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:
[ X ] Preliminary proxy statement
[ ] 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>
[ ] $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 MARCH 10, 2000
[ ] Fee computed on table below per Exchange Act Rules MAILING DATE MARCH 24, 2000
14a-6(i)(4) and 0-11. MEETING DATE APRIL 26, 2000
(1) Title of each class of securities to which
transaction applies:______________________ LIST OF EXHIBITS
(2) Aggregate number of securities to which A Proposed amended Certificate
transaction applies:______________________ B Form of Employment
Agreements
(3) Per unit price or other underlying value of C 2000 Non-Statutory Stock
transaction computed pursuant to Exchange Option Plan
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:__________________
</TABLE>
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IMAGING DIAGNOSTIC SYSTEMS, INC.
6531 NW 18th Court
Plantation, Florida 33313
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 26, 2000
TO THE STOCKHOLDERS OF IMAGING DIAGNOSTIC SYSTEMS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Imaging
Diagnostic Systems, Inc., a Florida Corporation (the "Company"), will be held on
Wednesday, April 26, 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 six (6) directors to serve a one-year term expiring upon the 2001
Annual Meeting of Stockholders or until his/her successor is duly elected
and qualified;
2. To consider and act upon a proposal to amend the Company's Certificate of
Incorporation to increase the number of authorized shares of the Company's
common stock, no par value, from 100,000,000 to 150,000,000;
3. To ratify the three executive officers employment agreements;
4. To consider and act upon a proposal to adopt the Company's 2000
Non-Statutory Stock Option Plan;
5. To ratify the Board of Directors' action of its appointment of Margolies,
Fink and Wichrowski, CPA's as independent auditors for the Company for the
fiscal year ending June 30, 2000; and
6. 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 Friday, March 10,
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
March 24, 2000
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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.
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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") to be held on Wednesday, April 26, 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 March 24, 2000 to
all shareholders entitled to vote at the Annual Meeting.
RECORD DATE; OUTSTANDING SHARES
Only stockholders of record at the close of business on Friday, March 10,
2000 (the "Record Date"), are entitled to receive notice of and to vote at the
meeting. On the Record Date, there were outstanding ____________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
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
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supplemented by telephone, facsimile, 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 and ADP will be paid a fee
for its services.
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock
of the Company as of March 10, 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 12,452,873(3) ____%
c/o 6351 NW 18th Court
Plantation, FL 33313
Linda B. Grable 4,530,633(4) ____%
c/o 6351 NW 18th Court
Plantation, FL 33313
Allan L. Schwartz 4,320,893(5) ____%
c/o 6351 NW 18th Court
Plantation, FL 33313
All officers and directors 21,304,399(6) ____%
as a group (3 persons)
The actual number of shares of common stock held by Richard Grable and Linda
Grable, without giving effect to options, are 11,494,540 and 3,572,300 shares,
respectively. Both Richard Grable and Linda Grable specifically disclaim any
beneficial interest in each other's shares or options other than that which may
be attributed to him/her by operation of law.
(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.
(2) Percentage of ownership is based on ______shares of common stock
outstanding as of March 10, 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 March 10, 2000 are deemed
outstanding for computing the percentage of that person and the group.
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* Note - share and option ownership indicated under section entitled "Share
Ownership by Principal Stockholders and Management" as well as footnotes
thereto will need to be updated so as to reflect positions as of March 10,
2000.
(3) Includes 958,333 shares subject to options and 11,494,540 shares owned by
Richard J. Grable. Does not include 3,572,300 shares owned by Linda B.
Grable, the wife of Richard J. Grable, since Richard J. Grable disclaims
any beneficial ownership over such shares other than that which may be
attributed to him by operation of law.
(4) Includes 958,333 shares subject to options and 3,572,300 shares owned by
Linda B. Grable. Does not include 11,494,540 shares owned by Richard J.
Grable, the husband of Linda B. Grable, since Linda B. Grable disclaims any
beneficial ownership over such shares other than that which may be
attributed to her by operation of law.
(5) Includes 958,333 shares subject to options held by Allan L. Schwartz and
9,000 shares owned by the wife of Allan L. Schwartz, Carolyn Schwartz.
(6) Includes 1,916,666 shares subject to options held by Linda and Richard
Grable and 958,333 shares subject to options held by Allan Schwartz. Also
includes 9,000 shares owned by the wife of Allan L. Schwartz, Carolyn
Schwartz, notwithstanding the fact that Allan L. Schwartz disclaims
beneficial ownership over shares other than that which may be attributed to
him by operation of law.
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, 1999, its officers,
directors and greater than 10% beneficial owners complied with all applicable
Section 16(a) filing requirements.
PROPOSAL 1
ELECTION OF DIRECTORS
Six directors are to be elected at the meeting. All six directors are to be
elected for the term expiring in 2001. 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
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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.
John R. Liegey: Mr. Liegey is the founder, Chairman and Chief Executive
Officer of The Weston Group LLC of New York, NY, an International Investment
Banking Firm. Prior to founding The Weston Group LLC, Mr. Liegey was Managing
Director for Global Fixed Income Sales and Trading at Dean Witter Reynolds Inc.,
New York, NY and then President and Chief Operating Officer for Dean Witter
International Capital Markets Ltd., London, U.K. managing a staff of 600
professionals in nine offices and six countries. He was responsible for all
international investment banking, capital markets trading and sales and
research. He is a graduate of Georgetown College of Arts and Sciences and holds
a degree in International Economics. Mr. Liegey has been involved in investment
banking for over 20 years.
Robert L. Kagan, M.D.: Dr. Kagan is the founder and medical director of the
MRI Scan Centers in Fort Lauderdale, FL. He is a graduate of the Georgetown
University School of
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Medicine and is board certified in pathology and nuclear medicine. He is a
diplomate of the National Board of Medical Examiners, the American Board of
Nuclear Medicine, the American Board of Pathology in Clinical Pathology and the
American Board of Hyperbaric Medicine. Dr. Kagan has served as Director of the
Company's medical advisory board.
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
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.
Compensation of Directors
Each director who is not an employee of the Company receives an annual
retainer of $500 plus a fee of $100 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.
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 14 times during the fiscal year ended June 30,
1999. The Company has no standing Committees. All three directors were present
for all board meetings.
Required Vote
Each nominee receiving a majority of the number of affirmative votes 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 the Directors.
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 nominee unless instructions are given to the
contrary.
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Management
Directors and Executive Officers
Summary Of Compensation Table
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Name & Principal
Position Year Salary (2) Other Annual Restricted Securities/Underlying
- -------- ---- ---------- Compensation Stock Awards Option/SARs (1)
------------ ------------ ---------------------
<S> <C> <C> <C> <C> <C>
Richard J. Grable, CEO 1997 $289,779 $115,000 $268,000 22,883
and Director 1998 $286,225 -0- -0- 534,602
1999 $286,225 -0- -0- 458,333
Linda B. Grable, President 1997 $ 97,451 $115,000 $268,000 22,883
and Director 1998 $119,070 -0- -0- 534,602
1999 $119,070 -0- -0- 458,333
Allan L. Schwartz, Exec 1997 $111,534 $115,000 $268,000 130,410
VP, CFO and Director 1998 $119,070 -0- -0- 534,602
1999 $119,070 -0- -0- 458,333
</TABLE>
(1) The aggregate dollar value of the 1998 and 1999 options, based on the
averaged high and low price on June 30, 1999 are as follows: Richard J.
Grable, $341,321; Linda B. Grable, $341,321; and Allan L. Schwartz,
$341,321.
(2) The salaries include compensation, which has been accrued and not paid as
of February 28, 2000 in the amounts as follows: Richard J. Grable, $47,704;
Linda B. Grable, $19,890 and Allan L. Schwartz, $19,806.
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 $500 per month. Each
employment agreement provides for bonuses, health insurance, car allowance, and
related benefits, and a cost of living adjustment of 7% per annum. No bonuses
have been paid to date. Form of Employment Agreement is annexed to this proxy
statement and marked Exhibit B.
The following table explains information regarding the Options/SARs we granted
to management for the fiscal year ended June 30, 1999.
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Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
No. of Securities % of Total Options Exercise or Market Price
Underlying Options Granted to Employees Base Price On Date of Expiration
Name Granted In Fiscal Year ($/Share) Grant Date
- ---- ------ -------------- --------- ----- -----
<S> <C> <C> <C> <C> <C>
Richard J. 250,000 16% $.17 $.44 7/5/03
Grable 208,333 14$ $.48 $.44 7/5/03
Linda B. 250,000 16% $.17 $.44 7/5/03
Grable 208,333 14$ $.48 $.44 7/5/03
Allan L 250,000 16% $.17 $.44 7/5/03
Schwartz 208,333 14$ $.48 $.44 7/5/03
</TABLE>
Stock Option Plans
For the fiscal year ended June 30, 1999, 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 shareholders at the March 29, 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.
Under this plan, the exercise price of the incentive options to employees must
be equal to at least 100% of the fair market value of the common stock, as of
the date of grant. The exercise price of incentive options to officers, or
affiliated persons, must be at least 110% of the fair market value as of the
date of grant.
According to stock option 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 vest in equal
installments over a five-year period at an exercise price of $.21 per share
(110% of the fair market value of the shares on the date of grant). These stock
option agreements terminate on August 30, 2004. Form of Stock Option Agreement
is included with Form of Employment Agreement as Exhibit B.
(1) Potential realizable values are based on the fair market value per
share as determined by the Company for financial statement purposes and
represents hypothetical gains that could be achieved for the respective
options if exercised at the date of the grant. The dollar amounts set forth
in these columns are the result of calculations at the zero percent, five
percent and ten percent rates set by the Securities and Exchange Commission
and are not intended to forecast possible future appreciation, if any, of
the Common Stock price. There can be no assurance that such potential
realizable values will not be more or less than indicated in the table
above.
(2) On July 4, 1996, Mr. Grable was granted an option to purchase 22,883
shares of common stock pursuant to the Company's incentive stock option
plan.
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(3) On July 4, 1996, Mrs. Grable was granted an option to purchase 22,883
shares of common stock pursuant to the Company's incentive stock option
plan.
(4) On July 4, 1996, Mr. Schwartz was granted an option to purchase 22,883
shares of common stock pursuant to the Company's incentive stock option
plan.
Fiscal Year-End Option Values. The following table sets forth certain
information concerning the number and value of securities underlying exercisable
and un-exercisable stock options as of the fiscal year ended June 30, 1997 by
the Name Executive Officers.
Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of
Securities Number of Securities Value of Unexercised
Underlying Underlying Unexercised "In-The-Money" Options
Options/SARs Value Options at Fiscal Year End at Fiscal Year End
Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
- ----- ------------ -------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Grable 0 $ 0 1,015,818 0 $ 0 $ 0
Linda B. Grable 0 $ 0 1,015,818 0 $ 0 $ 0
Allan L. Schwartz 0 $ 0 1,123,345 0 $ 0 $ 0
</TABLE>
PROPOSAL 2
APPROVE A PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK, NO PAR
VALUE, FROM 100,000,000 TO 150,000,000
The Board of Directors of the Company has adopted a resolution unanimously
approving and recommending to the Company's stockholders for their approval an
amendment to the Company's Certificate of Incorporation to provide for an
increase of the number of shares of common stock, which the Company shall be
authorized to issue from 100,000,000 to 150,000,000. As of the close of business
on March 10, 2000 there were __________shares of common stock outstanding. In
addition the Company currently has reserved (i) up to 1,058,125 shares of common
stock for issuance upon the exercise of certain warrants that are outstanding;
(ii) up to 858,455 common shares for issuance upon the conversion of certain
convertible debentures held by Charlton Avenue LLC and Spinneret Financial;
(iii) and up to 842,300 shares of common stock for issuance upon the exercise of
employee options. We are further obligated to have available for issuance (i)
3,165,276 common shares for the conversion of Series B and Series I convertible
preferred shares held by Charlton Avenue LLC, (ii) 3,098,968 common shares upon
the exercise of employee stock options held by the executive officers; (iii) and
if we should choose to use the $15,000,000 equity credit line an additional
3,846,154 common shares would be required. As of March 10, 2000 we had issued,
have reserved and have obligations for
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the issuance of approximately ___________ shares of common stock. Accordingly,
as of such date (i) the number of shares of common stock issued plus the number
of shares of common stock reserved for issuance and obligated for issuance
exceeded the number of common shares available, (ii) the Company was not in
compliance with all of its obligations to reserve a sufficient number of shares
of common stock for issuance upon conversion of convertible preferred stock,
convertible preferred debentures or exercise of outstanding options and warrants
and (iii) there were no additional shares of common stock available for issuance
in connection with financings, any refinancing of outstanding debentures or any
stock option plan for employees, future non-employee directors and consultants.
Without increasing the number of shares of common stock which the Company is
authorized to issue, we may not be able to meet our contractual obligations to
issue common stock to our convertible preferred stock and convertible debenture
holders, and to issue common stock upon exercise from our option and warrant
holders.
The Board of Directors recommends the proposed increase in the authorized number
of share of common stock to insure that a sufficient number of authorized and
unissued shares is available (i) to meet the Company's obligations under the
convertible preferred stock, convertible preferred debentures, and warrants and
options previously issued or contracted for by the Company or to permit a
refinancing of any or all of the Company's outstanding convertible debentures or
debts, (ii) to raise additional capital for the operations of the Company,
(iii) for the financing of the acquisition of other businesses and (iv) to make
options and shares available to employees, future non-employee directors and
consultants of the Company as an incentive for services provided to the Company.
Such shares would be available for issuance by the board of Directors of the
Company without further action by the stockholders, unless required by the
Company's Certificate of Incorporation or by NASDAQ rules. Neither the presently
authorized shares of common stock nor the additional shares of common stock that
may be authorized pursuant to the Authorized Stock Amendment carry preemptive
rights.
Except as described above, there are currently no plans or arrangements relating
to the issuance of any additional shares of common stock proposed to be
authorized. However, if this proposal is approved by the stockholders, no
assurance can be given that the Company will not consider effecting an equity
offering of common stock or otherwise issuing such stock in the future for the
purpose of raising additional working capital, acquiring related business or
assets or otherwise.
The additional shares of common stock, if issued, would have a dilutive effect
upon the percentage of equity of the Company owned by present stockholders. The
issuance of such additional shares of common stock might be disadvantageous to
current stockholders in that any additional issuances would potentially reduce
per share dividends, if any. Stockholders should consider, however, that the
possible impact upon dividends is likely to be minimal in view of the fact that
the Company has never paid dividends, has never adopted any policy with respect
to the payment of dividends and does not intend to pay any cash dividends in the
foreseeable future. In addition, the issuance of such additional shares of
common stock, by reducing the percentage of equity of the Company owned by
present shareholders, would reduce such present shareholders' ability to
influence the election of directors or any other action taken by the holders of
common stock.
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The authorization to issue the additional shares of common stock would provide
management with the capacity to negate the efforts of unfriendly tender offerors
through the issuance of securities to others who are friendly or desirable to
management. This proposal is not the result of management's knowledge of any
specific effort to accumulate shares of the Company's common stock or to obtain
control of the Company in opposition to management or otherwise. The Company is
not submitting this proposal to enable it to frustrate any efforts by another
party to acquire a controlling interest or to seek representation on the Board
of Directors. The submission of this proposal is not part of any plan by the
Company's management to adopt a series of amendments to the Certificate of
Incorporation or By-laws so as to render the takeover of the Company more
difficult.
If proposal no. 2 is approved by the Company's stockholders, the Board of
Directors expects to file a Certificate of Amendment to the Company's
Certificate of Incorporation increasing the number of authorized shares of
common stock as soon as practicable after the date of the annual meeting. The
Certificate of Amendment would amend and restate Article III of the Company's
Certificate of Incorporation to read as follows:
The maximum number of shares of capital stock that this corporation is
authorized to have outstanding at any one time is 152,000,000 (ONE HUNDRED
FIFTY-TWO MILLION) shares, no par value. The 152,000,000 shares of no par value
capital stock of the Corporation shall be designated as follows:
o 150,000,000 common shares
o 2,000,000 preferred shares, the rights, and preferences of which are
to be designated by the Company's Board of Directors.
Annexed to this proxy statement and marked Exhibit A is proposed amendment
to certificate of incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL
TO THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION
PROPOSAL 3
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. $286,224.96, $119,069.52 and $119,069.52 per annum to Richard
J. Grable, Linda B. Grable and Allan L. Schwartz respectively.
New stock option agreements were signed 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 date of the grant
which is $.21 per share.
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Annexed to this proxy statement as Exhibit B is the form of the employment
agreement as executed by each of the Company's three officers for the term and
annual salaries heretofore indicated.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE EXECUTIVE OFFICERS EMPLOYMENT AGREEMENTS
PROPOSAL 4
CONSIDER AND ACT UPON A PROPOSAL TO ADOPT THE COMPANY'S 2000 NON-STATUTORY STOCK
OPTION PLAN
The Board of Directors on January 3, 2000 adopted the Company's 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 and its subsidiaries. The Board of Directors believes that the
Company's policy of granting stock options to such persons will continue to
provide it with a critical advantage in attracting and retaining qualified
candidates. In addition, the Stock Option Plan is intended to provide the
Company with maximum flexibility to compensate plan participants. It is expected
that such flexibility will be an integral part of the Company's 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 the Company are gained by an option
program such as the 2000 Non-Statutory Stock Option Plan which includes
incentives for motivating employees of the Company, while at the same time
promoting a closer identity of interest between employees, non-employee
directors, consultants, attorneys and advisors on the one hand, and the
stockholders on the other.
The principal terms of the Stock Option Plan are summarized below and a
copy of the Stock Option Plan is annexed to this Proxy Statement as Exhibit C.
The summary of the Stock Option Plan set forth below is not intended to be a
complete description thereof and such summary is qualified in its entirety by
the actual text of the Stock Option Plan to which reference is made.
Summary Description of the Imaging Diagnostic Systems, Inc. 2000 Non-Statutory
Stock Option Plan
The purpose of the Non-Statutory Stock Option Plan ("Plan"), attached
hereto as Exhibit C, is to provide directors, officers and employees of,
consultants, attorneys and advisors to the Company and its subsidiaries with
additional incentives by increasing their ownership interest in the Company.
Directors, officers and other employees of the Company and its subsidiaries are
eligible to participate in the Plan. Options in the form of Non-Statutory Stock
Options ("NSO") may also be granted to directors who are not employed by the
Company and consultants, attorneys and advisors to the Company providing
valuable services to the Company and its subsidiaries. In addition, individuals
who have agreed to become an employee of, director of or an attorney, consultant
or advisor to the Company and/or its subsidiaries are eligible for option
grants, conditional in each case on actual employment, directorship or attorney,
advisor and/or
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consultant status. The Plan provides for the issuance of NSO's only, which are
not intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code, as amended.
The maximum number of options that may be granted under this Plan shall be
options to purchase 20,000,000 shares of Common Stock.
The Board of Directors of the Company or a Compensation Committee (once
established) will administer the Stock Option Plan with the discretion generally
to determine the terms of any option grant, including the number of option
shares, exercise price, term, vesting schedule and the post-termination exercise
period. Notwithstanding this discretion (i) the term of any option may not
exceed 10 years and (ii) an option will terminate as follows: (a) if such
termination is on account of termination of employment for any reason other than
death, without cause, such options shall terminate one year thereafter; (b) if
such termination is on account of death, such options shall terminate 15 months
thereafter; and (c) if such termination is for cause (as determined by the Board
of Directors and/or Compensation Committee), such options shall terminate
immediately. Unless otherwise determined by the Board of Directors or
Compensation Committee, the exercise price per share of Common Stock subject to
an option shall be equal to no less than 50% of the fair market value of the
Common Stock on the date such option is granted. No NSO shall be assignable or
otherwise transferable except by will or the laws of descent and distribution or
except as permitted in accordance with SEC Release No.33-7646 as effective April
7, 1999 and in particular that portion thereof which expands upon
transferability as is contained in Article III entitled "Transferable Options
and Proxy Reporting" as indicated in Section A 1 through 4 inclusive and Section
B thereof.
The Stock Option Plan may be amended, altered, suspended, discontinued or
terminated by the Board of Directors without further stockholder approval,
unless such approval is required by law or regulation or under the rules of the
stock exchange or automated quotation system on which the Common Stock is then
listed or quoted. Thus, stockholder approval will not necessarily be required
for amendments which might increase the cost of the Stock Option Plan or broaden
eligibility except that no amendment or alteration to the Plan shall be made
without the approval of stockholders which would (a) increase the total number
of shares reserved for the purposes of the Plan or decrease the NSO price
(except as provided in paragraph 9 of the Plan) or change the classes of persons
eligible to participate in the Plan or (b) extend the NSO period or (c)
materially increase the benefits accruing to Plan participants or (d) materially
modify Plan participation eligibility requirements or (e) extend the expiration
date of the Plan. Unless otherwise indicated the Stock Option Plan will remain
in effect until terminated by the Board of Directors. Attached to this proxy
statement and marked Exhibit D is copy of proposed Executive Officers Qualified
Stock Option Plan.
Federal Tax Consequences
The following is a brief description of the federal income tax consequences
generally arising with respect to options that may be granted under the Stock
Option Plan. This discussion is only intended for the information of
stockholders considering how to vote at the Annual Meeting, and not as tax
guidance to individuals who participate in the Stock Option Plan.
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The grant of an option will create no tax consequences for the grantee or
the Company. Upon exercising a NSO, the participant must generally recognize
ordinary income equal to the difference between the exercise price and fair
market value of the freely transferable and nonforfeitable stock received. In
such case, the Company will be entitled to a deduction equal to the amount
recognized as ordinary income by the participant.
The participant's disposition of shares acquired upon the exercise of an
option generally will result in capital gain or loss measured by the difference
between the sale price and the participant's tax basis in such shares.
Additionally, the following tax effects on Stock Option Plan participation
may be considered:
Tax Treatment to the Participants. The Stock Option Plan provides for the
grant of nonqualified stock options. A description of these options and certain
federal income tax aspects associated therewith is set forth below. Because tax
results may vary due to individual circumstances, each participant in the Stock
Option Plan is urged to consult his personal tax adviser with respect to the tax
consequences of the exercise of an option or the sale of stock received upon the
exercise thereof, especially with respect to the effect of state tax laws.
Federal Income Tax Treatment of Nonqualified Stock Options. No income is
recognized by an optionee when a non-qualified stock option is granted. Except
as described below, upon exercise of a nonqualified stock option, an optionee is
treated as having received ordinary income at the time of exercise in an amount
equal to the difference between the option price paid and the then fair market
value of the Common Stock acquired. The Company is entitled to a deduction at
the same time and in a corresponding amount. The optionee's basis in the Common
Stock acquired upon exercise of a nonqualified stock option is equal to the
option price plus the amount of ordinary income recognized, and any gain or loss
thereafter recognized upon disposition of the Common Stock is treated as capital
gain or loss.
Stock acquired by "insiders' (i.e., officers, directors or persons holding
10% or more of the stock of the Company who are subject to the restrictions on
short-swing trading imposed by Section 16(b) of the Securities Exchange Act of
1934) upon exercise of nonqualified stock options constitutes "restricted
property" and, unless the optionee elects otherwise, the recognition of income
upon exercise is deferred to the date upon which the stock acquired upon
exercise may first be sold without incurring Section 16(b) liability (generally
six months after exercise). If such an optionee does not elect to recognize
income upon exercise, the insider will realize ordinary income in an amount
equal to the difference between the option price and the fair market value on
the date the stock may first be sold without incurring Section 16(b) liability.
Vote Required for Approval
The affirmative vote of a majority of the outstanding shares of the Common
Stock present in persons or represented by Proxy at the Annual Meeting and
entitled to vote is required to approve the adoption of the Stock Option Plan.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL
OF THE 2000 NON-STATUTORY STOCK OPTION PLAN
PROPOSAL 5
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 2000, 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, 2000.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
The Company anticipates that the 2000 Annual Meeting will be held on or
about October 25, 2000 and that the proxy materials for the 2000 Annual Meeting
will be mailed on or before September 15, 2000. If any stockholder wishes a
proposal to be considered for inclusion in the 2000 Proxy Statement, this
material must be received by the Chief Executive Officer no later than August
15, 2000.
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
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APPENDIX A
IMAGING DIAGNOSTIC SYSTEMS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON April 26, 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 April 26, 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, 4, AND 5 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 six (6) directors [ ] [ ]
to hold office until the 2001 Annual
Meeting of Stockholders.
Nominees: Richard J. Grable, Linda B. Grable, Allan L. Schwartz, John R. Liegey,
Robert L. Kagan, M.D., and Irving H. Schwab
Instruction: To withhold authority to vote for any nominee, write
the nominee's name in the space provided below.
________________________________________________
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FOR
PROPOSAL 2: To approve the amendment FOR AGAINST ABSTAIN
To the Company's Certificate of
Incorporation to increase the number of [ ] [ ] [ ]
Authorized shares of the Company's
Common stock, no par value, from
100,000,000 to 150,000,000
FOR
PROPOSAL 3: To ratify executive officers FOR AGAINST ABSTAIN
Employment agreements
[ ] [ ] [ ]
FOR
PROPOSAL 4: To adopt the Company's FOR AGAINST ABSTAIN
2000 Non-Statutory Stock Option Plan
[ ] [ ] [ ]
FOR
PROPOSAL 5: 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, 2000.
I PLAN TO ATTEND THE MEETING [ ]
ADMISSION TO ANNUAL MEETING WILL BE BY TICKET ONLY TO SHAREHOLDERS 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________________
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PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
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EXHIBIT A
In accordance with shareholders approval of a proposal to amend the
Company's Certificate of Incorporation to increase the number of authorized
shares of the Company's common stock, no par value, from 100,000,000 to
150,000,000 duly executed by a majority of the shareholders of Imaging
Diagnostic Systems, Inc. entitled to vote thereon, and ratification of such
action by the Company's Board of Directors, the Corporation's Articles of
Incorporation to provide for and increase in the authorized Common Stock,
pursuant to the relevant provisions of Chapter 607 of the Florida Statutes are
hereby Amended as follows:
Article I
The name of the corporation is IMAGING DIAGNOSTIC SYSTEMS, INC.
ARTICLE III CAPITAL STOCK
The maximum number of shares of capital stock that this corporation is
authorized to have outstanding at any one time is 152,000,000 (ONE HUNDRED
FIFTY-TWO MILLION) shares, no par value. The 152,000,000 shares of no par value
capital stock of the Corporation shall be designated as follows:
o 150,000,000 common shares
o 2,000,000 Preferred Shares, the rights, and preferences of which
are to be designated by the Company's Board of Directors.
Except as amended above the remainder of the Company's Article of
Incorporation shall remain unchanged, and are hereby ratified and confirmed
The foregoing Amendments to the Articles of Incorporation were duly adopted on
April 26, 2000 by a vote of a majority of the holders of the Corporation's
common stock, no par value and the holders of the Preferred Shares, and approved
by a sufficient number of votes pursuant to the Florida Statutes.
ATTESTED TO: IMAGING DIAGNOSTIC SYSTEMS, INC
By: ____________________________ Name:______________________________
Title:_____________________________
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By:____________________________ Name_______________________________
Title______________________________
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EXHIBIT B
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
without the prior consent of the Board of Directors of the
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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
shareholders 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.
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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.
(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 unless the Executive shall fail to correct such breach
within 30 days of receipt of written
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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).
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(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.
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(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 now have or hereafter irrevocably waive any objection that
they now have or hereafter may have to the laying of venue of any
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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.
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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.
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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
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STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") 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, it has adopted a 1999 Equity Incentive Plan (the "Plan"); and
WHEREAS, by action taken by the board of directors of the Company on the
same date, it has been determined that in order to enhance the ability of the
Company to attract and retain qualified officers it will grant Executive the
right to purchase stock in the Company pursuant to incentive options.
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 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 all
or any part of an aggregate of 2,500,000 shares 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
2,500,000 shares of common stock, on the terms and conditions herein set forth.
The Options are intended to be Incentive Stock Options as defined by Section
422A of the Internal Revenue Code (the "Code").
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 ($.21 per
share).
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
(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 the Plan within one year
after approval by the Board of Directors,
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or in the event that the Executive is terminated with pursuant to
Section 5 (a) or 5(d) of that certain Employment Agreement dated
August 30, 1999 between the Company and the Executive, a copy of
which, is on file at the Company's corporate office (the "Employment
Agreement"), the exercise period for the Options shall be extended
through August 30, 2009 thereby converting all of the Options to
Non-Qualified Options. In such event, the Company shall pay Executive
a tax-offset bonus each time he exercises any Options. The amount of
the tax offset bonus shall be equal to the amount of federal income
tax he incurs in connection with the exercise of the Options assuming
he is at the highest marginal United States income bracket for the
year of exercise. Such bonus shall be paid to Executive on or before
February 1, of the year following exercise.
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;
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(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 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
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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 (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.
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(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.
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.
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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 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
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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.
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
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EXHIBIT C
IMAGING DIAGNOSTIC SYSTEMS, INC.
2000 NON-STATUTORY STOCK OPTION PLAN
1. Purpose of this Plan.
This Non-Statutory Stock Option Plan (the "Plan") is intended as an
employment incentive, to aid in attracting and retaining in the employ or
service of Imaging Diagnostic Systems, Inc. (the "Company"), a Florida
corporation, and any Affiliated Corporation, persons of experience and ability
and whose services are considered valuable, to encourage the sense of
proprietorship in such persons, and to stimulate the active interest of such
persons in the development and success of the Company. This Plan provides for
the issuance of non-statutory stock options ("NSOs" or "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 (the "Code").
2. Administration of this Plan.
The Company's Board of Directors ("Board") may appoint and maintain as
administrator of this Plan the Compensation Committee (the "Committee") of the
Board which shall consist of at least three members of the Board. Until such
time as the Committee is duly constituted, the Board itself shall have and
fulfill the duties herein allocated to the Committee. The Committee shall have
full power and authority to designate Plan participants, to determine the
provisions and terms of respective NSOs (which need not be identical as to
number of shares covered by any NSO, the method of exercise as related to
exercise in whole or in installments, or otherwise), including the NSO price,
and to interpret the provisions and supervise the administration of this Plan.
The Committee may, in its discretion, provide that certain NSOs not vest (that
is, become exercisable) until expiration of a certain period after issuance or
until other conditions are satisfied, so long as not contrary to this Plan.
A majority of the members of the Committee shall constitute a quorum. All
decisions and selections made by the Committee pursuant to this Plan's
provisions shall be made by a majority of its members. Any decision reduced to
writing and signed by all of the members shall be fully effective as if it had
been made by a majority at a meeting duly held. The Committee shall select one
of its members as its chairman and shall hold its meetings at such times and
places as it deems advisable. If at any time the Board shall consist of seven or
more members, then the Board may amend this Plan to provide that the Committee
shall consist only of Board members who shall not have been eligible to
participate in this Plan (or similar stock or stock option plan) of the Company
or its affiliates at any time within one year prior to appointment to the
Committee.
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All NSOs granted under this Plan are subject to, and may not be exercised
before, the approval of this Plan by the holders of a majority of the Company's
outstanding shares, and if such approval is not obtained, all NSOs previously
granted shall be void. Each NSO shall be evidenced by a written agreement
containing terms and conditions established by the Committee consistent with the
provisions of this Plan.
3. Designation of Participants.
The persons eligible for participation in this Plan as recipients of NSOs
shall include full-time and part-time employees (as determined by the Committee)
and officers of the Company or of an Affiliated Corporation. In addition,
directors of the Company or any Affiliated Corporation who are not employees of
the Company or an Affiliated Corporation and any attorney, consultant or other
adviser to the Company or any Affiliated Corporation shall be eligible to
participate in this Plan. For all purposes of this Plan, any director who is not
also a common law employee and is granted an option under this Plan shall be
considered an "employee" until the effective date of the director's resignation
or removal from the Board of Directors, including removal due to death or
disability. The Committee shall have full power to designate, from among
eligible individuals, the persons to whom NSOs may be granted. A person who has
been granted an NSO hereunder may be granted an additional NSO or NSOs, if the
Committee shall so determine. The granting of an NSO shall not be construed as a
contract of employment or as entitling the recipient thereof to any rights of
continued employment.
4. Stock Reserved for this Plan.
Subject to adjustment as provided in Paragraph 9 below, a total of
20,000,000 shares of Common Stock ("Stock"), of the Company shall be subject to
this Plan. The Stock subject to this Plan shall consist of unissued shares or
previously issued shares reacquired and held by the Company or any Affiliated
Corporation, and such amount of shares shall be and is hereby reserved for sale
for such purpose. Any of such shares which may remain unsold and which are not
subject to outstanding NSOs at the termination of this Plan shall cease to be
reserved for the purpose of this Plan, but until termination of this Plan, the
Company shall at all times reserve a sufficient number of shares to meet the
requirements of this Plan. Should any NSO expire or be canceled prior to its
exercise in full, the unexercised shares theretofore subject to such NSO may
again be subjected to an NSO under this Plan.
5. Option Price.
The purchase price of each share of Stock placed under NSO shall not be
less than 50% of the fair market value of such share on the date the NSO is
granted. The fair market value of a share on a particular date shall be deemed
to be the average of either (i) the highest and lowest prices at which shares
were sold on the date of grant, if traded on a national securities exchange,
(ii) the high and low prices reported in the consolidated reporting system, if
traded on a "last sale reported" system, such as NASDAQ, or (iii) the high bid
and high asked price for over-the-counter securities. If no transactions in the
Stock occur on the date of grant, the fair market value shall be determined as
of the next earliest day for which reports or quotations are available. If the
common shares are not then quoted on any exchange or in any quotation
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medium at the time the option is granted, then the Board of Directors or
Committee will use its discretion in selecting a good faith value believed to
represent fair market value based on factors then known to them. The cash
proceeds from the sale of Stock are to be added to the general funds of the
Company.
6. Exercise Period.
(a) The NSO exercise period shall be a term of not more than ten (10) years
from the date of granting of each NSO and shall automatically terminate:
(i) Upon termination of the optionee's employment with the Company for
cause;
(ii) At the expiration of twelve (12) months from the date of
termination of the optionee's employment with the Company for any reason
other than death, without cause; provided, that if the optionee dies within
such twelve-month period, subclause (iii) below shall apply; or
(iii) At the expiration of fifteen (15) months after the date of death
of the optionee.
(b) "Employment with the Company" as used in this Plan shall include
employment with any Affiliated Corporation, and NSOs granted under this Plan
shall not be affected by an employee's transfer of employment among the Company
and any Parent or Subsidiary thereof. An optionee's employment with the Company
shall not be deemed interrupted or terminated by a bona fide leave of absence
(such as sabbatical leave or employment by the Government) duly approved,
military leave, maternity leave or sick leave.
7. Exercise of Options.
(a) The Committee, in granting NSOs, shall have discretion to determine the
terms upon which NSOs shall be exercisable, subject to applicable provisions of
this Plan. Once available for purchase, unpurchased shares of Stock shall remain
subject to purchase until the NSO expires or terminates in accordance with
Paragraph 6 above. Unless otherwise provided in the NSO, an NSO may be exercised
in whole or in part, one or more times, but no NSO may be exercised for a
fractional share of Stock.
(b) NSOs may be exercised solely by the optionee during his lifetime, or
after his death (with respect to the number of shares which the optionee could
have purchased at the time of death) by the person or persons entitled thereto
under the decedent's will or the laws of descent and distribution.
(c) The purchase price of the shares of Stock as to which an NSO is
exercised shall be paid in full at the time of exercise and no shares of Stock
shall be issued until full payment is made therefor. Payment shall be made
either (i) in cash, represented by bank or cashier's check, certified check or
money order (ii) in lieu of payment for bona fide services rendered, and such
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services were not in connection with the offer or sale of securities in a
capital raising transaction, (iii) by delivering shares of the Company's Common
Stock which have been beneficially owned by the optionee, the optionee's spouse,
or both of them for a period of at least six (6) months prior to the time of
exercise (the "Delivered Stock") in a number equal to the number of shares of
Stock being purchased upon exercise of the NSO or (iv) by delivery of shares of
corporate stock which are freely tradeable without restriction and which are
part of a class of securities which has been listed for trading on the NASDAQ
system or a national securities exchange, with an aggregate fair market value
equal to or greater than the exercise price of the shares of Stock being
purchased under the NSO, or (v) a combination of cash, services, Delivered Stock
or other corporate shares. An NSO shall be deemed exercised when written notice
thereof, accompanied by the appropriate payment in full, is received by the
Company. No holder of an NSO shall be, or have any of the rights and privileges
of, a shareholder of the Company in respect of any shares of Stock purchasable
upon exercise of any part of an NSO unless and until certificates representing
such shares shall have been issued by the Company to him or her.
8. Assignability.
No NSO shall be assignable or otherwise transferable (by the optionee or
otherwise) except by will or the laws of descent and distribution or except as
permitted in accordance with SEC Release No.33-7646 as effective April 7, 1999
and in particular that portion thereof which expands upon transferability as is
contained in Article III entitled "Transferable Options and Proxy Reporting" as
indicated in Section A 1 through 4 inclusive and Section B thereof. No NSO shall
be pledged or hypothecated in any manner, whether by operation of law or
otherwise, nor be subject to execution, attachment or similar process.
9. Reorganizations and Recapitalizations of the Company.
(a) The existence of this Plan and NSOs granted hereunder shall not affect
in any way the right or power of the Company or its shareholders to make or
authorize any and all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stocks ahead of or affecting the Company's Common Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any sale,
exchange or transfer of all or any part of its assets or business, or the other
corporation act or proceeding, whether of a similar character or otherwise.
(b) The shares of Stock with respect to which NSOs may be granted hereunder
are shares of the Common Stock of the Company as currently constituted. If, and
whenever, prior to delivery by the Company of all of the shares of Stock which
are subject to NSOs granted hereunder, the Company shall effect a subdivision or
consolidation of shares or other capital readjustment, the payment of a Stock
dividend, a stock split, combination of shares (reverse stock split) or
recapitalization or other increase or reduction of the number of shares of the
Common Stock outstanding without receiving compensation therefor in money,
services or property, then the number of shares of Stock available under this
Plan and the number of shares of Stock with respect to which NSOs granted
hereunder may thereafter be exercised shall (i) in the event of an increase in
the number of outstanding shares, be proportionately increased, and
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the cash consideration payable per share shall be proportionately reduced; and
(ii) in the event of a reduction in the number of outstanding shares, be
proportionately reduced, and the cash consideration payable per share shall be
proportionately increased.
(c) If the Company is reorganized, merged, consolidated or party to a plan
of exchange with another corporation pursuant to which shareholders of the
Company receive any shares of stock or other securities, there shall be
substituted for the shares of Stock subject to the unexercised portions of
outstanding NSOs an appropriate number of shares of each class of stock or other
securities which were distributed to the shareholders of the Company in respect
of such shares of Stock in the case of a reorganization, merger, consolidation
or plan of exchange; provided, however, that all such NSOs may be canceled by
the Company as of the effective date of a reorganization, merger, consolidation,
plan of exchange, or any dissolution or liquidation of the Company, by giving
notice to each optionee or his personal representative of its intention to do so
and by permitting the purchase of all the shares subject to such outstanding
NSOs for a period of not less than thirty (30) days during the sixty (60) days
next preceding such effective date.
(d) Except as expressly provided above, the Company's issuance of shares of
Stock of any class, or securities convertible into shares of Stock of any class,
for cash or property, or for labor or services, either upon direct sale or upon
the exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into shares of Stock or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of shares of Stock subject to NSOs granted hereunder
or the purchase price of such shares.
10. Purchase for Investment.
Unless the shares of Stock covered by this Plan have been registered under
the Securities Act of 1933, as amended, each person exercising an NSO under this
Plan may be required by the Company to give a representation in writing that he
is acquiring such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of any part thereof.
11. Effective Date and Expiration of this Plan.
This Plan shall be effective as of January 3, 2000 the date of its adoption
by the Board, subject to the approval of the Company's shareholders, and no NSO
shall be granted pursuant to this Plan after its expiration. This Plan shall
expire on January 2, 2010 except as to NSOs then outstanding, which shall remain
in effect until they have expired or been exercised.
12. Amendments or Termination.
The Board may amend, alter or discontinue this Plan at any time in such
respects as it shall deem advisable in order to conform to any change in any
other applicable law, or in order to comply with the provisions of any rule or
regulation of the Securities and Exchange Commission required to exempt this
Plan or any NSOs granted thereunder from the operation of
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Section 16(b) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), or in any other respect not inconsistent with Section 16(b) of the
Exchange Act; provided, that no amendment or alteration shall be made which
would impair the rights of any participant under any NSO theretofore granted,
without his consent (unless made solely to conform such NSO to, and necessary
because of, changes in the foregoing laws, rules or regulations), and except
that no amendment or alteration shall be made without the approval of
shareholders which would:
(a) Increase the total number of shares reserved for the purposes of this
Plan or decrease the NSO price provided for in Paragraph 5 (except as provided
in Paragraph 9), or change the classes of persons eligible to participate in
this Plan as provided in Paragraph 3; or
(b) Extend the NSO period provided for in Paragraph 6; or
(c) Materially increase the benefits accruing to participants under this
Plan; or
(d) Materially modify the requirements as to eligibility for participation
in this Plan; or
(e) Extend the expiration date of this Plan as set forth in Paragraph 11.
13. Government Regulations.
This Plan, and the granting and exercise of NSOs hereunder, and the
obligation of the Company to sell and deliver shares of Stock under such NSOs,
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.
14. Liability.
No member of the Board of Directors, the Committee or officers or employees
of the Company or any Affiliated Corporation shall be personally liable for any
action, omission or determination made in good faith in connection with this
Plan.
15. Miscellaneous.
(a) The term "Affiliated Corporation" used herein shall mean any Parent or
Subsidiary.
(b) The term "Parent" used herein shall mean any corporation owning 50
percent or more of the total combined voting stock of all classes of the Company
or of another corporation qualifying as a Parent within this definition.
(c) The term "Subsidiary" used herein shall mean any corporation more than
50 percent of whose total combined voting stock of all classes is held by the
Company or by another corporation qualifying as a Subsidiary within this
definition.
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16. Options in Substitution for Other Options.
The Committee may, in its sole discretion, at any time during the term of
this Plan, grant new options to an employee under this Plan or any other stock
option plan of the Company on the condition that such employee shall surrender
for cancellation one or more outstanding options which represent the right to
purchase (after giving effect to any previous partial exercise thereof) a number
of shares, in relation to the number of shares to be covered by the new
conditional grant hereunder, determined by the Committee. If the Committee shall
have so determined to grant such new options on such a conditional basis ("New
Conditional Options"), no such New Conditional Option shall become exercisable
in the absence of such employee's consent to the condition and surrender and
cancellation as appropriate. New Conditional Options shall be treated in all
respects under this Plan as newly granted options. Option may be granted under
this Plan from time to time in substitution for similar rights held by employees
of other corporations who are about to become employees of the Company or an
Affiliated Corporation, or the merger or consolidation of the employing
corporation with the Company or an Affiliated Corporation, or the acquisition by
the Company or an Affiliated Corporation of the assets of the employing
corporation, or the acquisition by the Company or an Affiliated Corporation of
stock of the employing corporation as the result of which it becomes an
Affiliated Corporation.
17. Withholding Taxes.
Pursuant to applicable federal and state laws, the Company may be required
to collect withholding taxes upon the exercise of a NSO. The Company may
require, as a condition to the exercise of a NSO, that the optionee concurrently
pay to the Company the entire amount or a portion of any taxes which the Company
is required to withhold by reason of such exercise, in such amount as the
Committee or the Company in its discretion may determine. In lieu of part or all
of any such payment, the optionee may elect to have the Company withhold from
the shares to be issued upon exercise of the option that number of shares having
a Fair Market Value equal to the amount which the Company is required to
withhold.
18. Transferability in Accordance With Form S-8 as Amended and Effective April
7, 1999.
Notwithstanding anything to the contrary as may be contained in this Plan
regarding rights as to transferability or lack thereof, all options granted
hereunder may and shall be transferable to the extent permitted in accordance
with SEC Release No. 33-7646 entitled "Registration of Securities on Form S-8"
as effective April 7, 1999 and in particular in accordance with that portion of
such Release which expands Form S-8 to include stock
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option exercise by family members so that the rules governing the use of Form
S-8 (a) do not impede legitimate intra family transfer of options and (b) may
facilitate transfer for estate planning purposes - all as more specifically
defined in Article III, Sections A and B thereto, the contents of which are
herewith incorporated by reference.
Imaging Diagnostic Systems, Inc.
ATTEST:
By:/s/ Linda B. Grable, President
-------------------
Linda B. Grable
By:/s/ Allan L. Schwartz, Secretary
---------------------
Allan L. Schwartz
(SEAL)
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CERTIFICATION OF PLAN ADOPTION
I, the undersigned Secretary of this Corporation, hereby certify that the
foregoing 2000 Non-Statutory Stock Option Plan was duly approved by the
requisite number of holders of the issued and outstanding common stock of this
corporation as of March 10, 2000.
____________________, Secretary
(SEAL)
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OPTION AGREEMENT
The undersigned hereby grants ___________________ (pursuant to the Imaging
Diagnostic Systems, Inc. 2000 Non-Statutory Stock Option Plan dated January
3,2000 attached hereto) an option to purchase ___________ shares of Imaging
Diagnostic Systems, Inc. (the "Corporation").
Option Period. This option shall be for a period of ______ years from the date
of this Option Agreement ("Option Period").
Option Price. The option price shall be $ per share for an aggregate of $ if the
entire shares are purchased. The option price of the shares of Common Stock
shall be paid in full at the time of exercise and no shares of Common Stock
shall be issued until full payment is made therefor. Payment shall be made
either (i) in cash, represented by bank or cashier's check, certified check or
money order (ii) in lieu of payment for bona fide services rendered, and such
services were not in connection with the offer or sale of securities in a
capital-raising transaction, (iii) by delivering shares of the undersigned's
Common Stock which have been beneficially owned by the optionee, the optionee's
spouse, or both of them for a period of at least six (6) months prior to the
time of exercise (the "Delivered Stock") in a number equal to the number of
shares of Stock being purchased upon exercise of the Option or (iv) by delivery
of shares of corporate stock which are freely tradeable without restriction and
which are part of a class of securities which has been listed for trading on the
NASDAQ system or a national securities exchange, with an aggregate fair market
value equal to or greater than the exercise price of the shares of Stock being
purchased under the Option, or (v) a combination of cash, services, Delivered
Stock or other corporate shares.
Shareholder Rights. No holder of an Option shall be, or have any of the rights
and privileges of, a shareholder of the Corporation in respect of any shares of
Common Stock purchasable upon exercise of any part of an Option unless and until
certificates representing such shares shall have been issued by the Corporation
to him or her.
Determination of Exercise Date. This Option or a portion of this Option shall be
deemed exercised when written notice thereof, accompanied by the appropriate
payment in full, is received by the Corporation.
Date: ___________, 2000
Imaging Diagnostic Systems, Inc.
By: _____________________________, President
By: _____________________________, Secretary
