As filed with the Securities and Exchange Commission on November__, 1998
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of l933
SIMS COMMUNICATIONS, INC.
(Exact name of issuer as specified in its charter)
Delaware 65-0287558
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
18001 Cowan, Suites C&D
Irvine, California 92614
(Address of Principal Executive (Zip Code)
Offices)
Incentive Stock Option Plan
Non-Qualified Stock Option Plan
Stock Bonus Plans
(Full Title of Plan)
Mark Bennett
18001 Cowan, Suites C&D
Irvine, California 92614
(Name and address of agent for service)
(949) 724-9094
(Telephone number, including area code, of agent for service)
Copies of all communications, including all communications sent to agent for
service to:
William T. Hart, Esq.
Hart & Trinen
l624 Washington Street
Denver, Colorado 80203
(303) 839-0061
<PAGE>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of maximum maximum
Securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered (1) per share (2) price fee
Common Stock 1,500,000 $1.30 $1,950,000 $575.25
Issuable Pursuant Shares
to Incentive
Stock Option Plan
Common Stock 3,000,000 $1.30 $$3,900,000 1,150.50
Issuable Pursuant Shares
to Non-Qualified
Stock Option Plans
Common Stock 1,500,000 $1.30 $1,950,000 575.25
Issuable Pursuant Shares
to Stock
Bonus Plans
---------- -------
$7,800,000 $2,301
========== =======
(1) This Registration Statement also covers such additional number of shares,
presently undeterminable, as may become issuable under the Plans in the
event of stock dividends, stock splits, recapitalizations or other changes
in the Common Stock. The shares subject to this Registration Statement
reflect the shares available for issuance upon exercise of options granted
under the Incentive Stock Option and Non-Qualified Stock Option Plan and
shares issuable pursuant to the Stock Bonus Plan all of which may be
reoffered in accordance with the provisions of Form S-8.
(2) Varied, but not less than the fair market value on the date that the options
were or are granted. Pursuant to Rule 457(g), the proposed maximum offering
price per share and proposed maximum aggregate offering price are based upon
the average bid and asked prices of the Registrant's Common Stock on
November 18, 1998.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3 - Incorporation of Documents by Reference
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated by reference in this Registration
Statement: Annual Report on Form 10-KSB for the year ending June 30, 1998. All
reports and documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment to this Registration Statement of which
this Prospectus is a part which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Prospectus and to be a part
thereof from the date of filing of such reports or documents.
Item 4 - Description of Securities
Not required.
Item 5 - Interests of Named Experts and Counsel
Not Applicable.
Item 6 - Indemnification of Directors and Officers
The Delaware General Corporation Law provides in substance that the
Company shall indemnify any person who was or is a party or is threatened to be
made a party to any threatened or completed action, suit or proceeding, whether
civil, criminal, administrative, or investigative by reason of the fact that
such person is or was a director, officer, employee, fiduciary or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney's
fees), judgements, fines and amounts paid in settlement actually and reasonably
incurred by such person; and that expenses incurred in defending any such civil
or criminal action, suit or proceeding may be paid by the Company in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such director, officer or employee to repay such amount to the Company
unless it shall ultimately be determined that such person is entitled to be
indemnified by the Company.
Item 7 - Exemption from Registration Claimed
None.
<PAGE>
Item 8 - Exhibits
4 - Instruments Defining Rights of
Security Holders
(a) - Common Stock Incorporated by reference to Exhibit
4(a) of the Company's Registration
Statement on Form SB-2, File No.
33-70546-A.
(b) - 1998 Incentive Stock Option Plan
(c) - Non-Qualified Stock Option
Plan (as amended)
(d) - 1998 Non-Qualified Stock Option
Plan
(e) - 1998 Stock Bonus Plan
5 - Opinion Regarding Legality of
Securities to be Offered
24 - Consent of Independent Public
Accountants and Attorneys
25 - Power of Attorney Included in the signature page
of this Registration Statement
28 - Information from Reports None
furnished to State Insurance
Regulatory Authorities
99 - Additional Exhibits
(Re-Offer Prospectus)
Item 9 - Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section
l0(a)(3) of the Securities Act of l933;
<PAGE>
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change in such
information in the registration statement;
Provided, however, that paragraphs (a)(l)(i) and (a)(l)(ii) will
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section l3 or Section l5(d) of the Securities Act of l934
(2) That, for the purpose of determining any liability under the
Securities Act of l933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of l933, each filing of
the registrant's Annual Report pursuant to Section l3(a) or Section l5(d)
of the Securities Exchange Act of l934 (and, where applicable, each filing
of any employee benefit plan's annual report pursuant to Section l5(d) of
the Securities Exchange Act of l934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
<PAGE>
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
constitutes and appoints Mark Bennett and Michael Malet, and each of them, his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and all other documents in connection therewith, with the Securities and
Exchange Commission granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitutes or substitute may lawfully do or cause to be
done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Irvine, California, on November 19, 1998.
SIMS COMMUNICATIONS, INC.
By: /s/ Mark Bennett
Mark Bennett, President and
Chief Executive Officer
By: /s/ Ian Hart
Ian Hart, Principal Financial
Officer and Chief Accounting Officer
Pursuant to the requirements of the Securities Act of l933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<PAGE>
Signature Title Date
/s/ Mark Bennett Director November 19, 1998
Mark Bennett
/s/ Michael Malet Director November 19, 1998
Michael Malet
Director
Chet Howard
/s/ George Pursglove Director November 19, 1998
George Pursglove
/s/ Cornelia Eldridge Director November 19, 1998
Cornelia Eldridge
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
EXHIBITS
SIMS Communications, Inc.
18001 Cowan, Suites C&D
Irvine, CA 92614
<PAGE>
EXHIBIT 4(b)
<PAGE>
SIMS COMMUNICATIONS, INC.
1998 INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of the Incentive Stock Option Plan (the "Plan")
is to advance the interests of SIMS Communications, Inc. and any subsidiary
corporation (hereinafter referred to as the "Company") and all of its
shareholders, by strengthening the Company's ability to attract and retain in
its employ individuals of training, experience, and ability, and to furnish
additional incentive to officers and valued employees upon whose judgment,
initiative, and efforts the successful conduct and development of its business
largely depends, by encouraging such officers and employees to become owners of
capital stock of the Company.
This will be effected through the granting of stock options as
herein provided, which options are intended to qualify as "Incentive Stock
Options" within the meaning of Section 422 of the Internal Revenue Code, as
amended (the "Code").
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer
the Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted
under the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
(g) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a committee of two or
more directors appointed by the Board (the "Committee"). If a Committee should
be appointed, the Committee shall report all action taken by it to the Board.
The Committee shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom and the time or
times at which Options shall be granted and the number of shares and purchase
price of Common Stock covered by each Option; to construe and interpret the
<PAGE>
Plan; to determine the terms and provisions of the respective Option agreements,
which need not be identical, including, but without limitation, terms covering
the payment of the Option Price; and to make all other determinations and take
all other actions deemed necessary or advisable for the proper administration of
the Plan. All such actions and determinations shall be conclusively binding for
all purposes and upon all persons.
4. Common Stock Subject to Options. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed 1,500,000. The shares of Common Stock to
be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the market for
the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
shares subject to such Option but not purchased thereunder shall again be
available for Options to be granted under the Plan.
The aggregate fair market value (determined as of the time any
option is granted) of the stock for which any employee may be granted options
which are first exercisable in any single calendar year under this Plan (and any
other plan of the Company meeting the requirements for Incentive Stock Option
Plans) shall not exceed $100,000.
5. Participants. Options will be granted only to persons who are
employees of the Company and only in connection with any such person's
employment. The term "employees" shall include officers as well as other
employees, and the officers and other employees who are directors of the
Company. The Committee will determine the employees to be granted options and
the number of shares subject to each option.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by an agreement executed by the Company and the recipient and
shall contain such terms and be in such form as the Committee may from time to
time approve, subject to the following limitations and conditions:
(a) Option Price. The purchase price of each option shall not be
less than 100% of the fair market value of the Company's common stock at the
time of the granting of the option provided, however, if the optionee, at the
time the option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, the purchase price
of the option shall not be less than 110% of the fair market value of the stock
at the time of the granting of the option.
(b) Period of Option. The maximum period for exercising an option
shall be 10 years from the date upon which the option is granted, provided,
however, if the optionee, at the time the option is granted, owns stock
possessing more than l0% of the total combined voting power of all classes of
stock of the Company, the maximum period for exercising an option shall be five
years from the date upon which the option is granted and provided further,
however, that these periods may be shortened in accordance with the provisions
of Paragraphs 6 or 7 below.
Subject to the foregoing, the period during which each option may be
exercised, and the expiration date of each Option shall be fixed by the
Committee.
<PAGE>
If an optionee shall cease to be employed by the Company due to
disability, as defined in Section 22(e)(3) of the Code, he may, but only within
the one year next succeeding such cessation of employment, exercise his option
to the extent that he was entitled to exercise it on the date of such cessation.
The Plan will not confer upon any optionee any right with respect to continuance
of employment by the Company, nor will it interfere in any way with his right,
or his employer's right, to terminate his employment at any time.
(c) Vesting of Shareholder Rights. Neither an Optionee nor his
successor shall have any rights as a shareholder of the Company until the
certificates evidencing the shares purchased are properly delivered to such
Optionee or his successor.
(d) Exercise of Option. Each Option shall be exercisable from time
to time during a period (or periods) determined by the Committee and ending upon
the expiration or termination of the Option; provided, however, the Committee
may, by the provisions of any Option Agreement, limit the number of shares
purchaseable thereunder in any period or periods of time during which the Option
is exercisable. An Option shall not be exercisable in whole or in part prior to
the date of shareholder approval of the Plan.
Options may be exercised in part from time to time during the
option period. The exercise of any option will be contingent upon compliance by
the Optionee (or purchaser acting pursuant to Section 6(b)) with the provisions
of Section 10 below and upon receipt by the Company of either (i) cash or
certified bank check payable to its order in the amount of the purchase price of
such shares (ii) shares of Company stock having a fair market value equal to the
purchase price of such shares, or (iii) a combination of (i) and (ii). If any
law or regulation requires the Company to take any action with respect to the
shares to be issued upon exercise of any option, then the date for delivery of
such stock shall be extended for the period necessary to take such action.
(e) Nontransferability of Option. No Option shall be transferable
or assignable by an Optionee, otherwise than by will or the laws of descent and
distribution and each Option shall be exercisable, during the Optionee's
lifetime, only by him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar process except
with the express consent of the Committee.
(f) Death of Optionee. In the event of the death of an optionee
while in the employ of the Company, the option theretofore granted to him shall
be exercisable only within the three months succeeding such death and then only
(i) by the person or persons to whom the optionee's rights under the option
shall pass by the optionee's will or by the laws of descent and distribution,
and (ii) if and to the extent that he was entitled to exercise the option at the
date of his death.
7. Assumed Options. In connection with any transaction to which Section
424(a) of the Code is applicable, options may be granted pursuant hereto in
substitution of existing options or existing options may be assumed as
prescribed by that Section and any regulations issued thereunder.
Notwithstanding anything to the contrary contained in this Plan, options granted
<PAGE>
pursuant to this Paragraph shall be at prices and shall contain such terms,
provisions, and conditions as may be determined by the Committee and shall
include such provisions and conditions as may be necessary to meet the
requirements of Section 424(a) of the Code.
8. Certain Dispositions of Shares. Any options granted pursuant to this
Plan shall be conditioned such that if, within the earlier of (i) the two-year
period beginning on the date of grant of an option or (ii) the one-year period
beginning on the date after which any share of stock is transferred to an
individual pursuant to his exercise of an option, such an individual makes a
disposition of such share of stock by way of sale, exchange, gift, transfer of
legal title, or otherwise, such individual shall promptly report such
disposition to the Company in writing and shall furnish to the Company such
details concerning such disposition as the Company may reasonably request.
9. Reclassification, Consolidation, or Merger. If and to the extent
that the number of issued shares of Common Stock of the Corporaton shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to Option and the Option price per share shall be proportionately
adjusted by the Committee, whose determination shall be conclusive. If the
Corporation is reorganized or consolidated or merged with another corporation,
an Optionee granted an Option hereunder shall be entitled to receive Options
covering shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. The new
Option or assumption of the old Option shall not give Optionee additional
benefits which he did not have under the old Option, or deprive him of benefits
which he had under the old Option.
10. Restrictions on Issuing Shares. The exercise of each Option shall
be subject to the condition that if at any time the Company shall determine in
its discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares purchased thereto, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
Unless the shares of stock covered by the Plan have been registered
with the Securities and Exchange Commission pursuant to Section 5 of the
Securities Act of l933, each optionee shall, by accepting an option, represent
and agree, for himself and his transferrees by will or the laws of descent and
distribution, that all shares of stock purchased upon the exercise of the option
will be acquired for investment and not for resale or distribution. Upon such
exercise of any portion of an option, the person entitled to exercise the same
shall, upon request of the Company, furnish evidence satisfactory to the Company
(including a written and signed representation) to the effect that the shares of
stock are being acquired in good faith for investment and not for resale or
distribution. Furthermore, the Company may, if it deems appropriate, affix a
<PAGE>
legend to certificates representing shares of stock purchased upon exercise of
options indicating that such shares have not been registered with the Securities
and Exchange Commission and may so notify its transfer agent. Such shares may be
disposed of by an optionee in the following manner only: (l) pursuant to an
effective registration statement covering such resale or reoffer, (2) pursuant
to an applicable exemption from registration as indicated in a written opinion
of counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If shares of
stock covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
optionees who are directors, officers, or principal shareholders of the Company.
Such persons may dispose of shares only by one of the three aforesaid methods.
11. Use of Proceeds. The proceeds received by the Company from the sale
of Common Stock pursuant to the exercise of Options granted under the Plan shall
be added to the Company's general funds and used for general corporate purposes.
l2. Amendment, Suspension, and Termination of Plan. The Board of
Directors may alter, suspend, or discontinue the Plan, but may not, without the
approval of a majority of those holders of the Company's Common Stock voting in
person or by proxy at any meeting of the Company's shareholders, make any
alteration or amendment thereof which operates to (a) make any material change
in the class of eligible employees as defined in Section 5, (b) extend the term
of the Plan or the maximum option periods provided in paragraph 6, (c) decrease
the minimum option price provided in paragraph 6, except as provided in
paragraph 9, or (d) materially increase the benefits accruing to employees
participating under this Plan.
Unless the Plan shall theretofore have been terminated by the Board,
the Plan shall terminate ten years after the effective date of the Plan. No
Option may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without an
Optionee's consent, alter or impair any of the rights or obligations under any
Option theretofore granted to such Optionee under the Plan.
13. Limitations. Every right of action by any person receiving options
pursuant to this Plan against any past, present or future member of the Board,
or any officer or employee of the Company arising out of or in connection with
this Plan shall, irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
14. Governing Law. The Plan shall be governed by the laws of the
State of Delaware.
l5. Expenses of Administration. All costs and expenses incurred in
the operation and adminstration of this Plan shall be borne by the Company.
<PAGE>
EXHIBIT 4(c)
<PAGE>
SIMS COMMUNICATIONS, INC.
NON-QUALIFIED STOCK OPTION PLAN
(as amended)
l. Purpose. This Non-Qualified Stock Option Plan (the "Plan") is
intended to advance the interests of SIMS Communications, Inc. (the "Company")
and its shareholders, by encouraging and enabling selected officers, directors,
consultants and key employees upon whose judgment, initiative and effort the
Company is largely dependent for the successful conduct of its business, to
acquire and retain a proprietary interest in the Company by ownership of its
stock. Options granted under the Plan are intended to be Options which do not
meet the requirements of Section 422 of the Internal Revenue Code of 1954, as
amended (the "Code").
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer the
Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted under
the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not expired,
has been granted under the Plan.
(g) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a committee of two or
more directors appointed by the Board (the "Committee"). If a Committee should
be appointed, the Committee shall report all action taken by it to the Board.
The Committee shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom and the time or
times at which Options shall be granted and the number of shares and purchase
price of Common Stock covered by each Option; to construe and interpret the
Plan; to determine the terms and provisions of the respective Option agreements,
which need not be identical, including, but without limitation, terms covering
the payment of the Option Price; and to make all other determinations and take
all other actions deemed necessary or advisable for the proper administration of
the Plan. All such actions and determinations shall be conclusively binding for
all purposes and upon all persons.
<PAGE>
4. Common Stock Subject to Options. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed 1,500,000. The shares of Common Stock to
be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the market for
the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
shares subject to such Option but not purchased thereunder shall again be
available for Options to be granted under the Plan.
5. Participants. Options may be granted under the Plan the Company's
employees, directors and officers, and consultants or advisors to the Company,
provided however that bona fide services shall be rendered by such consultants
or advisors and such services must not be in connection with the offer or sale
of securities in a capital-raising transaction.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by an agreement executed by the Company and the recipient and
shall contain such terms and be in such form as the Committee may from time to
time approve, subject to the following limitations and conditions:
(a) Option Price. The Option Price per share with respect to each
Option shall be determined by the Committee but shall in no instance be less
than the par value of the Common Stock.
(b) Period of Option. The period during which each option may be
exercised, and the expiration date of each Option shall be fixed by the
Committee, but, notwithstanding any provision of the Plan to the contrary, such
expiration date shall not be more than ten years from the date of Grant.
(c) Vesting of Shareholder Rights. Neither an Optionee nor his
successor shall have any rights as a shareholder of the Company until the
certificates evidencing the shares purchased are properly delivered to such
Optionee or his successor.
(d) Exercise of Option. Each Option shall be exercisable from time
to time during a period (or periods) determined by the Committee and ending upon
the expiration or termination of the Option; provided, however, the Committee
may, by the provisions of any Option Agreement, limit the number of shares
purchaseable thereunder in any period or periods of time during which the Option
is exercisable.
(e) Nontransferability of Option. No Option shall be transferable
or assignable by an Optionee, otherwise than by will or the laws of descent and
distribution and each Option shall be exercisable, during the Opionee's
lifetime, only by him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar process except
with the express consent of the Committee.
<PAGE>
(f) Death of Optionee. If an Optionee dies while holding an Option
granted hereunder, his Option privileges shall be limited to the shares which
were immediately purchasable by him at the date of death and such Option
privileges shall expire unless exercised by his successor within four months
after the date of death.
7. Reclassification, Consolidation, or Merger. If and to the extent
that the number of issued shares of Common Stock of the Corporaton shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to Option and the Option price per share shall be proportionately
adjusted by the Committee, whose determination shall be conclusive. If the
Corporation is reorganized or consolidated or merged with another corporation,
an Optionee granted an Option hereunder shall be entitled to receive Options
covering shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. The new
Option or assumption of the old Option shall not give Optionee additional
benefits which he did not have under the old Option, or deprive him of benefits
which he had under the old Option.
8. Restrictions on Issuing Shares. The exercise of each Option shall be
subject to the condition that if at any time the Company shall determine in its
discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares purchased thereto, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
Unless the shares of stock covered by the Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of l933, each optionee shall, by accepting an option,
represent and agree, for himself and his transferrees by will or the laws of
descent and distribution, that all shares of stock purchased upon the exercise
of the option will be acquired for investment and not for resale or
distribution. Upon such exercise of any portion of an option, the person
entitled to exercise the same shall, upon request of the Company, furnish
evidence satisfactory to the Company (including a written and signed
representation) to the effect that the shares of stock are being acquired in
good faith for investment and not for resale or distribution. Furthermore, the
Company may, if it deems appropriate, affix a legend to certificates
representing shares of stock purchased upon exercise of options indicating that
such shares have not been registered with the Securities and Exchange Commission
<PAGE>
and may so notify the Company's transfer agent. Such shares may be disposed of
by an optionee in the following manner only: (l) pursuant to an effective
registration statement covering such resale or reoffer, (2) pursuant to an
applicable exemption from registration as indicated in a written opinion of
counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If shares of
stock covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
optionees who are directors, officers, or principal shareholders of the Company.
Such persons may dispose of shares only by one of the three aforesaid methods.
9. Use of Proceeds. The proceeds received by the Company from the sale
of Common Stock pursuant to the exercise of Options granted under the Plan shall
be added to the Company's general funds and used for general corporate purposes.
l0. Amendment, Suspension, and Termination of Plan. The Board of
Directors may alter, suspend, or discontinue the Plan, but may not, without the
approval of a majority of those holders of the Company's Common Stock voting in
person or by proxy at any meeting of the Company's shareholders, make any
alteration or amendment thereof which operates to (a) abolish the Committee,
change the qualification of its members, or withdraw the administration of the
Plan from its supervision, (b) make any material change in the class of eligible
employees as defined in paragraph 5, (c) increase the total number of shares
reserved for purposes of this Plan except as provided in paragraph 7, (d)
increase the total number of shares for which an option or options may be
granted to any one employee, (e) extend the term of the Plan or the maximum
option periods provided in paragraph 6, (f) decrease the minimum option price
provided in paragraph 6, except as provided in paragraph 7, or (g) materially
increase the benefits accruing to employees participating under this Plan.
Unless the Plan shall theretofore have been terminated by the
Board, the Plan shall terminate ten years after the effective date of the Plan.
No Option may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without an
Optionee's consent, alter or impair any of the rights or obligations under any
Option theretofore granted to such Optionee under the Plan.
11. Limitations. Every right of action by any person receiving options
pursuant to this Plan against any past, present or future member of the Board,
or any officer or employee of the Company arising out of or in connection with
this Plan shall, irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
l2. Governing Law. The Plan shall be governed by the laws of the
State of Delaware.
13. Expenses of Administration. All costs and expenses incurred in the
operation and adminstration of this Plan shall be borne by the Company.
<PAGE>
EXHIBIT 4(d)
<PAGE>
SIMS COMMUNICATIONS, INC.
1998 NON-QUALIFIED STOCK OPTION PLAN
l. Purpose. This Non-Qualified Stock Option Plan (the "Plan") is
intended to advance the interests of SIMS Communications, Inc. (the "Company")
and its shareholders, by encouraging and enabling selected officers, directors,
consultants and key employees upon whose judgment, initiative and effort the
Company is largely dependent for the successful conduct of its business, to
acquire and retain a proprietary interest in the Company by ownership of its
stock. Options granted under the Plan are intended to be Options which do not
meet the requirements of Section 422 of the Internal Revenue Code of 1954, as
amended (the "Code").
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Committee" means the directors duly appointed to administer the
Plan.
(c) "Common Stock" means the Company's Common Stock.
(d) "Date of Grant" means the date on which an Option is granted under
the Plan.
(e) "Option" means an Option granted under the Plan.
(f) "Optionee" means a person to whom an Option, which has not expired,
has been granted under the Plan.
(g) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of any Optionee.
3. Administration of Plan. The Plan shall be administered by the
Company's Board of Directors or in the alternative, by a committee of two or
more directors appointed by the Board (the "Committee"). If a Committee should
be appointed, the Committee shall report all action taken by it to the Board.
The Committee shall have full and final authority in its discretion, subject to
the provisions of the Plan, to determine the individuals to whom and the time or
times at which Options shall be granted and the number of shares and purchase
price of Common Stock covered by each Option; to construe and interpret the
Plan; to determine the terms and provisions of the respective Option agreements,
which need not be identical, including, but without limitation, terms covering
the payment of the Option Price; and to make all other determinations and take
all other actions deemed necessary or advisable for the proper administration of
the Plan. All such actions and determinations shall be conclusively binding for
all purposes and upon all persons.
4. Common Stock Subject to Options. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of Options
<PAGE>
granted under the Plan shall not exceed 1,500,000. The shares of Common Stock to
be issued upon the exercise of Options may be authorized but unissued shares,
shares issued and reacquired by the Company or shares bought on the market for
the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
shares subject to such Option but not purchased thereunder shall again be
available for Options to be granted under the Plan.
5. Participants. Options may be granted under the Plan the Company's
employees, directors and officers, and consultants or advisors to the Company,
provided however that bona fide services shall be rendered by such consultants
or advisors and such services must not be in connection with the offer or sale
of securities in a capital-raising transaction.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by an agreement executed by the Company and the recipient and
shall contain such terms and be in such form as the Committee may from time to
time approve, subject to the following limitations and conditions:
(a) Option Price. The Option Price per share with respect to each
Option shall be determined by the Committee but shall in no instance be less
than the par value of the Common Stock.
(b) Period of Option. The period during which each option may be
exercised, and the expiration date of each Option shall be fixed by the
Committee, but, notwithstanding any provision of the Plan to the contrary, such
expiration date shall not be more than ten years from the date of Grant.
(c) Vesting of Shareholder Rights. Neither an Optionee nor his
successor shall have any rights as a shareholder of the Company until the
certificates evidencing the shares purchased are properly delivered to such
Optionee or his successor.
(d) Exercise of Option. Each Option shall be exercisable from time
to time during a period (or periods) determined by the Committee and ending upon
the expiration or termination of the Option; provided, however, the Committee
may, by the provisions of any Option Agreement, limit the number of shares
purchaseable thereunder in any period or periods of time during which the Option
is exercisable.
(e) Nontransferability of Option. No Option shall be transferable
or assignable by an Optionee, otherwise than by will or the laws of descent and
distribution and each Option shall be exercisable, during the Opionee's
lifetime, only by him. No Option shall be pledged or hypothecated in any way and
no Option shall be subject to execution, attachment, or similar process except
with the express consent of the Committee.
(f) Death of Optionee. If an Optionee dies while holding an Option
granted hereunder, his Option privileges shall be limited to the shares which
<PAGE>
were immediately purchasable by him at the date of death and such Option
privileges shall expire unless exercised by his successor within four months
after the date of death.
7. Reclassification, Consolidation, or Merger. If and to the extent
that the number of issued shares of Common Stock of the Corporaton shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to Option and the Option price per share shall be proportionately
adjusted by the Committee, whose determination shall be conclusive. If the
Corporation is reorganized or consolidated or merged with another corporation,
an Optionee granted an Option hereunder shall be entitled to receive Options
covering shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. The new
Option or assumption of the old Option shall not give Optionee additional
benefits which he did not have under the old Option, or deprive him of benefits
which he had under the old Option.
8. Restrictions on Issuing Shares. The exercise of each Option shall be
subject to the condition that if at any time the Company shall determine in its
discretion that the satisfaction of withholding tax or other withholding
liabilities, or that the listing, registration, or qualification of any shares
otherwise deliverable upon such exercise upon any securities exchange or under
any state or federal law, or that the consent or approval of any regulatory
body, is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of shares purchased thereto, then in any
such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
Unless the shares of stock covered by the Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of l933, each optionee shall, by accepting an option,
represent and agree, for himself and his transferrees by will or the laws of
descent and distribution, that all shares of stock purchased upon the exercise
of the option will be acquired for investment and not for resale or
distribution. Upon such exercise of any portion of an option, the person
entitled to exercise the same shall, upon request of the Company, furnish
evidence satisfactory to the Company (including a written and signed
representation) to the effect that the shares of stock are being acquired in
good faith for investment and not for resale or distribution. Furthermore, the
Company may, if it deems appropriate, affix a legend to certificates
representing shares of stock purchased upon exercise of options indicating that
such shares have not been registered with the Securities and Exchange Commission
and may so notify the Company's transfer agent. Such shares may be disposed of
by an optionee in the following manner only: (l) pursuant to an effective
registration statement covering such resale or reoffer, (2) pursuant to an
applicable exemption from registration as indicated in a written opinion of
counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If shares of
stock covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
optionees who are directors, officers, or principal shareholders of the Company.
Such persons may dispose of shares only by one of the three aforesaid methods.
<PAGE>
9. Use of Proceeds. The proceeds received by the Company from the sale
of Common Stock pursuant to the exercise of Options granted under the Plan shall
be added to the Company's general funds and used for general corporate purposes.
l0. Amendment, Suspension, and Termination of Plan. The Board of
Directors may alter, suspend, or discontinue the Plan at any time.
Unless the Plan shall theretofore have been terminated by the
Board, the Plan shall terminate ten years after the effective date of the Plan.
No Option may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without an
Optionee's consent, alter or impair any of the rights or obligations under any
Option theretofore granted to such Optionee under the Plan.
11. Limitations. Every right of action by any person receiving options
pursuant to this Plan against any past, present or future member of the Board,
or any officer or employee of the Company arising out of or in connection with
this Plan shall, irrespective of the place where such action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
l2. Governing Law. The Plan shall be governed by the laws of the
State of Delaware.
13. Expenses of Administration. All costs and expenses incurred in the
operation and adminstration of this Plan shall be borne by the Company.
<PAGE>
EXHIBIT 4(e)
<PAGE>
SIMS COMMUNICATIONS, INC.
1998 STOCK BONUS PLAN
l. Purpose. The purpose of this Stock Bonus Plan is to advance
the interests of SIMS Communications, Inc. (the "Company") and its shareholders,
by encouraging and enabling selected officers, directors, consultants and key
employees upon whose judgment, initiative and effort the Company is largely
dependent for the successful conduct of its business, to acquire and retain a
proprietary interest in the Company by ownership of its stock, to keep personnel
of experience and ability in the employ of the Company and to compensate them
for their contributions to the growth and profits of the Company and thereby
induce them to continue to make such contributions in the future.
2. Definitions.
A. "Board" shall mean the board of directors of the Company.
B. "Committee" means the directors duly appointed to
administer the Plan.
C. "Plan" shall mean this Stock Bonus Plan.
D. "Bonus Share" shall mean the shares of common stock of the
Company reserved pursuant to Section 4 hereof and any such shares issued to a
Recipient pursuant to this Plan.
E. "Recipient" shall mean any individual rendering services
for the Company to whom shares are granted pursuant to this Plan.
3. Administration of Plan. The Plan shall be administered by a
committee of two or more directors appointed by the Board (the "Committee"). The
Committee shall report all action taken by it to the Board. The Committee shall
have full and final authority in its discretion, subject to the provisions of
the Plan, to determine the individuals to whom and the time or times at which
Bonus Shares shall be granted and the number of Bonus Shares; to construe and
interpret the Plan; and to make all other determinations and take all other
actions deemed necessary or advisable for the proper administration of the Plan.
All such actions and determinations shall be conclusively binding for all
purposes and upon all persons.
4. Bonus Share Reserve. There shall be established a Bonus Share
Reserve to which shall be credited 750,000 shares of the Company's common stock.
In the event that the shares of common stock of the Company should, as a result
of a stock split or stock dividend or combination of shares or any other change,
or exchange for other securities by reclassification, reorganization, merger,
consolidation, recapitalization or otherwise, be increased or decreased or
changed into or exchanged for, a different number or kind of shares of stock or
other securities of the Company or of another corporation, the number of shares
<PAGE>
then remaining in the Bonus Share Reserve shall be appropriately adjusted to
reflect such action. Upon the grant of shares hereunder, this reserve shall be
reduced by the number of shares so granted. Distributions of Bonus Shares may,
as the Committee shall in its sole discretion determine, be made from authorized
but unissued shares or from treasury shares. All authorized and unissued shares
issued as Bonus Shares in accordance with the Plan shall be fully paid and
nonassessable and free from preemptive rights.
5. Eligibility, and Granting and Vesting of Bonus Shares. Bonus Shares
may be granted under the Plan to the Company's employees, directors and
officers, and consultants or advisors to the Company, provided however that bona
fide services shall be rendered by such consultants or advisors and such
services must not be in connection with the offer or sale of securities in a
capital-raising transaction.
The Committee, in its sole discretion, is empowered to grant to an
eligible Participant a number of Bonus Shares as it shall determine from time to
time. Each grant of these Bonus Shares shall become vested according to a
schedule to be established by the Committee directors at the time of the grant.
For purposes of this plan, vesting shall mean the period during which the
recipient must remain an employee or provide services for the Company. At such
time as the employment of the Recipient ceases, any shares not fully vested
shall be forfeited by the Recipient and shall be returned to the Bonus Share
Reserve. The Committee, in its sole discretion, may also impose restrictions on
the future transferability of the bonus shares, which restrictions shall be set
forth on the notification to the Recipient of the grant.
The aggregate number of Bonus Shares which may be granted pursuant
to this Plan shall not exceed the amount available therefore in the Bonus Share
Reserve.
6. Form of Grants. Each grant shall specify the number of Bonus Shares
subject thereto, subject to the provisions of Section 5 hereof.
At the time of making any grant, the Committee shall advise the
Recipient by delivery of written notice, in the form of Exhibit A hereto
annexed.
7. Recipients' Representations.
A. The Committee may require that, in acquiring any Bonus Shares,
the Recipient agree with, and represent to, the Company that the Recipient is
acquiring such Bonus Shares for the purpose of investment and with no present
intention to transfer, sell or otherwise dispose of shares except such
distribution by a legal representative as shall be required by will or the laws
of any jurisdiction in winding-up the estate of any Recipient. Such shares shall
be transferrable thereafter only if the proposed transfer shall be permissable
pursuant to the Plan and if, in the opinion of counsel (who shall be
satisfactory to the Committee), such transfer shall at such time be in
compliance with applicable securities laws.
B. To effectuate Paragraph A above, the Recipient shall deliver to
the Committee, in duplicate, an agreement in writing, signed by the Recipient,
in form and substance as set forth in Exhibit B hereto annexed, and the
Committee shall forthwith acknowledge its receipt thereof.
<PAGE>
8. Restrictions Upon Issuance.
A. Bonus Shares shall forthwith after the making of any representations
required by Section 6 hereof, or if no representations are required then within
thirty (30) days of the date of grant, be duly issued and transferred and a
certificate or certificates for such shares shall be issued in the Recipient's
name. The Recipient shall thereupon be a shareholder with respect to all the
shares represented by such certificate or certificates, shall have all the
rights of a shareholder with respect to all such shares, including the right to
vote such shares and to receive all dividends and other distributions (subject
to the provisions of Section 7(B) hereof) paid with respect to such shares.
Certificates of stock representing Bonus Shares shall be imprinted with a legend
to the effect that the shares represented thereby are subject to the provisions
of this Agreement, and to the vesting and transfer limitations established by
the Committee, and each transfer agent for the common stock shall be instructed
to like effect with respect of such shares.
B. In the event that, as the result of a stock split or stock
dividend or combination of shares or any other change, or exchange for other
securities, by reclassification, reorganization, merger, consolidation,
recapitalization or otherwise, the Recipient shall, as owner of the Bonus Shares
subject to restrictions hereunder, be entitled to new or additional or different
shares of stock or securities, the certificate or certificates for, or other
evidences of, such new or additional or different shares or securities, together
with a stock power or other instrument of transfer appropriately endorsed, shall
also be imprinted with a legend as provided in Section 7(A), and all provisions
of the Plan relating to restrictions herein set forth shall thereupon be
applicable to such new or additional or different shares or securities to the
extent applicable to the shares with respect to which they were distributed.
C. The grant of any Bonus Shares shall be subject to the condition
that if at any time the Company shall determine in its discretion that the
satisfaction of withholding tax or other withholding liabilities, or that the
listing, registration, or qualification of any Bonus Shares upon such exercise
upon any securities exchange or under any state or federal law, or that the
consent or approval of any regulatory body, is necessary or desirable as a
condition of, or in connection with, the issuance of any Bonus Shares, then in
any such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent, or approval shall have been ef-
fected or obtained free of any conditions not acceptable to the Company.
D. Unless the Bonus Shares covered by the Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of l933, each Recipient shall, by accepting a Bonus Share,
represent and agree, for himself and his transferrees by will or the laws of
descent and distribution, that all Bonus Shares were acquired for investment and
not for resale or distribution. The person entitled to receive Bonus Shares
shall, upon request of the Committee, furnish evidence satisfactory to the
Committee (including a written and signed representation) to the effect that the
shares of stock are being acquired in good faith for investment and not for
resale or distribution. Furthermore, the Committee may, if it deems appropriate,
affix a legend to certificates representing Bonus Shares indicating that such
Bonus Shares have not been registered with the Securities and Exchange
<PAGE>
Commission and may so notify the Company's transfer agent. Such shares may be
disposed of by a Recipient in the following manner only: (l) pursuant to an
effective registration statement covering such resale or reoffer, (2) pursuant
to an applicable exemption from registration as indicated in a written opinion
of counsel acceptable to the Company, or (3) in a transaction that meets all the
requirements of Rule l44 of the Securities and Exchange Commission. If Bonus
Shares covered by the Plan have been registered with the Securities and Exchange
Commission, no such restrictions on resale shall apply, except in the case of
Recipients who are directors, officers, or principal shareholders of the
Company. Such persons may dispose of shares only by one of the three aforesaid
methods.
9. Limitations. Neither the action of the Company in establishing the
Plan, nor any action taken by it nor by the Committee under the Plan, nor any
provision of the Plan, shall be construed as giving to any person the right to
be retained in the employ of the Company.
Every right of action by any person receiving shares of common
stock pursuant to this Plan against any past, present or future member of the
Board, or any officer or employee of the Company arising out of or in connection
with this Plan shall, irrespective of the place where action may be brought and
irrespective of the place of residence of any such director, officer or employee
cease and be barred by the expiration of one year from the date of the act or
omission in respect of which such right of action arises.
l0. Amendment, Suspension or Termination of the Plan. The Board of
Directors may alter, suspend, or discontinue the Plan at any time.
Unless the Plan shall theretofore have been terminated by the Board,
the Plan shall terminate ten years after the effective date of the Plan. No
Bonus Share may be granted during any suspension or after the termination of the
Plan. No amendment, suspension, or termination of the Plan shall, without a
recipient's consent, alter or impair any of the rights or obligations under any
Bonus Share theretofore granted to such recipient under the Plan.
ll. Governing Law. The Plan shall be governed by the laws of the
State of Delaware.
l2. Expenses of Administration. All costs and expenses incurred in
the operation and adminstration of this Plan shall be borne by the Company.
<PAGE>
- EXHIBIT A -
SIMS COMMUNICATIONS, INC.
STOCK BONUS PLAN
TO: Recipient:
PLEASE BE ADVISED that SIMS Communications, Inc. has on the date
hereof granted to the Recipient the number of Bonus Shares as set forth under
and pursuant to the Stock Bonus Plan. Before these shares are to be issued, the
Recipient must deliver to the Committee that administers the Stock Bonus Plan an
agreement in duplicate, in the form as Exhibit B hereto. The Bonus Shares are
issued subject to the following vesting and transfer limitations.
Vesting:
Number of Shares Date of Vesting
Transfer Limitations:
SIMS COMMUNICATIONS, INC.
By
Date
<PAGE>
- EXHIBIT B -
SIMS Communications, Inc.
17821 Skypark Circle
Suite G
Irvine, CA 92614
Gentlemen:
I represent and agree that said Bonus Shares are being acquired by me
for investment and that I have no present intention to transfer, sell or
otherwise dispose of such shares, except as permitted pursuant to the Plan and
in compliance with applicable securities laws, and agree further that said
shares are being acquired by me in accordance with and subject to the terms,
provisions and conditions of said Plan, to all of which I hereby expressly
assent. These agreements shall bind and inure to the benefit of my heirs, legal
representatives, successors and assigns.
My address of record is:
and my social security number: .
Very truly yours,
Receipt of the above is hereby acknowledged.
SIMS COMMUNICATIONS, INC.
By
Date its
<PAGE>
EXHIBIT 5
<PAGE>
November 19, 1998
SIMS Communications, Inc.
18001 Cowan, Suites C&D
Irvine, California 92614
This letter will constitute an opinion upon the legality of the sale by
SIMS Communications, Inc. a Delaware corporation, of up to 6,000,000 shares of
common stock, all as referred to in the Registration Statement on Form S-8 filed
by the Company with the Securities and Exchange Commission. This letter will
also constitute an opinion upon the legality of the sale by certain Selling
Shareholders of the Company of shares of common stock issuable upon the exercise
of options or shares issued as stock bonuses pursuant to the stock option and
stock bonus plans referred to in such Registration Statement.
We have examined the Articles of Incorporation, the Bylaws and the
minutes of the Board of Directors of the Company and the applicable laws of the
State of Delaware, an a copy of the Registration Statement. In our opinion, the
Company has duly authorized the issuance of the shares of stock mentioned above
and such shares when issued will be legally issued, fully paid, and
nonassessable. It is also our opinion that the Company is authorized to issue
the shares mentioned above and, when issued in accordance with the terms and
conditions set out in the Registration Statement, such shares of common stock
will be legally issued, fully paid and non-assessable.
Very truly yours,
HART & TRINEN, L.L.P.
/s/ William T. Hart
<PAGE>
EXHIBIT 24
<PAGE>
CONSENT OF ATTORNEYS
Reference is made to the Registration Statement of SIMS Communications,
Inc. on Form S-8 whereby the Company proposes to sell up to 6,000,000 shares of
the Company's common stock. Reference is also made to Exhibit 5 included in the
Registration Statement relating to the validity of the securities proposed to be
issued and sold.
We hereby consent to the use of our opinion concerning the validity of
the securities proposed to be issued and sold.
Very truly yours,
HART & TRINEN, L.L.P.
/s/ William T. Hart
Denver, Colorado
November 19, 1998
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors
SIMS Communications, Inc.
18001 Cowan, Suites C&D
Irvine, California 92614
We consent to the incorporation by reference in this Registration Statement
of SIMS Communications, Inc. on Form S-8 of our report dated September 15, 1998
and to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ Ehrhardt Keefe Steiner & Hottman PC
October 13, 1998
Denver, Colorado
<PAGE>
EXHIBIT 99
<PAGE>
SIMS COMMUNICATIONS, INC.
Shares Common Stock
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR did not DISAPPROVE BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This Prospectus relates to shares (the "Shares") of this common stock
(the "Common Stock") of SIMS Communications, Inc. (the "Company") which may be
issued pursuant to certain employee incentive plans adopted by the Company. The
employee incentive plans provide for the grant, to selected employees of the
Company and other persons, of either stock bonuses or options to purchase shares
of the Company's Common Stock. Persons who receive Shares pursuant to the Plans
and who are offering such Shares to the public by means of this Prospectus are
referred to as the "Selling Shareholders".
The Company has an Incentive Stock Option Plan, two Non-Qualified Stock
Option Plans and two Stock Bonus Plans. In some cases the plans described above
are collectively referred to as the "Plans". The terms and conditions of any
stock bonus and the terms and conditions of any options, including the price of
the shares of Common Stock issuable on the exercise of options, are governed by
the provisions of the respective Plans and the stock bonus or stock option
agreements between the Company and the Plan participants.
The Selling Shareholders may offer the shares from time to time in
negotiated transactions in the over-the-counter market, at fixed prices which
may be changed from time to time, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares to or through securities broker/dealers, and such broker/dealers may
receive compensation in the form of discounts, concessions, or commissions from
the Selling Shareholders and/or the purchasers of the Shares for whom such
broker/dealers may act as agent or to whom they sell as principal, or both
(which compensation as to a particular broker/dealer might be in excess of
customary commissions). See "Selling Shareholders" and "Plan of Distribution".
The date of this Prospectus is , 1998.
<PAGE>
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear all
expenses (other than underwriting discounts, selling commissions and fees and
expenses of counsel and other advisers to the Selling Shareholders). The Company
has agreed to indemnify the Selling Shareholders against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the
"Securities Act").
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Proxy statements, reports and other information
concerning the Company can be inspected and copied at Room 1024 of the
Commission's office at 450 Fifth Street, N.W., Washington, D.C. 20549, and the
Commission's Regional Offices in New York (26 Federal Plaza, New York, New York
10278), and Chicago (Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511), and copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Certain information concerning the
Company is also available at the Internet Web Site maintained by the Securities
and Exchange Commission at www.sec.gov. The Company has filed with the
Commission a Registration Statement on Form S-8 (together with all amendments
and exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"), with respect to the securities offered hereby.
This Prospectus does not contain all information set forth in the Registration
Statement of which this Prospectus forms a part and exhibits thereto which the
Company has filed with the Commission under the Securities Act and to which
reference is hereby made.
DOCUMENTS INCORPORATED BY REFERENCE
The Company will provide, without charge, to each person to whom a copy
of this Prospectus is delivered, including any beneficial owner, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into this Prospectus).
Requests should be directed to:
SIMS Communications, Inc.
18001 Cowan, Suites C&D
Irvine, CA 92614
(949) 724-9094
Attention: Secretary
<PAGE>
The following documents filed with the Commission by the Company
(Commission File No. 0-25474) are hereby incorporated by reference into this
Prospectus:
(1) The Company's Annual Report on Form 10-KSB for the fiscal year
ended June 30, 1998. All documents filed with the Commission by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the offering
registered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of the filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
<PAGE>
TABLE OF CONTENTS
PAGE
THE COMPANY ..................................................5
RISK FACTORS .................................................6
DILUTION .....................................................10
USE OF PROCEEDS ..............................................12
SELLING SHAREHOLDERS .........................................12
PLAN OF DISTRIBUTION .........................................15
DESCRIPTION OF COMMON STOCK ..................................16
EXPERTS.......................................................17
GENERAL ......................................................17
<PAGE>
THE COMPANY
SIMS Communications, Inc. (the "Company") was incorporated in Delaware
on August 15, 1991 to design and market a computerized system which provides
unattended rental of cellular telephones through a stand-alone dispensing
station. The Company's system, known as an Automated Communications Distribution
Center ("ACDC"), was designed to serve the needs of traveling sales people,
convention and seminar participants, and anyone else who is temporarily away
from normal communications facilities and needs to maintain contact with an
office or home while traveling.
Prior to 1996 the Company operated ACDC units for its own account and
also sold franchises which provided third parties the right to operate ACDC
units at various franchised locations.
The Company's first ACDC units became operational in September l993. In
August 1995, the Company had 50 ACDC units in operation and the Company's
franchisees (13 in total) had 28 ACDC's in operation. As of September 30, l998
the Company was not operating any ACDC units and the Company's only remaining
franchisee had four ACDC units in operation.
During 1996 the Company introduced four additional programs in an
effort to diversify and broaden the Company's product and service mix: (i)
cellular telephone activations, (ii) sale of pre-paid calling cards, (iii) sale
of long distance telephone service and (iv) rental of cellular telephones using
overnight courier service. With the exception of the sale of prepaid calling
cards, these programs were discontinued in December 1997.
Effective December 31, 1996 the Company acquired all the issued and
outstanding shares of Link International, Inc. ("Link"). Link manufactures and
distributes machines which dispense prepaid calling cards and terminals which
are used by merchants to perform a variety of transactions, including accepting
credit cards and bank debit cards in payment for sales of merchandise and
services.
Effective January 30, 1998 the Company issued 550,000 shares of its
common stock to the shareholders of Moviebar, Incorporated and Vectorvision,
Incorporated in consideration for the acquisition of a business known as "Movie
Vision." Movie Vision rents videocassettes, primarily containing motion
pictures, through automated dispensing units in hotels. Movie Vision currently
has videocassette dispensing machines in approximately 140 hotels in the United
States.
Effective May 30, 1998 the Company acquired One Medical Service Inc.
The One Medical Service technology is used in the pharmaceutical market and
allows the pharmacy and its customers to communicate with medical vendors and
suppliers and directly order home medical equipment.
All historical share data in this Prospectus has been adjusted to
<PAGE>
reflect the following stock splits relating to the Company's common stock:
June 1995: 2-for-1 forward split, February 1996: 1-for-10 reverse split,
February l998: 1-for-4 reverse split.
Unless otherwise indicated, all references to the Company include
the operations of Link, Movie Vision and One-Medical
The Company's executive offices are located at 18001 Cowan St., Suites
C&D, Irvine, CA 92614. The Company's telephone number is (949) 724-9094.
RISK FACTORS
The securities offered hereby are speculative and involve a high degree
of risk and should be purchased only by persons who can afford to lose their
entire investment. Therefore, prospective investors should read this entire
Prospectus and carefully consider, among others, the following risk factors in
addition to the other information set forth in this Prospectus prior to making
an investment.
History of Losses. The Company has incurred losses since it was formed
in 1991. From the date of its formation through June 30, 1998, the Company
incurred net losses of approximately $(20,417,000). During the year ended June
30, l998 the Company had a loss of $(7,109,748). The Company expects to continue
to incur losses until such time, if ever, as it generates substantial revenues
and earns net income. There can be no assurance that the Company will be able to
generate sufficient revenues and become profitable.
The Company is vulnerable to a variety of business risks generally
associated with small companies, any one of which could have a material adverse
effect on its business, financial condition and results of operations. Potential
investors should be aware of the difficulties encountered by small companies and
the other risk factors set forth in this section. The Company's future operating
results will depend on a number of factors, including the demand for its
products and services, government regulation, the Company's ability to compete
with much larger companies, its ability to successfully market its products and
services, retain qualified sales and other personnel, successfully manage growth
(including monitoring an expanded level of operations and controlling costs),
and the availability of additional financing,
The Company's operations have placed, and are expected to continue to
place, significant strain on the Company's management, staff, working capital,
and financial control systems. The failure to maintain or upgrade financial
control systems, to recruit additional staff or to respond effectively to
difficulties encountered during expansion could have a material adverse effect
on the Company's business, financial condition and results of operations. There
can be no assurance that the Company's systems and controls or staff will be
adequate. There can be no assurance that the Company will be able to earn a
profit from its operations.
Need for Capital. This offering is being made in behalf of certain
Selling Shareholders. The Company will not receive any proceeds from the sale of
the shares offered by the Selling Shareholders. The Company's continued
<PAGE>
operations will depend upon the availability of additional funding. There can be
no assurance that the Company will be able to obtain additional funding, if
needed, or if available on terms satisfactory to the Company.
Competition There can be no assurance that the Company will be able to
compete with the numerous other companies which are engaged in the Company's
lines of business. Many of these competitors have greater financial and
marketing resources than those of the Company.
Agreements with Credit Card Companies. The Company's point-of-sale
terminals and video dispensing machines are capable of operating on an automatic
basis as the result of a nationwide credit card system. By means of telephone
lines and computers, this system links credit card companies, issuing banks and
credit card processing firms throughout the United States and allows products
and services to be purchased through credit cards. The Company presently has
agreements with credit card processors which authorize the use of various major
credit cards in the Company's machines. In order for the Company to continue to
have the services of these credit card processors available, the Company is
required to meet certain conditions as provided in the agreements between the
credit card processors and the Company. In the event the Company fails to meet
these conditions, the credit card processors may automatically refuse to accept
credit cards, in which case the Company's machines would be unable to process
transactions.
Dependence on Personnel. The future success of the Company will be
highly dependent upon the personal efforts of its executive officers and the
loss of the services of any of the Company's executive officers could have a
material adverse effect on the Company. The Company believes that its future
success will also depend upon its ability to attract and retain qualified
marketing, operating and programming personnel. There can be no assurance that
the Company will be able to hire and retain such necessary personnel in the
future.
Market for Company's Securities; Volatility of Securities Prices.
Prices for the Company's Common Stock have been highly volatile and will be
influenced by a number of factors, including the depth and liquidity of the
market for the Company's Common Stock, the Company's financial results, investor
perceptions of the Company, and general economic and other conditions.
Additionally, in the last several years, the stock market has experienced a high
level of price and volume volatility and market prices of many companies,
particularly small and emerging growth companies, the common stock of which
trade in the over-the-counter market, have experienced wide price fluctuations
which have not necessarily been related to the operating performance of such
companies.
No Assurance of Continued NASDAQ Listing. Although the Company's Common
Stock and Warrants are currently listed on the NASDAQ Small-Cap Market, the
National Association of Securities Dealers, Inc. ("NASD") requires, for
continued inclusion on the NASDAQ Small-Cap Market, that the Company must
maintain $2,000,000 in net worth and that the bid price of the Company's Common
Stock must be at least $1.00.
There can be no assurance however that the Company's securities will
remain listed on the NASDAQ Small-Cap Market. If the Company's securities were
delisted from the NASDAQ Small-Cap Market, the Company's securities would trade
in the unorganized interdealer over-the-counter market through the OTC Bulletin
Board which provides significantly less liquidity than the NASDAQ Small-Cap
Market. Securities which are not traded on the NASDAQ Small-Cap Market may be
more difficult to sell and may be subject to more price volatility than NASDAQ
listed securities.
If the Company's Common Stock was delisted from NASDAQ, trades in such
securities may then be subject to Rule 15g-9 under the Securities Exchange Act
of 1934, which rule imposes certain requirements on broker/dealers who sell
securities subject to the rule to persons other than established customers and
accredited investors. For transactions covered by the rule, brokers/dealers must
make a special suitability determination for purchasers of the securities and
receive the purchaser's written agreement to the transaction prior to sale. Rule
15g-9, if applicable to sales of the Company's securities, may affect the
ability of broker/dealers to sell the Company's securities and may also affect
the ability of investors in this offering to sell such securities in the
secondary market and otherwise affect the trading market in the Company's
securities.
The Securities and Exchange Commission has rules that regulate
broker/dealer practices in connection with transactions in "penny stocks". Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in that security is provided by the exchange or system).
The penny stock rules require a broker/dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the Commission that provides information about
penny stocks and the nature and level of risks in the penny stock market. The
broker/dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker/dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker/dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customer's confirmation. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for a
stock that becomes subject to the penny stock rules.
Transactions with Affiliates. The Company has in the past entered into
transactions and agreements with the Company's management and certain affiliated
parties and the Company may in the future enter into other transactions and
agreements incident to its business with certain of its affiliates. Although the
Company intends that the terms of any such future transactions and agreements
will be no less favorable than those which could be obtained from unaffiliated
third parties, no assurances can be given that this will be the case. See
"Management - Transactions with Former Management" and "Management -
Transactions With Present Management".
<PAGE>
Options, Warrants and Convertible Securities. The Company has issued
options, warrants and other convertible securities ("Derivative Securities")
which allow the holders to acquire additional shares of the Company's Common
Stock. In some cases the Company has agreed that, at its expense, it will make
appropriate filings with the Securities and Exchange Commission so that the
securities underlying certain Derivative Securities will be available for public
sale. Such filings could result in substantial expense to the Company and could
hinder future financings by the Company.
For the terms of these Derivative Securities, the holders thereof will
have an opportunity to profit from any increase in the market price of the
Company's Common Stock without assuming the risks of ownership. Holders of such
Derivative Securities may exercise and/or convert them at a time when the
Company could obtain additional capital on terms more favorable than those
provided by the Derivative Securities. The exercise or conversion of the
Derivative Securities will dilute the voting interest of the owners of presently
outstanding shares of the Company's Common Stock and may adversely affect the
ability of the Company to obtain additional capital in the future. The sale of
the shares of Common Stock issuable upon the exercise or conversion of the
Derivative Securities could adversely affect the market price of the Company's
stock. See "Dilution and Comparative Share Data".
Shares Available for Resale. As of September 30, 1998, there were
9,417,957 shares of the Company's Common Stock issued and outstanding. Of this
amount, approximately 4,200,000 shares are "restricted securities" as defined by
Rule 144 of the Securities Act of 1933, as amended (the "Act").
Rule 144 provides, in essence, that shareholders, after holding
restricted securities for a period of one year may, every three months, sell in
ordinary brokerage transactions an amount equal to the greater of l% of the
Company's then outstanding Common Stock or the average weekly trading volume, if
any, of the stock during the four calendar weeks preceding the sale.
Non-affiliates of the Company who hold restricted securities for a period of two
years may, under certain prescribed conditions, sell their securities without
regard to any of the requirements of the Rule.
Approximately 3,500,000 shares of restricted stock have satisfied the
one-year holding period required by Rule 144. Approximately 3,800,000 additional
shares of restricted stock are being offered for public sale by means of a
registration statement which has been filed with the Securities and Exchange
Commission. The remaining shares of restricted stock will become available for
resale pursuant to Rule 144 beginning in January 1999.
No prediction can be made as to the effect, if any, that the sale of
Common Stock (or the availability of such Common Stock for sale) by the holders
of the Company's restricted stock will have on the market price of the Company's
securities. Nevertheless, the possibility of a substantial number of shares of
Common Stock being offered for sale in the public market may adversely affect
prevailing market prices for the Common Stock and could impair investors'
ability to sell the Company's Common Stock or the Company's ability to raise
capital through the sale of its equity securities.
<PAGE>
Lack of Dividends. There can be no assurance that the operations of the
Company will result in any revenues or will be profitable. At the present time,
the Company intends to use available funds to finance any possible growth of the
Company's business. Accordingly, while payment of dividends rests within the
discretion of the Board of Directors, no common stock dividends have been
declared or paid by the Company. The Company does not presently intend to pay
dividends and there can be no assurance that dividends will ever be paid.
Preferred Stock. The Company's Articles of Incorporation authorize the
Company's Board of Directors to issue up to 1,000,000 shares of Preferred Stock.
The provisions in the Company's Articles of Incorporation relating to the
Preferred Stock would allow the Company's directors to issue Preferred Stock
with multiple votes per share and dividends rights which would have priority
over any dividends paid with respect to the Company's Common Stock. The issuance
of Preferred Stock with such rights may make the removal of management difficult
even if such removal would be considered beneficial to shareholders generally,
and will have the effect of limiting shareholder participation in certain
transactions such as mergers or tender offers if such transactions are not
favored by incumbent management.
FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH HEREIN, THE
PURCHASE OF THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. ANY
PERSON CONSIDERING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE
AWARE OF THESE AND OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THE SECURITIES
SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO ABSORB A TOTAL LOSS OF
THEIR INVESTMENT IN THE COMPANY AND HAVE NO NEED FOR A RETURN ON THEIR
INVESTMENT.
DILUTION
As of September 30, 1998, the Company had 9,417,957 shares of Common
Stock and issued outstanding with a net tangible book value (total assets less
total liabilities and intangible assets) of approximately $0.18 per share.
The net tangible book value of a share of the Company's Common Stock is
substantially less than the price which investors will pay for the shares
offered by this Prospectus. The difference between the public offering price and
the net tangible book value of the Company's Common Stock is the dilution
attributable to each share of Common Stock.
"Net tangible book value per share" is the amount that results from
subtracting the total liabilities and intangible assets of the Company from its
total assets and dividing such amount by the shares of Common Stock then
outstanding.
As of September 30, 1998 the Company had 9,417,957 shares of Common
Stock issued and outstanding. The following table reflects the shares of Common
Stock which may be issued by the Company as the result of the sale of additional
securities by the Company, the exercise of options and warrants issued, or to be
<PAGE>
issued, by the Company and the conversion of convertible securities issued by
the Company.
Number of Note
Shares Reference
Shares Outstanding 9,417,957
Shares issuable upon exercise
of warrants issued to sales agents
and financial consultants 225,000 A
Shares issuable upon conversion of notes
and exercise of warrants sold in
private offerings 256,937 B
Shares issuable upon exercise of options
previously granted by Company 2,589,000 C
Shares issuable upon conversion of
Series A and Series B Preferred Stock 35,000 D
Additional shares issuable in connection
with the acquisition of One Medical
Services, Inc.: E
Warrant Shares 187,500
Incentive Shares 1,485,000
Shares issuable upon conversion
of loan 142,900 F
A. In connection with prior private offerings of the Company's common stock, the
Company paid Commissions to the sales agents for such offerings in the form of
cash and warrants. The Company has also entered into a number of agreements with
various financial consultants. Pursuant to the terms of these agreements, the
Company has issued to the financial consultants shares of common stock, plus
warrants to purchase additional shares of common stock. The warrants referred to
above are exercisable at prices ranging between $2.00 and $7.00 per share and
expire between 2001 and 2003.
B. Between February and December l997 the Company sold $1,017,500 of convertible
notes (the "Notes"), together with warrants for the purchase of 97,562 shares of
the Company's common stock. The Notes bear interest at 8% per annum and are
presently due and payable. As of September 30, 1998 Notes in the principal
amount of $762,500 (plus accrued interest) have been converted into 534,285
shares of the Company's common stock. The remaining Notes are collectively
<PAGE>
convertible into 159,375 shares of the Company's Common Stock at a conversion
price of $1.60 per share. The Warrants are exercisable at any time prior to May
31, 2000 at prices ranging between $5.00 and $10.00 per share.
C. See "Selling Shareholders - Summary".
D. The preferred shares were issued in 1995 and 1996.
E. Effective May 30, 1998 the Company acquired One Medical Services, Inc. in
consideration for 142,349 shares of common stock and 187,500 warrants
exercisable at $2.00 per share at any time prior to May 30, 2003. The Company
has also agreed to issue to the former owners of One Medical up to 1,485,000
additional shares of common stock depending on the future operating of One
Medical. The number of shares to be issued will be determined by dividing the
quarterly net income of One Medical (for each fiscal quarterly beginning June
30, 1998 and ending June 30, 2001, by the average closing price of the Company's
common stock for the five day trading period prior to the end of each quarter.
F. The Company has borrowed $250,000 from an non-affiliated third party. At the
option of the third party the loan is convertible into shares of the Company's
common stock. The number of shares to be issued upon the conversion of the loan
is determined by dividing the principal and accrued interest to be converted by
the average market price of the Company's common stock during the five day
period prior to conversion. The shares in the table assume the principal amount
of the loan is converted when the market price of the Company's common stock is
$1.75 per share.
The shares referred to in Note C, above are being offered for public
sale by means of this prospectus. See "Selling Shareholders". The shares which
are referred to in Notes A and B (as well as approximately 3,677,000 additional
shares), are being registered for public sale by means of a seperate
registration statement on Form SB-2 which has been filed with the Securities and
Exchange Commission
USE OF PROCEEDS
All of the shares offered by this Prospectus are being offered by
certain owners of the Company's Common Stock (the Selling Shareholders) and were
issued by the Company in connection with the Company's employee stock bonus or
stock option plans. None of the proceeds from this offering will be received by
the Company. Expenses expected to be incurred by the Company in connection with
this offering are estimated to be approximately $10,000. The Selling
Shareholders have agreed to pay all commissions and other compensation to any
securities broker/dealers through whom they sell any of the Shares.
SELLING SHAREHOLDERS
The Company has issued (or may in the future issue) shares of its common
stock to various persons pursuant to certain employee incentive plans adopted by
the Company. The employee incentive plans provide for the grant, to selected
employees of the Company and other persons, of either stock bonuses or options
to purchase shares of the Company's common stock. Officers and directors who
received options or shares of commons stock pursuant to the Plans prior to
September 30, 1998 and who are offering shares of common stock to the public by
<PAGE>
means of this Prospectus, are referred to as the "Selling Shareholders". Shares
issuable upon the exercise of options granted, or which may be granted pursuant
to the Company's Incentive Stock Option and Non-Qualified Stock Option Plans, as
well as shares issued or issuable pursuant to the Stock Bonus Plans are also
being offered by means of this Prospectus.
The Company has an Incentive Stock Option Plan, two Non-Qualified Stock
Option Plans and two Stock Bonus Plans. In some cases these Plans are
collectively referred to as the "Plans". A summary description of these Plans
follows.
Incentive Stock Option Plan. The Company has an Incentive Stock Option
Plans which collectively authorize the issuance of up to 1,500,000 shares of the
Company's Common Stock to persons that exercise options granted pursuant to the
Plan. Only Company employees may be granted options pursuant to the Incentive
Stock Option Plan.
Non-Qualified Stock Option Plans. The Company has two Non-Qualified
Stock Option Plans which collectively authorize the issuance of up to 3,000,000
shares of the Company's Common Stock to persons that exercise options granted
pursuant to the Plans. The Company's employees, directors, officers, consultants
and advisors are eligible to be granted options pursuant to the Plans, provided
however that bona fide services must be rendered by such consultants or advisors
and such services must not be in connection with the offer or sale of securities
in a capital-raising transaction. The option exercise price is determined by the
Committee but cannot be less than the market price of the Company's Common Stock
on the date the option is granted.
Stock Bonus Plans. The Company has two Stock Bonus Plans which allows
for the issuance of up to 1,500,000 shares of Common Stock. Such shares may
consist, in whole or in part, of authorized but unissued shares, or treasury
shares. Under the Stock Bonus Plan, the Company's employees, directors,
officers, consultants and advisors are eligible to receive a grant of the
Company's shares, provided however that bona fide services must be rendered by
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.
Summary. The following sets forth certain information, as of September
30, 1998, concerning the stock options and stock bonuses granted by the Company.
Each option represents the right to purchase one share of the Company's Common
Stock.
Total Shares Remaining
Shares Reserved for Shares Options/
Reserved Outstanding Issued as Shares
Name of Plan Under Plan Options Stock Bonus Under Plan
Incentive Stock Option Plan 1,500,000 -- N/A --
<PAGE>
Non-Qualified Stock Option
Plans 3,000,000 2,164,000 N/A 836,000
Stock Bonus Plans 1,500,000 N/A 749,625 750,375
The following table summarizes the options and stock bonuses granted to
the Company's officers, directors, employees and consultants pursuant to the
Plans:Non-Qualified Stock Options
Shares Subject Exercise Expiration
Option Holder To Option Price Date of Option
Mark Bennett 560,500 $1.50 5-29-03
Michael Malet 457,000 $1.50 5-29-03
David Markowski 439,000 $1.50 5-29-03
Chet Howard 50,000 $1.50 5-29-03
George Pursglove 50,000 $1.50 5-29-03
Other Company employees
and other third parties 607,500 $3.00 to $13.00 9/30/99 to 12/31/06
Stock Bonus Plans
Name Shares issued as Stock Bonus (1)
Mark Bennett 18,750
Michael Malet 21,250
Bruce Schames 18,750
David Markowski 6,250
Chet Howard 6,250
George Pursglove 12,500
Other Employees
and Consultants as
a group 665,875
(1) Shares were issued between May 1997 and February 1998. All of these
shares have since been sold.
The following table provides certain information concerning the share
ownership of the Selling Shareholders and the shares offered by this Prospectus.
<PAGE>
Number of
Shares to
Number of Number of Shares be Beneficially
Name of Shares Being Offered owned on Com- Percent
Selling Beneficially Option Bonus pletion of the of
Shareholder Owned Shares(1) Shares(2) Offering Class
Mark Bennett 224,900 560,500 -- 224,900 3%
Michael Malet 157,802 457,000 -- 157,802 2%
Chet Howard 25,000 439,000 -- 25,000 *
George Pursglove 27,500 50,000 -- 27,500 *
David Markowski 25,000 50,000 -- 25,000 *
Cornelia Eldridge -- -- -- --
* Less than 1%
(1) Represents shares issuable upon exercise of stock options granted pursuant
to the Plans.
(2) Represents shares received as a stock bonus.
To allow the Selling Shareholders to sell their Shares when they deem
appropriate, the Company has filed a Form S-8 registration statement under the
Securities Act of 1933, of which this Prospectus forms a part, with respect to
the resale of the Shares from time to time in the over-the-counter market or in
privately negotiated transactions.
PLAN OF DISTRIBUTION
The Selling Shareholders may sell the Shares offered by this Prospectus
from time to time in negotiated transactions in the over-the-counter market at
fixed prices which may be changed from time to time, at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Selling Shareholders may effect such transactions by
selling the Shares to or through broker/ dealers, and such broker/dealers may
receive compensation in the form of discounts, concessions, or commissions from
the Selling Shareholders and/or the purchasers of the Shares for which such
broker/dealers may act as agent or to whom they may sell, as principal, or both
(which compensation as to a particular broker/ dealer may be in excess of
customary compensation).
The Selling Shareholders and any broker/dealers who act in connection
with the sale of the Shares hereunder may be deemed to be "underwriters" within
the meaning of ss.2(11) of the Securities Acts of 1933, and any commissions
received by them and profit on any resale of the Shares as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
The Company has agreed to indemnify the Selling Shareholders and any securities
broker/dealers who may be deemed to be underwriters against certain liabilities,
including liabilities under the Securities Act as underwriters or otherwise.
<PAGE>
The Company has advised the Selling Shareholders that they and any
securities broker/dealers or others who may be deemed to be statutory
underwriters will be subject to the Prospectus delivery requirements under the
Securities Act of 1933. The Company has also advised each Selling Shareholder
that in the event of a "distribution" of the shares owned by the Selling
Shareholder, such Selling Shareholder, any "affiliated purchasers", and any
broker/ dealer or other person who participates in such distribution may be
subject to Rule 102 under the Securities Exchange Act of 1934 ("1934 Act") until
their participation in that distribution is completed. A "distribution" is
defined in Rule 102 as an offering of securities "that is distinguished from
ordinary trading transactions by the magnitude of the offering and the presence
of special selling efforts and selling methods". The Company has also advised
the Selling Shareholders that Rule 101 under the 1934 Act prohibits any
"stabilizing bid" or "stabilizing purchase" for the purpose of pegging, fixing
or stabilizing the price of the Common Stock in connection with this offering.
Rule 102 makes it unlawful for any person who is participating in a
distribution to bid for or purchase stock of the same class as is the subject of
the distribution. If Rule 102 applies to the offer and sale of any of the
Shares, then participating broker/dealers will be obligated to cease
market-making activities nine business days prior to their participation in the
offer and sale of such Shares and may not recommence market-making activities
until their participation in the distribution has been completed. If Rule 102
applies to one or more of the principal market makers in the Company's Common
Stock, the market price of such stock could be adversely affected. See "RISK
FACTORS".
DESCRIPTION OF COMMON STOCK
The shares of Common Stock offered by this Prospectus are fully paid
and non-assessable. Holders of the Common Stock do not have preemptive rights.
Each stockholder is entitled to one vote for each share of Common stock held of
record by such stockholder. There is no right to cumulate votes for election of
directors. Upon liquidation of the Company, the assets then legally available
for distribution to holders of the Common Stock will be distributed ratably
among such shareholders in proportion to their stock holdings. Holders of Common
Stock are entitled to dividends when, as and if declared by the Board of
Directors out of funds legally available therefor.
EXPERTS
The financial statements as of June 30, 1998 and for each of the two
years in the period ended June 30, 1998 incorporated by reference in this
prospectus from the Company's annual report on Form 10-K have been audited by
Ehrhardt Keefe Steiner & Hottman PC independent auditors, as stated in their
report which is incorporated herein by reference, and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
<PAGE>
GENERAL
The Delaware General Corporation Law provides that the Company may
indemnify its directors and officers against expense and liabilities they incur
to defend, settle or satisfy any civil or criminal action brought against them
as a result of their being or having been Company directors or officers unless,
in any such action, they have acted with gross negligence or willful misconduct.
Officers and Directors are not entitled to be indemnified for claims or losses
resulting from a breach of their duty of loyalty to the Company, for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law or a transaction from which the director derived an improper
personal benefit. Insofar as indemnification for liabilities arising under the
Securities Act of l933 may be permitted to the Company's directors and officers,
the Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of l933, and is, therefore, unenforceable.
No dealer, salesman, or any other person has been authorized to give
any information or to make any representations other than those contained in
this prospectus in connection with this offering and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or the selling shareholders. This prospectus does not constitute
an offer to sell, or a solicitation of any offer to buy, the securities offered
in any jurisdiction to any person to whom it is unlawful to make an offer or
solicitation. Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
not been any change in the affairs of the Company since the date hereof or that
any information contained herein is correct as to any time subsequent to its
date.
All dealers effecting transactions in the registered securities,
whether or not participating in this distribution, may be required to deliver a
prospectus. This is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
