above written.
Imaging Diagnostic Systems, Inc.
________________________________ By: _________________________________
Executive Linda B. Grable, President
23
<PAGE>
AMENDED STOCK OPTION AGREEMENT
THIS IS AN AMENDMENT TO STOCK OPTION AGREEMENT (the "Agreement") dated
August 15, 2000 and originally entered into as of the 30th day of August 1999,
between Imaging Diagnostic Systems, Inc. the "Company") and
_____________________________, an Executive of the Company ("Executive").
WHEREAS, by action taken by the Board of Directors of the Company
on August 30, 1999, the Company adopted the 1999 Equity Incentive Plan, and
WHEREAS, the 1999 Equity Incentive Plan was replaced with the 2000
Non-Statutory Stock Option Plan which was adopted on January 3, 2000 by the
Board of Directors and adopted by the stockholders of the Company at its annual
meeting held on May 10, 2000, and
WHEREAS, the Board of Directors ratified the Agreement on September
6, 2000,
NOW THEREFORE, in consideration of the mutual covenants and
promises hereafter set forth and for other good and valuable consideration,
receipt of which is acknowledged, the parties hereto agree to amend the
agreement as follows:
1. GRANT OF INCENTIVE OPTIONS. The Company irrevocably grants to
Executive, as a matter of separate agreement and not in lieu of salary or other
compensation for services, the right and option (the "Options") to purchase
500,000 shares each year as of the anniversary date of said Agreement, for the
next five years, as of August 30, 1999 of authorized but unissued common stock
of the Company or, at Executive's option, that number of Voting Convertible
Preferred Stock that would give Executive voting rights equal to the 500,000
shares of common stock, on the terms and conditions herein set forth. The
Options originally intended to be Incentive Stock Options shall be Non-Statutory
Stock Options which are not intended to qualify as "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
2. PRICE. The exercise price of the shares of common stock subject to
the Options shall be 110% of fair market value on the date of the grant based on
the average of the high and low price on the anniversary date of the Agreement.
3. WHEN EXERCISABLE.
(a) Provided that Executive is employed by the Company on the
respective dates below, the Options shall vest as follows:
Date No. of Shares
---- -------------
August 30, 1999 500,000
August 30, 2000 500,000
August 30, 2001 500,000
August 30, 2002 500,000
August 30, 2003 500,000
24
<PAGE>
(b) Except as provided in paragraphs 2 and 3 of this
Agreement, once any Option become exercisable they shall remain
exercisable through August 30, 2004.
4. CONVERSION TO NON-QUALIFIED OPTIONS. In the event that the
stockholders of the Company fail to approve a subsequent plan for
additional shares to comply with the Agreement, than the Options shall
be issued as Non-Qualified Options.
5. TERMINATION OF RELATIONSHIP.
(a) Except as set forth in Section 4 above, if for any reason,
except death, Executive ceases to act as an employee of the Company,
all rights granted hereunder shall terminate effective three months
from the date Executive ceases to act as an employee.
(b) If Executive shall die while an employee of the Company,
his estate or any transferee, as defined herein, shall have the right
within three months from the date of Executive's death to exercise
Executive's Options to the extent the right to exercise to the Options
shall have accrued at the date of death, except to the extent the
Options shall have been exercised prior thereto. The exercise period
for any Options not vested, shall be extended through August 30, 2004
thereby converting all of the Options to Non-Qualified Options. For the
purpose of this Agreement, "transferee" shall mean a person to whom
such shares are transferred by will or by the laws of descent and
distribution.
(c) No transfer of the Options by Executive by will or by the
laws of descent and distribution shall be effective to bind the Company
unless the Company shall have been furnished with written notice
thereof and a copy of the letters testamentary or such other evidence
as the board may deem necessary to establish the authority of the state
and the acceptance by the transferee or transferees of the terms and
conditions of the Options.
(d) If Executive becomes disabled while employed by the
Company within the meaning of Section 22(e)(3) of the Code, the three
month period referred to in paragraph 3(a) of this Agreement shall be
extended to one year.
6. METHOD OF EXERCISE/REGISTRATION. These Options shall be exercisable
by a written notice, which shall:
(a) state the election to exercise the Options, the number of
shares to be exercised, the person in whose name the stock certificate
or certificates for such shares of common stock is to be registered,
his address and social security number (or if more than one, the names,
addresses and social security numbers of such persons);
(b) contain such representations and agreements as to the
holder's investment intent with respect to such shares of common stock
as set forth in paragraph 8 hereof;
(c) be signed by the person or persons entitled to exercise
the Options and, if the Options is being exercised by any person or
persons other than the Executive, be accompanied by proof, satisfactory
25
<PAGE>
to counsel for the Company, of the right of such person or persons to
exercise the Options.
(d) be accompanied by full payment of the purchase or exercise
price there for either (i) in United States dollars in cash or by
check; (ii) by Executive's personal recourse note bearing interest
payable not less than annually at no less than 100% of the lowest
applicable federal rate, as defined in Section 1274(d) of the Code;
(iii) by having the Company retain a portion of the Shares covered by
the option exercise, or (iv) by any combination of (i) (ii) and (iii)
above.
If the Executive chooses to pay the exercise price pursuant to (iii)
above, the number of Shares to be delivered to or withheld by the Company times
the fair market value shall equal the cash required for exercise. To the extent
that the Participant elects to either deliver or have withheld Shares of the
Company's Common Stock, the Board of Directors may require the Executive to make
such election only during certain periods of time as may be necessary to comply
with appropriate exemptive procedures regarding the "short-swing" profit
provisions of Section 16(b) of the Securities Exchange Act of 1934 or to meet
certain Internal Revenue Code requirements.
The certificate or certificates for shares of common stock as to which
the Options shall be exercised shall be registered in the name of the person or
persons exercising the Options.
The Company shall, if requested by the Executive, as expeditiously as
possible file a registration statement on a form of general use under the
Securities Act to permit the sale or other disposition of the Optioned Shares.
The Executive shall provide all information reasonable requested by the Company
for inclusion in any registration statement to be filed under this Agreement.
The Company will use its best efforts to cause such registration statement first
to become effective at the earliest practicable time and then to remain
effective for such period as the Executive reasonably deems necessary to effect
such sales or other dispositions or until all Optioned Shares no longer will
constitute "restricted securities" with the meaning of Rule 144 under the
Securities Act. Such registration shall be effected at the Company's expense
except for underwriting commissions and the fees and disbursements of the
Executive's counsel attributable to the registration of the Optioned Shares. The
Company and the Executive shall enter into an agreement under which each will
indemnify the other with respect to information provided by such party for use
in the registration statement, such indemnities and the procedures for them to
be in a form customarily included in registration rights agreements. The Company
further agrees to use its best efforts to register or qualify the Optioned Stock
covered under such registration statement under such other securities or
blue-sky laws of such jurisdictions, as the Executive shall reasonably request.
7. RELOAD OPTIONS. If the Executive pays all or a portion of the
exercise price of an Option or the tax required to be withheld pursuant to an
exercise of an Option by surrendering shares of Stock pursuant to Section 6(d)
above, the Executive shall be automatically granted an Option for the purchase
of Stock equal to the number of shares surrendered (a "Reload Option"). The
grant of the Reload Option shall be effective on the date the Participant
surrenders the shares of Stock in respect of which the Reload Option is granted
26
<PAGE>
(the "Reload Date"). The Reload Option shall have an exercise price equal to the
Fair Market Value of the Stock on the Reload Date, and shall have a term which
is no longer, and which shall lapse no later, than the original term of the
underlying option. If stock otherwise available under an Incentive Stock Option
is withheld pursuant to Section 6(d) above, any Reload Option granted in
connection with the withholding shall be treated as a new Incentive Stock
Option, subject to the rules set forth in the Plan.
8. ADJUSTMENTS. Upon the occurrence of any of the following events, the
Executive's rights with respect to Options granted hereunder shall be adjusted
as hereinafter provided unless otherwise specifically provided in the written
agreement between the Executive and the Company relating to such Option:
(a) If the shares of Common Stock shall be subdivided or
combined into a greater or smaller number of shares or if the Company shall
issue any shares of Common Stock as a stock dividend on its outstanding Common
Stock, the number of shares of Common Stock deliverable upon the exercise of
Options shall be appropriately increased or decreased proportionately, and
appropriate adjustments shall be made in the purchase price per share to reflect
such subdivision, combination or stock dividend.
(b) Except as provided for pursuant to Section 5 (a) or 5(d)
of the Employment Agreement, if the Company is to be consolidated with or
acquired by another entity in a merger, sale of all or substantially all of the
Company's assets or otherwise (an "Acquisition"), the committee or the board of
directors of any entity assuming the obligations of the Company hereunder (the
"Successor Board") shall at the Executives sole option, as to outstanding
Options, either (i) make appropriate provision for the continuation of such
Options by substituting on an equitable basis for the shares then subject to
such Options the consideration payable with respect to the outstanding shares of
Common Stock in connection with the Acquisition; or (ii) terminate all Options
in exchange for a cash payment equal to the excess of the fair market value of
the shares subject to such Options (to the extent then exercisable) over the
exercise price thereof.
(c) In the event of a recapitalization or reorganization of
the Company (other than a transaction described in subparagraph (b) above)
pursuant to which securities of the Company or of another corporation are issued
with respect to the outstanding shares of Common Stock, the Executive upon
exercising an Option shall be entitled to receive for the purchase price paid
upon such exercise the securities he would have received if he had exercised his
Option prior to such recapitalization or reorganization.
(d) Except as expressly provided herein, no issuance by the
Company of shares of stock of any class or securities convertible into shares of
stock of any class shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares subject to Options. No
adjustments shall be made for dividends or other distributions paid in cash or
in property other than securities of the Company.
(e) No fractional shares shall be issued pursuant to the
Options; the Executive shall receive from the Company cash in lieu of such
fractional shares.
27
<PAGE>
9. NECESSITY TO BECOME HOLDER OF RECORD. Neither the Executive nor his
estate, as provided in paragraph 3(b), shall have any rights as a shareholder
with respect to any shares covered by the Options until such person shall have
become the holder of record of such shares. No adjustment shall be made for cash
dividends or cash distributions, ordinary or extraordinary, in respect of such
shares for which the record date is prior to the date on which he shall become
the holder of record thereof.
10. RESERVATION OF RIGHT TO TERMINATE RELATIONSHIP. Nothing contained
in this Agreement shall restrict the right of the Company to terminate the
relationship of Executive at any time, with or without cause. The termination of
the relationship of Executive by the Company, regardless of the reason there
for, shall have the results provided for in Section 5 of this Agreement.
11. CONDITIONS TO EXERCISE OF OPTIONS. In order to enable the Company
to comply with the Securities Act of 1933 (the "Securities Act") and relevant
state law, the Company shall require Executive, his estate, or any Transferee as
a condition of the exercising of the Options granted hereunder, to give written
assurance satisfactory to the Company that the shares subject to the Options are
being acquired for his own account, for investment only, with no view to the
distribution of same, and that any subsequent resale of any such shares either
shall be made pursuant to a registration statement under the Securities Act and
applicable state law which has become effective and is current with regard to
the shares being sold, or shall be pursuant to an exemption from registration
under the Securities Act and applicable state law.
The Options are subject to the requirement that, if at any time the
board of directors shall determine, in its discretion, that the listing,
registration, or qualification of the shares of common stock subject to the
Options upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary as a
condition of, or in connection with the issue or purchase of shares under the
Options, the options may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected.
12. DUTIES OF COMPANY. The Company will at all times during the term of
Options:
(a) Reserve and keep available for issue such number of shares
of its authorized and unissued common stock as will be sufficient to
satisfy the requirements of this Agreement;
(b) Pay all original issue taxes with respect to the issue of
shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection therewith;
(c) Use its best efforts to comply with all laws and
regulations, which, in the opinion of counsel for the Company, shall be
applicable thereto.
13. PARTIES BOUND BY PLAN. The Plan and each determination,
interpretation or other action made or taken pursuant to the provisions of the
Plan shall be final and shall be binding and conclusive for all purposes on the
28
<PAGE>
Company and Executive and his respective successors in interest.
14. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or to the interpretations, breach or enforcement thereof, shall
be submitted to one arbitrator and settled by arbitration in Fort Lauderdale,
Florida, in accordance with the rules, then obtaining, of the American
Arbitration Association. Any award made by such arbitrator shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
15. BENEFIT. This Agreement shall be binding upon and insure to the
benefit of the parties hereto and their legal representatives, successors and
assigns.
16. NOTICES AND ADDRESSES. All notices, offers, acceptance and any
other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted delivery, by facsimile delivery or, if mailed,
postage prepaid, by certified mail, return receipt requested, as follows:
To the Company: Imaging Diagnostic Systems, Inc.
6531 NW 18th Court
Plantation Florida 33313
To the Executive: ______________________
______________________
______________________
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
17. ATTORNEY'S FEES. In the event that there is any controversy or
claim arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding is commenced to
enforce the provisions of this Agreement, the prevailing party shall be entitled
to a reasonable attorney's fee, costs and expenses.
18. CONSTRUCTION. In the event any parts of this Agreement are found to
be void, the remaining provisions of this Agreement shall nevertheless be
binding with the same effect as though the void parts were deleted.
19. GOVERNING LAW. This Agreement and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided therein or performance
shall be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.
29
<PAGE>
20. ORAL EVIDENCE. This Agreement supersedes all prior oral and written
agreements between the parties hereto with respect to the subject matter hereof.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, except by a statement in writing signed by the
party or parties against which enforcement or the change, waiver discharge or
termination is sought.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
22. ADDITIONAL DOCUMENTS. The parties hereto shall execute such
additional instruments as may be reasonably required by their counsel in order
to carry out the purpose and intent of this Agreement and to fulfill the
obligations of the parties hereunder.
23. PARAGRAPH HEADINGS. Paragraph headings herein have been inserted
for reference only and shall not be deemed to limit or otherwise affect, in any
matter, or be deemed to interpret in whole or in part any of the terms or
provisions of this Agreement.
IN WITNESS WHEREOF the parties hereto have set their hand and seal the
day and year first above written.
WITNESSES: Imaging Diagnostic Systems, Inc.
________________________________ By: _____________________________
Linda B. Grable, President
________________________________ By: _____________________________
Executive
30
<PAGE>
