GENETIC LABORATORIES WOUND CARE, INC.
2726 Patton Road
St. Paul, MN 55113
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held October 25, 1996
To Our Shareholders:
The Annual Meeting of Shareholders of Genetic Laboratories Wound Care, Inc. a
Minnesota
corporation (the "Company"), will be held at 4:00 p.m., Central Time, on
Friday, October 25, 1996
at the Minneapolis Athletic Club, 615 Second Avenue South, Minneapolis,
Minnesota for the
purpose of considering and acting upon the following:
(1) To fix the number of members of the Board of
Directors for the ensuing
year at three (3).
(2) To elect a class of directors consisting of one (1) person who will
serve
until the 1999 Annual Meeting of Shareholders or thereafter until his
successor has been elected and qualified.
(3) To approve the adoption of the Genetic Laboratories Wound Care, Inc.
1996 Stock Option Plan recommended by the Board of Directors.
(4) Such other matters as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on August 1, 1996 are
entitled to notice of
and to vote at the meeting and any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Robert A. Ersek
` Secretary
St. Paul, Minnesota
September 20, 1996
THE FORM OF PROXY IS ENCLOSED. TO ASSURE THAT YOUR SHARES WILL BE
VOTED AT THE MEETING, PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE PREPAID, ADDRESSED
ENVELOPE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IF YOU ATTEND THE MEETING.
GENETIC LABORATORIES WOUND CARE, INC.
2726 Patton Road
St. Paul, MN 55113
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held October 25, 1996
The enclosed Proxy is solicited by and on behalf of the Board of Directors of
Genetic
Laboratories Wound Care, Inc., a Minnesota corporation (the "Company"), for use
at the Company's
Annual Meeting of Shareholders to be held at 4:00 p.m., Central Time, on
Friday, October 25, 1996
at the Minneapolis Athletic Club, 615 Second Avenue South, Minneapolis, MN
55402, and any
adjournment thereof. The Company anticipates that this Proxy Statement and the
accompanying form
of Proxy will first be mailed or given to the shareholders of the Company on or
about September 20,
1996.
VOTING AND REVOCATION OF PROXY
Only shareholders of record at the close of business on August 1, 1996 are
entitled to notice of
and to vote at the meeting. Each share so held entitles the holder to one vote
upon each matter to be
voted upon. On August 1, 1996, the Company had outstanding 2,401,100 shares of
common stock.
A quorum, consisting of a majority of the outstanding shares of the common
stock entitled to vote
at the annual meeting, must be present in person or represented by proxy before
action may be taken
at the annual meeting.
All shares represented by proxies which have been properly executed and
returned will be voted
at the meeting. Where a specification is made by the shareholder as provided in
the form of proxy,
the shares will be voted in accordance with such specification. If no
specification is made, the shares
will be voted (i) FOR fixing the number of members of the Board of Directors
for the ensuing year
at three (3), (ii) FOR the election of the nominee for director named in this
Proxy Statement, and
(iii) FOR approval of the 1996 Stock Option Plan.
Any proxy given pursuant to this solicitation may be revoked by the person
giving the proxy at
any time before it is voted. Proxies may be revoked by (a) giving written
notice of such revocation
to the Secretary of the Company, (b) giving another written proxy bearing a
later date, or (c)
attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will
not in and of itself constitute a revocation of a proxy).
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspectors of
Election appointed for the meeting who will determine if a quorum is present.
If an executed proxy
card is returned and the shareholder has abstained from voting on any matter,
the shares represented
by such proxy will be considered present at the meeting for purposes of
determining a quorum and
for purpose of calculating the vote, but will not be considered to have been
voted in favor for such
matter. If a broker returns a "non-vote" proxy, indicating a lack of authority
to vote on such matter,
then the shares covered by such non-vote shall be deemed present at the meeting
for purposes of
determining a quorum but shall not be deemed to be represented at the meeting
for purposes of
calculating the vote with respect to such matter.
DIRECTORS AND EXECUTIVE OFFICERS
Certain information concerning directors and executive officers of the
Company is set forth
below.
Arthur A. Beisang (age 64) served as C.E.O. since May 1992 and as Chairman of
the Board of
Directors since January 1988. He served as President from January 1988 to May
1992. Mr. Beisang
has done post-graduate work at Wayne State University and the University of
Minnesota. Mr.
Beisang is a member of the American Association of Tissue Banks. Mr. Beisang
was a founder of
Bioplasty, Inc. (formerly Genetic Laboratories, Inc.)
H. James Thompson (age 54) has served as President since May 1992. He served
as Executive
Vice President from January 1990 to May 1992, and Vice President of Sales from
1988 to January
1990. He is originally from Albert Lea, Minnesota and graduated from the
University of North
Dakota. His sales management experience prior to 1984 includes eight years
with Baxter/Travenol
Laboratories during which he advanced from a Twin Cities based sales
representative to National
Sales Manager of Hyland Division. Mr. Thompson was Director of Domestic Sales
and Vice
President of Sales at Bioplasty, Inc. from 1984 to 1988.
Robert A. Ersek, MD (age 58) has served as Secretary since November 1992 and
as Medical
Director since January 1988. Dr. Ersek holds a degree from Morris Harvey
College (B.S.) and
Hahneman Medical College (M.D.). Dr. Ersek has done post-graduate work at the
University of
Minnesota, Tulane University, and the University of Mississippi. He is a
member of the
International Society of Cryosurgery, American Society for Artificial Internal
Organs and American
Medical Association, among others. Dr. Ersek has engaged in the private
practice of plastic surgery
in Austin, Texas since completing his residency in that specialty in 1978.
John H. Olson (age 53) has served as a Director since November 1992. He
holds a degree from
Macalester College (B.A.). He has also done post-graduate work at the
University of Minnesota,
University of North Dakota (MST), Genetic Institute and Mankato State
University. Mr. Olson has
been the President and an Executive Director of Cryogenic Laboratories, Inc.
(Sperm Bank,
Roseville) for over fifteen years. Mr. Olson is a member of the American
Fertility Society, Society
for Cryobiology, American Association of Tissue Banks, American Society of
Andrology and New
York Academy of Sciences.
PROPOSAL 1
SET BOARD MEMBERS FOR ENSUING YEAR AT THREE
The property, affairs, and business of the Company are managed under the
direction of the Board
of Directors. As permitted by Minnesota law, the Company's Articles of
Incorporation require that
the Board of Directors of the Company be divided into three classes, with each
class containing as
nearly as possible one-third of the total number of directors, and each class
having a term of three
years. The term of office of each class is staggered so that in any one year
the term of only one class
expires.
The Bylaws of the Company provide that the Board of Directors shall number no
fewer than five
(5) directors unless otherwise fixed by the shareholders. The Board of
Directors recommends that
the shareholders continue the number of directors to comprise the Board of
Directors for the ensuing
year at three (3) directors.
PROPOSAL 2
ELECTION OF DIRECTORS
Robert A. Ersek is now a director of the Company and has been nominated to
serve as a member
of the Board of Directors for a term of three years to serve until the Annual
Meeting of Shareholders
in 1999, and until his successor is elected and qualified. It is the intention
of the named proxies that
the shares represented by proxy, unless otherwise indicated thereon, will be
voted for the election
of Robert A. Ersek to hold office for a term of one year until the Annual
Meeting of Shareholders
in 1999, and until his successor is elected and qualified.
Proxies cannot be voted for a greater number of nominees than the number of
nominees named
herein. Unless authority to vote in the election of directors is withheld, it
is the intention of the
proxies to nominate and vote for the following named nominee. If at the time
of the meeting, the
nominee shall have become unavailable for any reason for election as a
Director, which event is not
expected to occur, the persons entitled to vote the proxy will vote for such
substitute nominee, if any,
as shall be designated by the Board of Directors. Directors are elected by a
plurality of the votes cast
for the election of directors at the Annual Meeting. The nominee for Director,
who has consented
to serve if elected, and the remaining Directors who will continue in office
after the Annual Meeting
of Shareholders are now directors of the Company and have served continuously
as directors of the
Company since the year indicated, are named below:
Name of Nominee and Position Director
if any, in the CompanyAge Since
NOMINEE TO SERVE IN OFFICE UNTIL 1999
Robert A. Ersek, M.D.58 1988
(Medical Director and Secretary)
DIRECTOR TO SERVE IN OFFICE UNTIL 1997
John H. Olson53 1992
(Director)
DIRECTOR TO SERVE IN OFFICE UNTIL 1998
Arthur A. Beisang64 1988
(CEO and Chairman of the Board)
The Company knows of no arrangements or understandings between a director or
nominee and
any other person pursuant to which any person has been selected as a director
or nominee. There is
no family relationship between any of the nominees, directors, or executive
officers of the Company.
The Board of Directors recommends a vote for the election of the nominee named
above.
PROPOSAL 3
APPROVAL OF ADOPTION OF 1996 STOCK OPTION PLAN
1.Background and Board Recommendation.
The Board of Directors of the Company has determined that it is desirable to
adopt a new stock
option plan. To that end, on June 24, 1996, the Board of Directors adopted,
subject to Shareholder
approval, the Genetic Laboratories Wound Care, Inc. 1996 Stock Option Plan (the
"1996 Plan"),
which is described below.
On May 24, 1988, the Board of Directors adopted and the shareholders approved
the adoption
of the Genetic Laboratories Wound Care, Inc. Incentive Stock Option Plan (the
"1988 Plan"),
pursuant to which 275,000 shares of the Company's Common Stock were reserved
for issuance upon
exercise of options granted under the 1988 Plan. In June, 1996, options for
the last of such shares
were granted, and the Board terminated the 1988 Plan, except to the extent that
options were already
outstanding.
The Board of Directors recommends that the Shareholders of the Company
approve the adoption
of the 1996 Plan, and the reservation of 300,000 shares of Common Stock for
issuance pursuant to
the exercise of options under the 1996 Plan. The text of the 1996 Plan is
attached as Appendix A.
Neither the approval nor disapproval of the 1996 Plan by the Shareholders will
affect the right of
holders of presently outstanding options under the 1988 Plan. The affirmative
vote of a majority of
the shares of the Common Stock represented in person or by proxy at the annual
meeting are required
to approve the adoption of the 1996 Plan.
2.Description of the 1996 Plan.
The following discussion gives a summary of the principal provisions of the
1996 Plan. The
summary is qualified in its entirety by reference to the complete text of the
Plan which appears as
Appendix A to this Proxy Statement.
The purpose of the 1996 Plan is to promote the Company's success by
facilitating the
employment and retention of the best available personnel and by furnishing an
additional incentive
to the personnel upon whose efforts the success of the Company depends to a
large degree.
The 1996 Plan provides that the Board of Directors may, in its discretion,
grant to employees of
the Company or its subsidiaries, and to non-employee directors and consultants,
options to purchase
shares of Common Stock of the Company. The 1996 Plan provides for the
reservation of 300,000
shares of the Company's Common Stock. The Board of Directors may grant as many
options in any
year of the 1996 Plan's term as there are shares reserved. The options granted
under the 1996 Plan
are not determinable because options will be granted at the discretion of the
Board of Directors. The
1996 Plan will, in the absence of earlier termination, amendment, change of law
or exhaustion of
shares reserved, expire in 2006. The Board of Directors may in its discretion
delegate some or all
of its authority under the 1996 Plan to a Committee consisting of directors
appointed by the Board.
Under the 1996 Plan employees of the Company, including officers and
directors who are also
employees, are eligible to receive grants of either incentive stock options or
non-statutory stock
options to purchase Common Stock. In addition, non-employee directors of the
Company and
consultants or independent contractors of the Company are eligible to receive
non-statutory options
under the 1996 Plan, but are not eligible to receive incentive stock options.
A total of 300,000 shares
of the Company's authorized but unissued Common Stock has been reserved for
options granted
under the 1996 Plan. As of September 6, 1996, neither incentive stock options
nor non-statutory
stock options had been granted under the 1996 Plan.
The Board has complete discretion to select all optionees and to establish
the terms and
conditions for the grant and exercise of each option granted to each such
optionee, subject in all
cases to the provisions of the 1996 Plan. As of September 6, 1996, fifteen
employees, including
executive officers and one non-employee director, were eligible to receive
option grants under the
1996 Plan. In determining the employees to whom options shall be granted and
the number of shares
to be covered by each option, the Board may take into account the nature of the
services rendered
by the respective employees, their present and potential contributions to the
success of the Company,
and such other factors as the Board in its sole discretion shall deem relevant.
The 1996 Plan is administered by the Board of Directors. Subject to the
express provisions of
the 1996 Plan, the Board determines which eligible persons will receive
options, the exercise price
and terms of options, and the number of shares covered by options. The Board
may grant options
intended to qualify as incentive stock options under Section 422 of the
Internal Revenue Code of
1986 as amended (the "Code"), or options not intended to qualify as incentive
stock options ("non-
statutory options"). Participants may hold more than one option under the 1996
Plan and any other
plan; provided, that the aggregate fair market value of the Company's Common
Stock (determined
on the date an option is granted) for which an employee's incentive stock
options become
exercisable in any calendar year may not exceed $100,000, and to the extent
that it does, such
options shall be treated as non-statutory stock options.
The exercise price for shares of Common Stock subject to incentive stock
options granted under
the 1996 Plan is determined by the Board but may not be less than the fair
market value of the
Company's Common Stock on the date the option is granted. The exercise price
for shares of
Common Stock subject to non-statutory stock options granted under the 1996 Plan
may not be less
than 85% of the fair market value of the Common Stock on the date the option is
granted. (The
exercise price for shares under an incentive stock option granted to an
employee who already owns
more than 10% of the Company's Common Stock must be at least 110% of the fair
market value on
the date of grant.) The exercise price for incentive stock options must be
paid by cash, check, shares
already outstanding which have a fair market value equal to the aggregate
exercise price as
determined by the administrator, unless the Board of Directors requires
otherwise, or a reduction in
the amount of any Company liability to the optionee, unless the Board, in its
sole discretion, permits
payment in another form.
The Board fixes the option period for options granted under the 1996 Plan;
provided that, in the
case of incentive stock options the option period may not be more than 10 years
from the date of
grant. (The option period for an incentive stock option granted to an employee
who already owns
10% of the Company's Common Stock may not be more than five years.) No options
may be
granted under the 1996 Plan after June 23, 2006. Options granted under the
1996 Plan are not
transferable or assignable by the optionee otherwise than by will or the laws
of descent and
distribution or pursuant to a qualified domestic relations order, as defined in
applicable laws and
rules, and may be exercised only by the optionee.
If an optionee's employment with the Company terminates for reasons other
than death or
permanent total disability, the optionee may exercise his or her option, to the
extent it was
exercisable at termination, for a period of three months after termination or
until the normal
expiration date, whichever is earlier. If an optionee's employment terminates
because of disability,
the optionee may exercise the option to the extent it was exercisable at
termination, for up to one
year after termination or until the normal expiration date, whichever occurs
first. If employment
terminates because of the optionee's death, the option will remain exercisable,
to the extent it was
exercisable at the time of the optionee's death for one year or until the
normal expiration date,
whichever is earlier.
Shares issued upon exercise of options granted under the 1996 Plan will be
authorized and
unissued shares of Common Stock of the Company. If any option lapses or
terminates for any reason
before being completely exercised, the shares covered by the unexercised
portion of such option may
again be made subject to subsequently granted options under the 1996 Plan. The
aggregate number
of shares that may be made subject to options granted under the 1996 Plan, and
the number of shares
covered by an outstanding option and the purchase price per share of such
option, may at the
discretion of the Board, be adjusted to give effect to certain adjustments made
during the term of the
1996 Plan or such option, as the case may be, in the number of shares of Common
Stock of the
Company outstanding through a merger, recapitalization, combination, stock
dividend, stock split
or other relevant change.
Options granted pursuant to the 1996 Plan will be exercisable during a term
ending not more than
ten years from the date of grant. The exercise price of the shares subject to
the options in the case
of incentive stock options can not be less than 100% of the fair market value
of the Common Stock
of the Company on the date of grant. In the case of non-statutory stock
options, the exercise price
of the shares subject to options can not be less than 85% of the fair market
value of the Common
Stock on the date of the grant. "Fair market value" is determined as the mean
between the high bid
and the low asked prices for the Common Stock on the last market trading day
prior to the day of
grant, unless the Company's stock is listed on any established exchange, or
national market system,
in which event the Fair Market Value shall be the closing sales price. The
Company receives no
monetary consideration from optionees for the granting of options.
On September 5, 1996, the "representative" bid and asked prices for the
Company's Common
Stock as reported by the Star Tribune, were $.43 and $.81, respectively, per
share.
3.Federal Income Tax Consequences of the Operation of the 1996 Plan.
With respect to options granted under the 1996 Plan that are intended to
qualify as "incentive
stock options" under Section 422 of the Code, the Company understands that,
under existing federal
income tax provisions, if certain statutory employment and holding period
conditions are met, then
(i) any gain or loss will be recognized to the optionee only upon the ultimate
disposition of such
shares by the optionee (except to the extent that he or she may be subject in
the year the option is
exercised to the "alternative minimum tax", (ii) any gain or loss realized by
an optionee upon
disposition of the shares will be a capital gain or loss, and (iii) the Company
will not be entitled to
a deduction in connection with the issuance or exercise of the options.
The grant of a non-statutory option under the Plan will not result in taxable
income at the time
of grant. Upon exercise of a non-statutory option, however, income will be
recognized by the
optionee in the amount by which the fair market value of the Common Stock on
the exercise date
exceeds the option price and the Company will be entitled to a compensation
expense deduction
equal to the amount taxable to the optionee. Upon disposition of the shares,
any additional gain or
loss realized by the optionee will be taxed as a capital gain or loss. The
Company will not be entitled
to a deduction with respect to the disposition of such shares by an optionee.
4.Amendment/Termination.
The Board of Directors may at any time amend, suspend or terminate the 1996
Plan without the
approval of the shareholders, except that shareholder approval will be required
for any amendment
that would (i) materially modify the eligibility requirements for participants;
(ii) increase the total
number of shares issuable under the 1996 Plan or reduce the minimum exercise
price (unless such
changes are made in accordance with the 1996 Plan upon the occurrence of
certain corporate events);
(iii) extend the period for granting options; or (iv) materially increase the
benefits accruing to
optionees. The optionee's consent is required for any amendment, suspension or
termination that
would alter or impair the optionee's existing rights under the 1996 Plan.
5.Recommendation.
The Board of Directors recommends that the shareholders vote FOR approval of
the 1996 Plan.
The affirmative vote of a majority of the shares of Common Stock represented in
person or by proxy
at the annual meeting is required to approve the adoption of the 1996 Plan. If
the 1996 Plan does
not receive the required number of votes for approval, the Board intends to
retain the 1996 Plan and
grant non-statutory options, but will not be able to grant incentive stock
options under the 1996 Plan.
Valid proxies will be voted FOR, AGAINST or ABSTAIN with respect to the 1996
Plan as
directed on the proxy. If no direction is indicated on the proxy, it will be
voted FOR the approval
of the 1996 Plan.
VOTING SECURITIES
All voting rights are vested exclusively in the holders of the Company's $.01
par value Common
Stock with each share entitled to one vote. Only shareholders of record at the
close of business on
August 1, 1996 are entitled to notice of and to vote at the meeting or any
adjournment thereof. On
August 1, 1996, the Company had 2,401,100 shares of its $.01 par value stock
issued and
outstanding.
BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS
AND MANAGEMENT
The following table sets forth information as of May 31, 1996 regarding
the beneficial
ownership of Common Stock of the Company, its only class of equity security
outstanding, by each
director or nominee for director of the Company, by each executive officer
named in the Summary
Compensation Table herein, by all directors, nominees and executive officers as
a group, and by each
person (including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act
of 1934, as amended) who is known by the Company to be the beneficial owner of
more than five
percent of the Common Stock of the Company.
Name and Address
of Beneficial Owner
Arthur A. Beisang..........................
2726 Patton Road
St. Paul, MN 55113
Robert A. Ersek, M.D..................
2726 Patton Road
St. Paul, MN 55113
John H. Olson................................
1944 North Lexington Avenue
Roseville, MN 55113
H. James Thompson...........................
2726 Patton Road
St. Paul, MN 55113
All Directors and Officers
as a group (four persons).............
Amount and Nature
of Beneficial Ownership(1)
339,540(3)
454,898(4)(5)
14,100(4)
108,650(4)
917,188(3)(4)(5)
Percent
of Outstanding(2)
14.14%
18.85%
less than 1%
4.42%
36.95%
____________________________
(1) Each person has sole voting and sole dispositive powers with respect to
the outstanding shares
held by him, except as otherwise noted.
(2) Each figure showing the percentage of outstanding shares owned
beneficially has been calculated
by treating as outstanding and owned the shares which would be issuable
within 60 days if stock
options held by the indicated person were exercised.
(3) Includes 178,920 shares owned jointly by Mr. Beisang and his wife over
which Mr. Beisang may
be deemed to have shared voting and investment power.
(4) Includes shares which would be issuable within 60 days if stock options
held by the indicated
person were exercised as follows: Mr. Olson, 14,000 shares; Mr.
Thompson, 55,000 shares; and
Dr. Ersek, 12,000 shares; all directors, nominees and executive officers
as a group, 81,000 shares.
(5) Includes 157,000 shares owned by Dr. Ersek's wife and 252,898 shares held
by various trusts
deemed to be beneficially owned by Dr. Ersek.
There has been no change in control of the Company since the beginning of
the last fiscal
year, and there are no arrangements known to the Company, including any pledge
of securities of
the Company, the operation of which may at a subsequent date result in a change
of control of the
Company.
BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended May 31, 1996, the Company's Board of
Directors met or took
action by written consent two (2) times. All of the directors attended at
least 75 percent of the
aggregate number of meetings of the Board of Directors and the committees of
the board on which
they served.
The Board of Directors has a Compensation Committee, consisting of one (1)
non-employee
director, Mr. Olson. The Compensation Committee, which met one (1) time during
the fiscal year
ended May 31, 1996, reviews salary levels, bonuses and other matters and makes
recommendations
to the Board of Directors in connection therewith.
The Board of Directors does not have an audit or a nominating committee.
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation paid for
services rendered
to the Company during the last three fiscal years by the Company's Chief
Executive Officer and the
executive officers of the Company whose total annual salary and bonus
compensation for the most
recent year exceeded $100,000.
Summary Compensation Table
Long Term Compensation
Annual Compensation
Awards
Payout
Name and Principal
Position
Fiscal
Year
Salary($)
Bonus($)
Other
Annual
Compen-
sation($)
Restricted
Stock
Award(s)
($)
Securities
Underlying
Options/SARs
(#)
LTIP
Payouts
($)
All Other
Compen-
sation
($)(1)
Arthur A. Beisang
Chief Executive
Officer
1996
1995
1994
$65,192
$60,000
$60,000
$5,000
$7,750
$3,500
$0
$0
$0
$0
$0
$0
0
12,000
8,000
$0
$0
$0
$1,253
$1,662
$1,477
H. James Thompson
President
1996
1995
1994
$85,084
$79,880
$76,830
$26,316
$25,681
$20,012
$0
$0
$0
$0
$0
$0
0
6,000
7,000
$0
$0
$0
$8,716
$6,377
$3,020
(1) All Other Compensation consists of matching fund contributions to the
Company 401(k) plan.
COMPENSATION OF DIRECTORS
Mr. Olson receives $500.00 a month as a Director fee. No other board
member receives
compensation for being a board member.
STOCK OPTIONS
On May 24, 1988, Genetic Laboratories Wound Care, Inc. Incentive Stock
Option Plan (the
"1988 Plan") was adopted by the Board of Directors. The 1988 Plan was approved
by the
shareholders on October 20, 1988. All employees of the Company are eligible to
receive options
under the 1988 Plan. A total of 275,000 shares of the Company's stock have
been reserved for
issuance upon exercise of options granted under the 1988 Plan. All 275,000
options under the 1988
Plan have been granted. The purpose of the 1988 Plan was to encourage certain
employees of the
Company to acquire a proprietary interest in the Company and to create
additional incentive for
employees to promote the financial success of the Company. Performance
standards against which
options are issued vary from person to person, and are defined by the extent
and scope of each
person's responsibility.
The Board determined the exercise price for options granted under the 1988
Plan, subject
to the 1988 Plan's express requirement that the exercise price be equal to at
least the fair market
value of the Common Stock on the date of grant. (For employees who own more
than 10% of the
Company's Common Stock the exercise price must be at least 110% of the fair
market value of the
Common Stock on the date of grant.) The exercise price must be paid to the
Company in cash or in
property having a fair market value equal to the exercise price. During the
lifetime of an optionee
an option is exercisable only by the optionee. Shares issued upon exercise
must be held two years
before they may be traded.
The following table provides information with respect to incentive stock
option exercises
in fiscal 1996 under the 1988 Plan by the named executive officers and the
value of such officer's
unexercised options at May 31, 1996.
Aggregated Option Exercises in Last Fiscal Year
and May 31, 1996 Option Values
Number of Securities
Underlying Unexercised
Options at May 31, 1996 (#) (1)
Value of Unexercised
In-the-Money Options
at May 31, 1996 ($) (2)
Name
Shares
Acquired
on Exercise (#)
Value
Realized($)
Exercisable
Unexercisable
Exercisable
Unexercisable
Arthur A. Beisang
Chief Executive Officer
38,000
$6,906
- -0-
- -0-
- -0-
- -0-
H. James Thompson
President
- -0-
$0
55,000
- -0-
$11,825
- -0-
(1) There are no outstanding stock appreciation rights.
(2) Calculated on the basis of the number of shares subject to such options
multiplied by the excess of the closing price of a share of Common Stock
of $.50 on the Local Over the Counter market at May 31, 1996 over the
exercise price of such options.
COMPANY ACCOUNTANTS
McGladrey & Pullen, LLP was selected by the Board of Directors as the
Company's
independent auditor for the fiscal year ended May 31, 1996. A representative
of McGladrey &
Pullen, LLP is expected to be present at the Annual Meeting of Shareholders and
to have the
opportunity to make a statement if so desired. Such representative also is
expected to be available
to respond to appropriate questions at that time.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
In July 1995, the Company entered into employment agreements with Messrs.
Beisang,
Thompson and Ersek. Each of the agreements has a term of three years. Each
agreement provides
for an annual cost-of-living increase in the base salary. Additional
compensation based on pre-tax
profits of the Company may be paid to the executives as determined by the
Compensation
Committee. The agreements with Messrs. Beisang and Ersek provide that the
executive may
terminate his employment upon the occurrence of any of the following events:
(i) a change in
majority ownership or control of the Company which occurs as a result of a
merger; a sale of all or
substantially all of the Company's assets; or the acquisition of a majority of
the Company's
outstanding stock by a single party or a group acting in concert; (ii) any
attempted termination of the
executive's employment by the Company prior to expiration of the agreement not
in accordance with
any termination event as set forth in the agreement; or (iii) any material
diminution of, or any adverse
change in the terms or conditions of the executive's employment duties,
responsibilities or authority.
In the event of such termination by Mr. Beisang or Mr. Ersek, the Company shall
pay said executive
a severance payment equal to their gross base salary payable over the remaining
term of the
agreement. Mr. Beisang and Mr. Ersek are paid a base annual salary of $66,000
and $28,000,
respectively. The agreements with Messrs. Beisang and Ersek provide that each
executive retains
the right to new products or patents which the executive develops and contain a
covenant not to
compete by the executive during the employment period and for one year
thereafter.
COMPLIANCE WITH SECTION 16(a)
The Company's directors, its executive officers, and any persons holding
more than 10% of
the outstanding Common Stock are required to file reports concerning their
initial ownership of
Common Stock and any subsequent changes in that ownership. The Company
believes that the filing
requirements were satisfied. In making this disclosure, the Company has relied
solely on written
representations of its directors, executive officers and beneficial owners of
more than 10% of
Common Stock and copies of the reports that they have filed with the Securities
and Exchange
Commission.
SHAREHOLDER PROPOSALS
According to Rule 14a-8 promulgated under the Securities Exchange Act of
1934, a
shareholder may require that certain proposals suggested by the shareholder be
voted upon at a
shareholders' meeting. Information concerning such a proposal may be submitted
to the Company
for inclusion in the Company's proxy statement. Such proposals must be
submitted to the Company
before May 31, 1997 for consideration at the shareholders' meeting to be held
in 1997.
SOLICITATION OF PROXIES
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition
to solicitation by mail, proxies may be solicited by officers and other regular
employees of the
Company by telephone, telegraph or personally for which employees will not
receive additional
compensation. Arrangements also may be made with brokerage houses and other
custodians,
nominees and fiduciaries to forward solicitation material to beneficial owners
of the shares held of
record by such persons and the Company may reimburse such persons for
reasonable out-of-pocket
expenses incurred by them in so doing.
OTHER BUSINESS
As of the date of this Proxy Statement, Management is unaware that any
business not
described above will be presented for consideration at the meeting. If any
other business properly
comes before the meeting, it is intended that the shares represented by proxies
will be voted in
respect thereto in accordance with the judgment of the persons voting them.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
Robert A. Ersek
Secretary
St. Paul, Minnesota
September 20, 1996
P R O X Y
GENETIC LABORATORIES WOUND CARE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Arthur A. Beisang, John H. Olson and
Robert A. Ersek, M.D. as Proxies, each with the
power to appoint his substitute, and hereby authorizes them, or any of them, to
represent and to vote, as designated below, all of the
shares of Common Stock of GENETIC LABORATORIES WOUND CARE, INC., held of record
by the undersigned on August 1, 1996
at the Annual Meeting of the Shareholders to be held on October 25, 1996 or any
adjournment(s) thereof upon the following matters.
1.NUMBER OF DIRECTORS - To fix the number of members of the Board of
Directors for the ensuing year at three (3).
(CHECK ONE)________VOTE FOR ________AGAINST ________ABSTAIN
2.ELECTION OF DIRECTORS - To elect a class of Directors consisting of one
(1) person who will serve until the 1998 Annual
Meeting of Shareholders or thereafter until his successor has been elected and
qualified. NOMINEE: Robert A. Ersek
(CHECK ONE)________VOTE FOR NOMINEE LISTED ________WITHHOLD AUTHORITY to
vote
for nominee listed above
3.1996 STOCK OPTION PLAN - To approve the adoption of the Genetic
Laboratories Wound Care, Inc. 1996 Stock Option
Plan recommended by the Board of Directors.
(CHECK ONE)________VOTE FOR ________AGAINST
________ABSTAIN
4.In their discretion, the Proxies are authorized to vote upon such other
business as may properly
come before the meeting.
(This Proxy, when properly executed will be voted in the manner directed hereon
by the undersigned stockholder. IF NO
DIRECTION IS MADE THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, and 3.)
The Board of Directors recommends a vote FOR Proposals 1, 2, and 3.
The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting
of Shareholders and the Proxy Statement furnished
therewith dated September 20, 1996. Please sign your name exactly as it
appears below. In the case of shares owned in joint tenancy
or as tenants in common, all should sign. Fiduciaries should indicate their
title and authority.
Please vote, sign, date and return this
proxy card
promptly, using the accompanying post-paid
envelope.
Dated: ____________________________, 1996
_______________________________________________
Signature(s)
______________________________________________
Sign above exactly as name(s) appears to the left.
APPENDIX A
GENETIC LABORATORIES WOUND CARE, INC.
1996 STOCK OPTION PLAN
1.Purposes of the Plan. The purposes of this 1996 Stock Option Plan are:
- to attract and retain the best available personnel for
positions of substantial responsibility,
- to provide additional incentive to Employees, Directors and
Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock
Options, as determined by the Administrator at the time of grant.
2.Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock
option plans under U. S. state corporate laws, U.S. federal and state
securities laws, the Code,
any stock exchange or quotation system on which the Common Stock is listed or
quoted and the
applicable laws of any foreign country or jurisdiction where Options or are, or
will be, granted
under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the Board in
accordance
with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Genetic Laboratories Wound Care, Inc., a Minnesota
corporation.
(h) "Consultant" means any person, including an advisor, engaged by the
Company
or a Parent or Subsidiary to render bona fide services and who is compensated
for such services.
(i) "Director" means a member of the Board.
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of
the Code.
(k) "Employee" means any person, including Officers and Directors,
employed by the
Company or any Parent or Subsidiary of the Company. A Service Provider shall
not cease to be
an Employee in the case of (i) any leave of absence approved by the Company or
(ii) transfers
between locations of the Company or between the Company, its Parent, any
Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave may exceed
ninety days, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, on the 91st
day of such leave any Incentive Stock Option held by the Optionee shall cease
to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Non statutory
Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient
to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(m) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a
national
market system, including without limitation the Nasdaq National Market or The
Nasdaq SmallCap
Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing
sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system
for the last market trading day prior to the time of determination, as reported
in The Wall Street
Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities
dealer but
selling prices are not reported, the Fair Market Value of a Share of Common
Stock shall be the
mean between the high bid and low asked prices for the Common Stock on the last
market trading
day prior to the day of determination, as reported in The Wall Street Journal
or such other source
as the Administrator deems reliable;
(iii) In the absence of an established market for the Common Stock, the
Fair
Market Value shall be determined in good faith by the Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock
option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to qualify
as an
Incentive Stock Option.
(p) "Notice of Grant" means a written or electronic notice evidencing
certain terms and
conditions of an individual Option grant. The Notice of Grant is part of the
Option Agreement.
(q) "Officer" means a person who is an officer of the Company within the
meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
(r) "Option" means a stock option granted pursuant to the Plan.
(s) "Option Agreement" means an agreement between the Company and an
Optionee
evidencing the terms and conditions of an individual Option grant. The Option
Agreement is
subject to the terms and conditions of the Plan.
(t) "Optioned Stock" means the Common Stock subject to an Option.
(u) "Optionee" means the holder of an outstanding Option granted under
the Plan.
(v) "Parent" means a "parent corporation," whether now or hereafter
existing, as
defined in Section 424(e) of the Code.
(w) "Plan" means this 1996 Stock Option Plan.
(x) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule
16b-3, as in effect when discretion is being exercised with respect to the Plan.
(y) "Section 16(b)" means Section 16(b) of the Securities Exchange Act of
1934, as
amended.
(z) "Service Provider" means an Employee, Director or Consultant.
(aa) "Share" means a share of the Common Stock, as adjusted in accordance
with
Section 12 of the Plan.
(bb) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing,
as defined in Section 424(f) of the Code.
3.Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the
maximum aggregate number of Shares which may be optioned and sold under the
Plan is 300,000
Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale
under the Plan (unless the Plan has terminated); provided, however, that Shares
that have actually
been issued under the Plan, upon exercise of an Option, shall not be returned
to the Plan and shall
not become available for future distribution under the Plan.
4.Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered by
different
Committees with respect to different groups of Service Providers.
(ii) Rule 16b-3. To the extent desirable to qualify transactions hereunder
as exempt
under Rule 16b-3, the Plan shall be administered by the Board or a Committee of
two or more
"non-employee directors" within the meaning of Rule 16b-3.
(iii) Other Administration. Other than as provided above, the Plan shall
be
administered by (A) the Board or (B) a Committee, which committee shall be
constituted to satisfy
Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case
of a Committee, subject to the specific duties delegated by the Board to such
Committee, the
Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options may be granted
hereunder;
(iii) to determine the number of shares of Common Stock to be covered by
each
Option granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the
terms of the
Plan, of any Option granted hereunder. Such terms and conditions include, but
are not limited to,
the exercise price, the time or times when Options may be exercised, and any
restriction or
limitation regarding any Option or the Stock, based in each case on such
factors as the
Administrator, in its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option to the then current Fair
Market
Value if the Fair Market Value of the Common Stock covered by such Option shall
have declined
since the date the Option was granted;
(vii) to construe and interpret the terms of the Plan and awards granted
pursuant
to the Plan;
(viii) to prescribe, amend and rescind rules and regulations relating to
the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for
preferred tax treatment under foreign tax laws;
(ix) to modify or amend each Option, subject to Section 14(c) of the Plan,
including the discretionary authority to extend the post-termination
exercisability period of Options
longer than is otherwise provided for in the Plan;
(x) to allow Optionees to satisfy withholding tax obligations by electing
to have the
Company withhold from the Shares to be issued upon exercise of an Option that
number of Shares
having a Fair Market Value equal to the amount required to be withheld. The
Fair Market Value
of the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld
is to be determined. All elections by an Optionee to have Shares withheld for
this purpose shall
be made in such form and under such conditions
as the Administrator may deem necessary or advisable;
(xi) to authorize any person to execute on behalf of the Company any
instrument
required to effect the grant of an Option previously granted by the
Administrator;
(xii) to make all other determinations deemed necessary or advisable for
administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations
and interpretations shall be final and binding on all Optionees and any other
holders of Options.
5.Eligibility. Nonstatutory Stock Options may be granted to Service
Providers. Incentive
Stock Options may be granted only to Employees.
6.Limitations.
(a) Each Option shall be designated in the Option Agreement as either an
Incentive
Stock Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the
extent that the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock
Options are exercisable for the first time by the Optionee during any calendar
year (under all plans
of the Company and any Parent or Subsidiary) exceeds $100,000, such Options
shall be treated
as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive
Stock Options shall
be taken into account in the order in which they were granted. The Fair Market
Value of the
Shares shall be determined as of the time the Option with respect to such
Shares is granted.
(b) Neither the Plan nor any Option shall confer upon an Optionee any
right with
respect to continuing the Optionee's relationship as a Service Provider with
the Company, nor
shall they interfere in any way with the Optionee's right or the Company's
right to terminate such
relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of the
Company,
Options to purchase more than 50,000 Shares.
(ii) In connection with his or her initial service, a Service Provider
may be granted
Options to purchase up to an additional 50,000 Shares which shall not count
against the limit set
forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted proportionately in
connection with
any change in the Company's capitalization as described in Section 12.
(iv) If an Option is canceled in the same fiscal year of the Company in
which it was
granted (other than in connection with a transaction described in Section 12),
the canceled Option
will be counted against the limits set forth in subsections (i) and (ii) above.
For this purpose, if
the exercise price of an Option is reduced, the transaction will be treated as
a cancellation of the
Option and the grant of a new Option.
7.Term of Plan. Subject to Section 18 of the Plan, the Plan shall become
effective upon
its adoption by the Board. It shall continue in effect for a term of ten (10)
years unless terminated
earlier under Section 14 of the Plan.
8.Term of Option. The term of each Option shall be stated in the Option
Agreement. In
the case of an Incentive Stock Option, the term shall be ten (10) years from
the date of grant or
such shorter term as may be provided in the Option Agreement, except that in
the case of an
Incentive Stock Option granted to an Optionee who, at the time the Incentive
Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes
of stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall
be five (5) years from the date of grant or such shorter term as may be
provided in the Option
Agreement.
9.Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Option Shares
shall be
determined by the Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes
of stock of the Company or any Parent or Subsidiary, the per Share exercise
price shall be not less
than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described in paragraph
9(a)(i) (A) above, the per Share exercise price shall be not less than 100% of
the Fair Market
Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share exercise
price shall
be not less than 85% of the Fair Market Value per Share on the date of grant.
(b) Waiting Period and Exercise Dates. At the time an Option is granted,
the
Administrator shall fix the period within which the Option may be exercised and
shall determine
any conditions which must be satisfied before the Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of
consideration for exercising an Option, including the method of payment. In the
case of an
Incentive Stock Option, the Administrator shall determine the acceptable form
of consideration at
the time of grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) other Shares which (A) in the case of Shares acquired upon exercise
of an
option, have been owned by the Optionee for more than six months on the date of
surrender, and
(B) have a Fair Market Value on the date of surrender equal to th aggregate
exercise price of the
Shares as to which said Option shall be exercised;
(iv) a reduction in the amount of any Company liability to the Optionee,
including
any liability attributable to the Optionee's participation in any
Company-sponsored deferred
compensation program or arrangement;
(v) any combination of the foregoing methods of payment; or
(vi) such other consideration and method of payment for the issuance of
Shares to
the extent permitted by Applicable Laws.
10.Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder . Any Option granted
hereunder
shall be exercisable according to the terms of the Plan and at such times and
under such conditions
as determined by the Administrator and set forth in the Option Agreement. An
Option may not
be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i) written
or electronic
notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise
the Option, and (ii) full payment for the Shares with respect to which the
Option is exercised. Full
payment may consist of any consideration and method of payment authorized by
the Administrator
and permitted by the Option Agreement and the Plan. Shares issued upon exercise
of an Option
shall be issued in the name of the Optionee or, if requested by the Optionee,
in the name of the
Optionee and his or her spouse. Until the Shares are issued (as evidenced by
the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company), no right to
vote or receive dividends or any other rights as a shareholder shall exist with
respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause
to be issued) such Shares promptly after the Option is exercised. No adjustment
will be made for
a dividend or other right for which the record date is prior to the date the
Shares are issued, except
as provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares
as to which the Option is exercised.
(b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a
Service Provider, other than upon the Optionee's death or Disability, the
Optionee may exercise
his or her Option within such period of time as is specified in the Option
Agreement to the extent
that he or she is entitled to exercise it on the date of termination (but in no
event later than the
expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
three (3) months
following the Optionee's termination. If, after termination, the Optionee does
not exercise his or
her Option within the time specified by the Administrator, the Option shall
terminate, and the
Shares covered by such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result
of the Optionee's Disability, the Optionee may exercise his or her Option at
any time within
twelve (12) months from the date of termination, but only to the extent that
the Optionee is entitled
to exercise it on the date of termination (and in no event later than the
expiration of the term of
the Option as set forth in the Option Agreement). If, after termination, the
Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the
Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider, the
Option may
be exercised at any time within twelve (12) months following the date of death
(but in no event
later than the expiration of the term of such Option as set forth in the Notice
of Grant), by the
Optionee's estate or by a person who acquires the right to exercise the Option
by bequest or
inheritance, but only to the extent that the Optionee would have been entitled
to exercise the
Option on the date of death. The Option may be exercised by the executor or
administrator of the
Optionee's estate or, if none, by the person(s) entitled to exercise the Option
under the Optionee's
will or the laws of descent or distribution. If the Option is not so exercised
within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert
to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to buy
out for a
payment in cash or Shares, an Option previously granted based on such terms and
conditions as
the Administrator shall establish and communicate to the Optionee at the time
that such offer is
made.
11.Non-Transferability of Options. Unless determined otherwise by the
Administrator,
an Option may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during
the lifetime of the Optionee, only by the Optionee. If the Administrator makes
an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator
deems appropriate.
12.Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of
the Company, the number of shares of Common Stock covered by each outstanding
Option, and
the number of shares of Common Stock which have been authorized for issuance
under the Plan
but as to which no Options have yet been granted or which have been returned to
the Plan upon
cancellation or expiration of an Option, as well as the price per share of
Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease
in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration
by the Company; provided, however, that conversion of any convertible
securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment
shall be made by the Board, whose determination in that respect shall be final,
binding and
conclusive. 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 of
Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation
of the Company, the Administrator shall notify each Optionee as soon as
practicable prior to the
effective date of such proposed transaction. The Administrator in its
discretion may provide for
an Optionee to have the right to exercise his or her Option until ten (10) days
prior to such
transaction as to all of the Optioned Stock covered thereby. To the extent it
has not been
previously exercised, an Option will terminate immediately prior to the
consummation of such
proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company with
or into
another corporation, or the sale of substantially all of the assets of the
Company, each outstanding
Option shall be assumed or an equivalent option substituted by the successor
corporation or a
Parent or Subsidiary of the successor corporation. In the event that the
successor corporation
refuses to assume or substitute for the Option, the Administrator shall notify
the Optionee in
writing or electronically that the Option shall be exercisable for a period of
fifteen (15) days from
the date of such notice, and the Option shall terminate upon the expiration of
such period.
13.Date of Grant. The date of grant of an Option shall be, for all
purposes, the date
on which the Administrator makes the determination granting such Option, or
such other later date
as is determined by the Administrator. Notice of the determination shall be
provided to each
Optionee within a reasonable time after the date of such grant.
14.Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend
or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder approval
of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or
termination of the Plan shall impair the rights of any Optionee, unless
mutually agreed otherwise
between the Optionee and the Administrator, which agreement must be in writing
and signed by
the Optionee and the Company.
15.Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the exercise
of an Option
unless the exercise of such Option and the issuance and delivery of such Shares
shall comply with
Applicable Laws.
(b) Investment Representations. As a condition to the exercise of an
Option, the
Company may require the person exercising such Option to represent and warrant
at the time of
any such exercise that the Shares are being purchased only for investment and
without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a
representation is required.
16.Inability to Obtain Authority. The inability of the Company to obtain
authority from
any regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company
of any liability in respect of the failure to issue or sell such Shares as to
which such requisite
authority shall not have been obtained.
17.Reservation of Shares. The Company, during the term of this Plan, will
at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements
of the Plan.
18.Shareholder Approval. The Plan shall be subject to approval by the
shareholders
of the Company within twelve (12) months after the date the Plan is adopted by
the Board. Such
shareholder approval shall be obtained in the manner and to the degree required
under Applicable
Laws. No Option shall be exercised until such shareholder approval is obtained.
