<PAGE> 1
As filed with the Securities and Exchange Commission on July 15, 1997.
Registration No. 333-_______________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FPA MEDICAL MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0604264
------------------------------ ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3636 Nobel Drive, Suite 200
San Diego, California 92122
------------------------------ ------------------------------
(Address of Principal (Zip Code)
Executive Offices)
HEALTHCAP MANAGEMENT GROUP, INC. 1994 STOCK OPTION PLAN
HEALTHCAP MANAGEMENT GROUP, INC. QUALITY CONSULTANT STOCK OPTION PLAN
------------------------------------------------------
(Full title of the plan)
James A. Lebovitz
Senior Vice President, General Counsel and Secretary
FPA Medical Management, Inc.
3636 Nobel Drive, Suite 200
San Diego, California 92122
(619) 453-1000
------------------------------
(Name, address and telephone
number, including area code,
of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Title of Amount Proposed Maximum Proposed Amount of
Securities To To Be Offering Price Maximum Aggregate Registration
Be Registered Registered per Share(1) Offering Price(1) Fee
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 407,256 shares $26.50 $10,792,284 $2,159
par value $0.002
per share
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the average of the high and low prices for the Registrant's Common
Stock as reported on the Nasdaq National Market on July 8, 1997, the latest
practicable date prior to the filing of this Registration Statement.
This Registration Statement shall become effective upon filing in
accordance with Rule 462 under the Securities Act of 1933.
<PAGE> 2
PREFACE
On June 30, 1997, HealthCap, Inc., a Delaware corporation
("HealthCap"), was merged with and into FPA Acquisition Corp., a California
corporation ("Sub") and a wholly owned subsidiary of FPA Medical Management,
Inc., a Delaware corporation (the "Registrant"). Pursuant to an Agreement and
Plan of Merger among HealthCap, Sub and Registrant dated as of June 5, 1997 (the
"Agreement"), certain options (the "Options") issued and outstanding pursuant to
the following employee benefit plans of HealthCap (collectively, the "Plans")
were assumed by the Registrant:
- HealthCap Management Group, Inc. 1994 Stock Option Plan
- HealthCap Management Group, Inc. Quality Consultant Stock Option
Plan
The Registrant will not issue further options to acquire shares of the
Registrant's common stock, par value $0.002 ("Common Stock"), pursuant to the
Plans; rather, the purpose of this Registration Statement is solely to provide
for the registration of shares of Common Stock issuable upon the exercise of the
Options.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
*ITEM 1. Plan Information.
*ITEM 2. Registrant Information and Employee Plan Annual Information.
- -----------------------
* Information required by Part I to be contained in the Section 10(a) prospectus
is omitted from this Registration Statement in accordance with Rule 428 under
the Securities Act of 1933 and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Certain Documents by Reference.
The following documents, filed by the Registrant with the Securities
and Exchange Commission (the "SEC"), are incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K as amended by
Form 10K/A, for the year ended December 31, 1996;
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") since
December 31, 1996; and
(c) The description of the Common Stock set forth in the
Registrant's Registration Statements pursuant to Section 12 of
the 1934 Act, including any amendment or report filed for the
purpose of updating such descriptions.
In addition, all documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then
<PAGE> 3
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
ITEM 4. Description of Securities.
Not applicable.
ITEM 5. Interests of Named Experts and Counsel.
Not applicable.
ITEM 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation may indemnify its officers, directors, employees and
agents (or persons who have served, at the corporation's request, as officers,
directors, employees or agents of another corporation) against expenses,
including attorneys' fees, actually and reasonably incurred by any such person
in connection with the defense of any action or suit by reason of being or
having been an officer, director, employee or agent, if such person shall have
acted in good faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful, except that if such action shall be by or in the right of
the corporation, no such indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation unless and only to the extent that the Court of Chancery of the
State of Delaware, or the court in which the action or suit was brought, shall
determine upon application that, in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
FPA's Certificate of Incorporation, as amended, has the following
indemnification provisions:
"SEVENTH"
A. Each person who was or is a party or is threatened to be made a party to
or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) actually and reasonably incurred or suffered by such person in
connection therewith, and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
that, except as provided in Paragraph B hereof, the Corporation shall indemnify
any such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Article SEVENTH shall be a contract right and
shall include the right to be paid by the Corporation the
<PAGE> 4
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the Delaware General Corporation Law
requires, the payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Article SEVENTH
or otherwise. The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
B. If a claim under Paragraph A of this Article SEVENTH is not paid in full
by the Corporation within thirty days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of providing such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
C. The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article SEVENTH shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
D. The Corporation may maintain insurance, at its expense, to protect itself
and any person who is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any such expense, liability or loss,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General Corporation
Law.
FPA's By-laws similarly provide that FPA shall indemnify its officers and
directors to the fullest extent permitted by the General Corporation Law of
Delaware.
In addition, FPA has entered into individual indemnification agreements (the
"Indemnification Agreements") with each of its directors. The general effect on
directors' liabilities is set forth in the provisions of the Indemnification
Agreements summarized below:
Proceedings Other Than Proceedings by or in the Right of FPA. A director
shall be entitled to the rights of indemnification if, by reason of his position
with FPA, he is, or is threatened to be made, a party to any threatened,
pending, or completed proceeding, other than a proceeding by or in the right of
FPA. In such case, such director shall be indemnified against all expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by
<PAGE> 5
him or on his behalf in connection with such proceeding or any claim, issue or
matter therein, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of FPA and, with respect to any
criminal proceeding, had no reasonable cause to believe his conduct was
unlawful.
Proceedings by or in the Right of Company. Generally, a director shall be
entitled to the rights of indemnification if, by reason of his position with
FPA, he is, or is threatened to be made, a party to any threatened, pending or
completed proceeding brought by or in the right of FPA to procure a judgment in
its favor. In such case, the director shall be indemnified against all expenses
actually and reasonably incurred by him or on his behalf in connection with such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of FPA; provided, however, that if
applicable law so provides, no indemnification against such expenses shall be
made in respect of any claim, issue or matter in such proceeding as to which the
director shall have been adjudged to be liable to FPA unless and to the extent
that the Court of Chancery of the State of Delaware, or the court in which such
proceeding shall have been brought or is pending, shall determine that such
indemnification may be made.
Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provision of the Indemnification Agreements, to the
extent that the director is, by reason of his position with FPA, a party to and
is successful, on the merits or otherwise, in any proceeding, he shall be
indemnified against all expenses actually and reasonably incurred by him or on
his behalf in connection therewith. If the director is not wholly successful in
such proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such proceeding, FPA shall
indemnify the director against all expenses actually and reasonably incurred by
him or on his behalf in connection with each successfully resolved claim, issue
or matter.
ITEM 7. Exemption from Registration Claimed.
Not applicable.
ITEM 8. Exhibits.
See Index to Exhibits.
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
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this 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 this
Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in this Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do
not apply if the informa-
<PAGE> 6
tion required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, 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 Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and each filing of the Plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in this 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 SEC 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 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.
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 City of San Diego, State of California, on July 15, 1997.
FPA MEDICAL MANAGEMENT, INC.
By: /s/ James A. Lebovitz
-------------------------------
James A. Lebovitz
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed as of July 15, 1997 by the following
persons in the capacities indicated. Each person whose signature appears below
hereby authorizes and appoints Seth Flam, Steven M. Lash or James A. Lebovitz,
and any one of them, as his or her attorney-in-fact, to sign and file on his or
her behalf, in the capacities stated below, any and all pre-effective amendments
and post-effective amendments to this Registration Statement.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Seth Flam President, Chief Executive July 15, 1997
---------------------------- Officer and Director
Seth Flam (Principal Executive
Officer)
/s/ Sol Lizerbram Director and Chairman of the July 15, 1997
---------------------------- Board of Directors
Sol Lizerbram
/s/ Steven M. Lash Executive Vice President, July 15, 1997
---------------------------- Chief Financial Officer
Steven M. Lash and Treasurer (Principal
Financial Officer and Accounting
Officer)
/s/ Sheldon Derezin Director July 15, 1997
----------------------------
Sheldon Derezin
/s/ Stephen J. Dresnick Director and Vice Chairman July 15, 1997
---------------------------- of the Board of Directors
Stephen J. Dresnick
/s/ Kevin Ellis Director July 15, 1997
----------------------------
Kevin Ellis
/s/ Michael Feinstein Director July 15, 1997
----------------------------
Michael Feinstein
/s/ Howard Hassman Director July 15, 1997
----------------------------
Howard Hassman
---------------------------- Director
Herbert A. Wertheim
</TABLE>
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Page
- ------ ------- -------------
<S> <C> <C>
*4.1 Registrant's Certificate of --
Incorporation.
**4.2 Registrant's Bylaws. --
5 Opinion of James A. Lebovitz
regarding the legality of
securities to be offered.
23.1 Consent of Deloitte & Touche LLP,
Independent Auditors.
23.2 Consent of Coopers & Lybrand L.L.P.,
Independent Auditors
23.3 Consent of Ernst & Young LLP,
Independent Auditors
23.4 Consent of James A. Lebovitz --
(included as part of Exhibit 5).
24.1 Power of Attorney for Members of
the Board of Directors of
Registrant (included on signature page).
99.1 HealthCap Management Group, Inc. 1994
Stock Option Plan.
99.2 HealthCap Management Group, Inc.
Quality Consultant Stock Option Plan.
</TABLE>
- ---------
* Incorporated by reference from Registrant's Registration Statement on
Form S-1, Registration Number 33-97456.
** Incorporated by reference from Registrant's Annual Report on Form 10-K/A,
filed with the Commission on April 29, 1997 .
<PAGE> 1
EXHIBIT 5
July 15, 1997
FPA Medical Management, Inc.
3636 Nobel Drive, Suite 200
San Diego, California
Re: Registration Statement on Form S-8
Gentlemen:
With reference to the Registration Statement on Form S-8 to be filed by
FPA Medical Management, Inc., a Delaware corporation (the "Company"), with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
relating to 407,256 shares of the Company's common stock, par value $0.002 per
share ("Common Stock"), issuable pursuant to options originally granted by
HealthCap, Inc., a Delaware corporation ("HealthCap"), and assumed by the
Company in respect of the merger of HealthCap with and into FPA Acquisition
Corp., a California corporation and a wholly owned subsidiary of the Company, it
is my opinion that such shares of Common Stock, when issued and sold in
accordance with the terms of the related options, will be legally issued, fully
paid and nonassessable.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5 to the Registration Statement.
Very truly yours,
/s/ James A. Lebovitz
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
FPA Medical Management, Inc. on Form S-8 of our report dated March 21, 1997,
appearing in the Annual Report on Form 10-K/A of FPA Medical Management, Inc.
for the year ended December 31, 1996 and our report dated May 2, 1997, appearing
in the Current Report on Form 8-K/A of FPA Medical Management, Inc. filed on
May 30, 1997.
DELOITTE & TOUCHE LLP
San Diego, California
July 9, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
FPA Medical Management, Inc. on Form S-8 ("Registration Statement") of our
report dated March 15, 1996, on our audits of the consolidated financial
statements of Sterling Healthcare Group, Inc. as of December 31, 1995, and for
the year ended December 31, 1995 and for the period from June 1, 1994 to
December 31, 1994, which is included in the Annual Report on Form 10-K/A.
COOPERS & LYBRAND L.L.P.
Miami, Florida
July 9, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. XXX-XXXXX) of FPA Medical Management, Inc. and in the related Prospectus
of our report dated February 22, 1996, with respect to the 1995 and 1994
consolidated financial statements of AHI Healthcare Systems, Inc. included in
the Current Report on Form 8-K as amended by Form 8-K/A of FPA Medical
Management, Inc. dated May 30, 1997, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Los Angeles, California
July 9, 1997
<PAGE> 1
EXHIBIT 99.1
HEALTHCAP MANAGEMENT GROUP, INC.
1994 STOCK OPTION PLAN
(EFFECTIVE AS OF OCTOBER 19, 1994)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. PURPOSE...................................................1
SECTION 2. DEFINITIONS...............................................1
(a) Board of Directors........................................1
(b) Code......................................................1
(c) Committee.................................................1
(d) Company...................................................1
(e) Disability................................................1
(f) Employee..................................................1
(g) Exercise Price............................................2
(h) Fair Market Value.........................................2
(i) ISO.......................................................2
(j) Nonstatutory Option.......................................2
(k) Option....................................................2
(l) Optionee..................................................2
(m) Plan......................................................2
(n) Service...................................................2
(o) Share.....................................................2
(p) Stock.....................................................2
(q) Stock Option Agreement....................................2
(r) Subsidiary................................................2
SECTION 3. ADMINISTRATION............................................2
(a) Committee Membership......................................2
(b) Committee Procedures......................................2
(c) Committee Responsibilities................................3
(d) Financial Reports.........................................4
SECTION 4. ELIGIBILITY...............................................4
(a) General Rule..............................................4
(b) Ten-Percent Shareholders..................................4
(c) Attribution Rules.........................................4
(d) Outstanding Stock.........................................4
SECTION 5. STOCK SUBJECT TO PLAN.....................................5
(a) Basic Limitation..........................................5
(b) Additional Shares.........................................5
SECTION 6. TERMS AND CONDITIONS OF OPTIONS...........................5
(a) Stock Option Agreement....................................5
(b) Number of Shares..........................................5
(c) Exercise Price............................................5
(d) Withholding Taxes.........................................6
(e) Exercisability............................................6
(f) Term......................................................6
(g) Nontransferability........................................6
(h) Exercise of Options on Termination of Service.............6
(i) No Rights as a Shareholder................................7
(j) Modification, Extension and Assumption of Options.........7
(k) Restrictions on Transfer of Shares........................7
SECTION 7. PAYMENT FOR SHARES........................................7
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(a) General Rule...............................................7
(b) Surrender of Stock.........................................7
(c) Promissory Notes...........................................7
(d) Cashless Exercise..........................................8
SECTION 8. ADJUSTMENT OF SHARES.......................................8
(a) General....................................................8
(b) Reorganizations ...........................................8
(c) Reservation of Rights .....................................8
SECTION 9. LEGAL REQUIREMENTS ........................................9
SECTION 10. NO EMPLOYMENT RIGHTS ......................................9
SECTION 11. DURATION AND AMENDMENTS ...................................9
(a) Term of the Plan ..........................................9
(b) Right to Amend or Terminate the Plan ......................9
(c) Effect of Amendment or Termination ........................9
SECTION 12. EXECUTION ................................................10
</TABLE>
-ii-
<PAGE> 4
HEALTHCAP MANAGEMENT GROUP, INC.
1994 STOCK OPTION PLAN
(EFFECTIVE AS OF OCTOBER 19, 1994)
SECTION 1. PURPOSE.
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such selected persons to
remain in the employ of the Company and to attract new employees with
outstanding qualifications by purchasing Shares of the Company's Common Stock.
The Plan provides for the grant of Options to purchase Shares. Options granted
under the Plan may include Nonstatutory Options as well as incentive stock
options intended to qualify under section 422 of the Internal Revenue Code.
SECTION 2. DEFINITIONS.
(a) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee of the Board of Directors which
is authorized to administer the Plan under Section 3. The Committee shall have
membership composition which enables the Plan to qualify under Rule 16b-3 with
regard to the grant of Options to persons who are subject to Section 16 of the
Securities Exchange Act of 1934.
(d) "Company" shall mean Healthcap Management Group, Inc., a
California corporation.
(e) "Disability" shall means that an Optionee is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment.
(f) "Employee" shall mean (i) any individual who is a common-law
employee of the Company or of a Subsidiary, (ii) a member of the Board of
Directors, or (iii) a consultant who performs services for the Company or a
Subsidiary. Service as a member of the Board of Directors or as a consultant
shall be considered employment for all purposes of the Plan except the second
sentence of Section 4(a).
(g) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
-1-
<PAGE> 5
(h) "Fair Market Value" shall mean the fair market value of a Share,
as determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(i) "ISO" shall mean an employee incentive stock option described in
Code section 422(b).
(j) "Nonstatutory Option" shall mean an employee stock option that is
not an ISO.
(k) "Option" shall mean an ISO or Nonstatutory Option granted under
the Plan and entitling the holder to purchase Shares.
(l) "Optionee" shall mean an individual who holds an Option.
(m) "Plan" shall mean this Healthcap Management Group, Inc. 1994 Stock
Option Plan.
(n) "Service" shall mean service as an Employee.
(o) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 8 (if applicable).
(p) "Stock" shall mean the common stock of the Company.
(q) "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(r) "Subsidiary" shall mean any corporation, of which the Company
and/or one or more other Subsidiaries own not less than 50 percent of the total
combined voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
SECTION 3. ADMINISTRATION.
(a) Committee Membership. The Plan shall be administered by the
Committee, which shall consist of members of the Board of Directors. The members
of the Committee shall be appointed by the Board of Directors. If no Committee
has been appointed, the entire Board of Directors shall constitute the
Committee.
(b) Committee Procedures. The Board of Directors shall designate one
of the members of the Committee as chairperson. The Committee may hold meetings
at such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum
-2-
<PAGE> 6
exists, or acts reduced to or approved in writing by all Committee members,
shall be valid acts of the Committee.
(c) Committee Responsibilities. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
(iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the
Plan;
(iv) To determine when Options are to be granted under the
Plan;
(v) To select the Optionees;
(vi) To determine the number of Shares to be made subject to
each Option;
(vii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price, to determine
whether such Option is to be classified as an ISO or as a Nonstatutory
Option, and to specify the provisions of the Stock Option Agreement
relating to such Option;
(viii) To amend or terminate any outstanding Stock Option
Agreement;
(ix) To determine the disposition of an Option in the event
of an Optionee's divorce or dissolution of marriage;
(x) To correct any defect, supply any omission, or reconcile
any inconsistency in the Plan and any Option;
(xi) To prescribe the consideration for the grant of each
Option under the Plan and to determine the sufficiency of such
consideration; and
(xii) To take any other actions deemed necessary or advisable
for the administration of the Plan.
All decisions, interpretations and other actions of the Committee
shall be final and binding on all Optionees, and all persons deriving their
rights from an Optionee. No member of the Committee shall be liable for any
action that he or she has taken or has failed to take in good faith with respect
to the Plan or any Option.
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(d) Financial Reports. To the extent required by applicable law, and
not less often than annually, the Company shall furnish to Optionees Company
financial statements including a balance sheet regarding the Company's financial
condition and results of operations, unless such Optionees have duties with the
Company that assure them access to equivalent information.
Such financial statements need not be audited.
SECTION 4. ELIGIBILITY.
(a) General Rule. Only Employees, as defined in Section 2(f), shall be
eligible for designation as Optionees by the Committee. In addition, only
individuals who are employed as common-law employees by the Company or a
Subsidiary shall be eligible for the grant of ISOs.
(b) Ten-Percent Shareholders. An Employee who owns more than 10
percent of the total combined voting power of all classes of outstanding stock
of the Company or any of its Subsidiaries shall not be eligible for designation
as an Optionee unless (i) the Exercise Price for an ISO (and a NSO to the extent
required by applicable law) is at least 110 percent of the Fair Market Value of
a Share on the date of grant, and (ii) in the case of an ISO, such ISO by its
terms is not exercisable after the expiration of five years from the date of
grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for his brothers, sisters, spouse, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its shareholders, partners or beneficiaries. Stock
with respect to which such Employee holds an option shall not be counted.
(d) Outstanding Stock. For purposes of Subsection (b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant. "Outstanding stock" shall not include shares
authorized for issuance under outstanding options held by the Employee or by any
other person.
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<PAGE> 8
SECTION 5. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. Shares offered under the Plan shall be
authorized but unissued Shares. The aggregate number of Shares which may be
issued under the Plan (upon exercise of Options) shall not exceed 250,000
Shares, subject to adjustment pursuant to Section 8. The number of Shares which
are subject to Options outstanding at any time under the Plan shall not exceed
the number of Shares which then remain available for issuance under the Plan.
The Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option for
any reason expires or is canceled or otherwise terminated, the Shares allocable
to the unexercised portion of such Option shall again be available for the
purposes of the Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
(c) Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date of grant. To the
extent required by applicable law, the Exercise Price of a Nonstatutory Option
shall not be less than eighty-five percent (85%) of the Fair Market Value of a
Share on the date of grant. Subject to the preceding two sentences, the Exercise
Price under any Option shall be
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<PAGE> 9
determined by the Committee in its sole discretion. The Exercise Price shall be
payable in a form described in Section 7.
(d) Withholding Taxes. As a condition to the exercise of an Option,
the Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Committee may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, an Option shall become exercisable no less
rapidly than the rate of 20% per year for each of the first five years from the
date of grant. Subject to the preceding sentence, the exercisability of any
Option shall be determined by the Committee in its sole discretion.
(f) Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten (10) years from the date of grant, except
as otherwise provided in Section 4(b). Subject to the preceding sentence, the
Committee at its sole discretion shall determine when an Option is to expire.
(g) Nontransferability. No Option shall be transferable by the
Optionee other than by will or by the laws of descent and distribution. An
Option may be exercised during the lifetime of the Optionee only by him or by
his guardian or legal representative. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during his
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.
(h) Exercise of Options on Termination of Service. Each Option shall
set forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the foregoing, and to the extent required by applicable law,
each Option shall provide that the Optionee shall have the right to exercise the
vested portion of any Option held at termination for at least 30 days
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<PAGE> 10
following termination of service with the Company for any reason, and that the
Optionee shall have the right to exercise the Option for at least six months if
the Optionee's service terminates due to death or Disability.
(i) No Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
(j) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price or for other consideration.
(k) Restrictions on Transfer of Shares. Any Shares issued upon
exercise of an Option shall be subject to such rights of repurchase, rights of
first refusal and other transfer restrictions as the Committee may determine.
Such restrictions shall be set forth in the applicable Stock Option Agreement
and shall apply in addition to any restrictions that may apply to holders of
Shares generally.
SECTION 7. PAYMENT FOR SHARES.
(a) General Rule. The entire Exercise Price of Shares issued under the
Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided in Subsections (b), (c)
and (d) below.
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for more than six months
and which are surrendered to the Company in good form for transfer. Such Shares
shall be valued at their Fair Market Value on the date when the new Shares are
purchased under the Plan.
(c) Promissory Notes. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with a full recourse promissory
note executed by the Optionee. The interest rate and other terms and conditions
of such note shall be determined by the Committee. The Committee
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<PAGE> 11
may require that the Optionee pledge his or her Shares to the Company for the
purpose of securing the payment of such note. In no event shall the stock
certificate(s) representing such Shares be released to the Optionee until such
note is paid in full.
(d) Cashless Exercise. To the extent that a Stock Option Agreement so
provides and a public market for the Shares exists, payment may be made all or
in part by delivery (on a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate Exercise Price.
SECTION 8. ADJUSTMENT OF SHARES.
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants under Section 5, (ii) the
number of Shares covered by each outstanding Option or (iii) the Exercise Price
under each outstanding Option.
(b) Reorganizations. In the event that the Company is a party to a
merger or reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization.
(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Shares
subject to an Option. The grant of an Option pursuant to the Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
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<PAGE> 12
SECTION 9. LEGAL REQUIREMENTS.
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
SECTION 10. NO EMPLOYMENT RIGHTS.
No provision of the Plan, nor any Option granted under the Plan, shall
be construed to give any person any right to become, to be treated as, or to
remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason.
SECTION 11. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. In the event that the shareholders fail
to approve the Plan within twelve (12) months after its adoption by the Board of
Directors, any Option grants already made shall be null and void, and no
additional Option grants shall be made after such date. The Plan shall terminate
automatically ten (10) years after its adoption by the Board of Directors and
may be terminated on any earlier date pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may
amend the Plan at any time and from time to time. Rights and obligations under
any Option granted before amendment of the Plan shall not be materially altered,
or impaired adversely, by such amendment, except with consent of the person to
whom the Option was granted. An amendment of the Plan shall be subject to the
approval of the Company's stockholders only to the extent required by applicable
laws, regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Option previously granted under the
Plan.
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SECTION 12. EXECUTION.
To record the adoption of the Plan by the Board of Directors has
caused its authorized officer to execute the same as of __________, 199_.
HEALTHCAP MANAGEMENT GROUP, INC.
By ___________________________________
As Its _______________________________
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<PAGE> 1
EXHIBIT 99.2
HEALTHCAP, INC.
QUALITY CONSULTANT STOCK OPTION PLAN
(EFFECTIVE AS OF NOVEMBER 30, 1994)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1. PURPOSE.....................................................1
SECTION 2. DEFINITIONS.................................................1
(a) "Board of Directors"........................................1
(b) "Code"......................................................1
(c) "Committee".................................................1
(d) "Company"...................................................1
(e) "Consultant"................................................1
(f) "Disability"................................................1
(g) "Exercise Price"............................................1
(h) "Fair Market Value".........................................1
(i) "Option"....................................................1
(j) "Optionee"..................................................1
(k) "Plan"......................................................1
(l) "Share".....................................................1
(m) "Stock".....................................................2
(n) "Stock Option Agreement"....................................2
(o) "Subsidiary"................................................2
SECTION 3. ADMINISTRATION..............................................2
(a) Committee Membership........................................2
(b) Committee Procedures........................................2
(c) Committee Responsibilities..................................2
(d) Financial Reports...........................................3
SECTION 4. ELIGIBILITY.................................................3
(a) General Rule................................................3
(b) Ten-Percent Shareholders....................................3
SECTION 5. STOCK SUBJECT TO PLAN.......................................4
(a) Basic Limitation............................................4
(b) Additional Shares...........................................4
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.............................4
(a) Stock Option Agreement......................................4
(b) Number of Shares............................................4
(c) Exercise Price..............................................4
(d) Withholding Taxes...........................................4
(e) Exercisability..............................................5
(f) Term........................................................5
(g) Nontransferability..........................................5
(h) Exercise of Options on Termination of Service...............5
(i) No Rights as a Shareholder..................................5
(j) Modification, Extension and Assumption of Options...........6
(k) Restrictions on Transfer of Shares..........................6
SECTION 7. PAYMENT FOR SHARES..........................................6
SECTION 8. ADJUSTMENT OF SHARES........................................6
</TABLE>
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<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
(a) General.....................................................6
(b) Reorganizations.............................................6
(c) Reservation of Rights.......................................6
SECTION 9. LEGAL REQUIREMENTS..........................................7
SECTION 10. NO ADDITIONAL RIGHTS........................................7
SECTION 11. DURATION AND AMENDMENTS.....................................7
(a) Term of the Plan............................................7
(b) Right to Amend or Terminate the Plan........................7
(c) Effect of Amendment or Termination..........................7
SECTION 12. EXECUTION........................................................8
</TABLE>
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<PAGE> 4
HEALTHCAP, INC.
QUALITY CONSULTANT STOCK OPTION PLAN
(EFFECTIVE AS OF NOVEMBER 30, 1994)
SECTION 1. PURPOSE.
The purpose of the Plan is to offer selected consultants an
opportunity to acquire a proprietary interest in the success of the Company by
permitting them to purchase Shares of the Company's Common Stock. The Plan
provides for the grant of Options to purchase Shares. Options granted under the
Plan may not include options intended to qualify as incentive stock options
under section 422 of the Internal Revenue Code.
SECTION 2. DEFINITIONS.
(a) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee of the Board of Directors which
is authorized to administer the Plan under Section 3.
(d) "Company" shall mean HealthCap, Inc., a California corporation.
(e) "Consultant" shall mean a consultant who performs managed care,
utilization review services or other similar services for the Company or a
Subsidiary who is not a common-law employee.
(f) "Disability" shall means that an Optionee is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment.
(g) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(h) "Fair Market Value" shall mean the fair market value of a Share,
as determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
(i) "Option" shall mean an option granted under the Plan entitling the
holder to purchase Shares.
(j) "Optionee" shall mean an individual who holds an Option.
(k) "Plan" shall mean this HealthCap, Inc. Quality Consultant Stock
Option Plan.
(l) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 8 (if applicable).
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(m) "Stock" shall mean the common stock of the Company.
(n) "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(o) "Subsidiary" shall mean any corporation, of which the Company
and/or one or more other Subsidiaries own not less than 50 percent of the total
combined voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
SECTION 3. ADMINISTRATION.
(a) Committee Membership. The Plan shall be administered by the
Committee, which shall consist of members of the Board of Directors. The members
of the Committee shall be appointed by the Board of Directors. If no Committee
has been appointed, the entire Board of Directors shall constitute the
Committee.
(b) Committee Procedures. The Board of Directors shall designate one
of the members of the Committee as chairperson. The Committee may hold meetings
at such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) Committee Responsibilities. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
(iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the
Plan;
(iv) To determine when Options are to be granted under the
Plan;
(v) To select the Optionees;
(vi) To determine the number of Shares to be made subject to
each Option;
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<PAGE> 6
(vii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price, the vesting
schedule and to specify the provisions of the Stock Option Agreement
relating to such Option;
(viii) To amend or terminate any outstanding Stock Option
Agreement;
(ix) To determine the disposition of an Option in the event
of an Optionee's divorce or dissolution of marriage;
(x) To correct any defect, supply any omission, or reconcile
any inconsistency in the Plan and any Option;
(xi) To prescribe the consideration for the grant of each
Option under the Plan and to determine the sufficiency of such
consideration; and
(xii) To take any other actions deemed necessary or advisable
for the administration of the Plan.
All decisions, interpretations and other actions of the Committee
shall be final and binding on all Optionees, and all persons deriving their
rights from an Optionee. No member of the Committee shall be liable for any
action that he or she has taken or has failed to take in good faith with respect
to the Plan or any Option.
(d) Financial Reports. To the extent required by applicable law, not
less often than annually the Company shall furnish to Optionees Company
financial statements including a balance sheet regarding the Company's financial
condition and results of operations, unless such Optionees have duties with the
Company that assure them access to equivalent information. Such financial
statements need not be audited.
SECTION 4. ELIGIBILITY.
(a) General Rule. Only Consultants, as defined in Section 2, shall be
eligible for designation as Optionees by the Committee.
(b) Ten-Percent Shareholders. A Consultant who owns more than 10
percent of the total combined voting power of all classes of outstanding stock
of the Company or its parent or any of its Subsidiaries shall not be eligible
for designation as an Optionee unless the Exercise Price for the Option, to the
extent required by applicable law, is at least 110 percent of the Fair Market
Value of a Share on the date of grant.
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<PAGE> 7
SECTION 5. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. Shares offered under the Plan shall be
authorized but unissued Shares. The aggregate number of Shares which may be
issued under the Plan (upon exercise of Options) shall not exceed 2,424,500
Shares, subject to adjustment pursuant to Section 8. The number of Shares which
are subject to Options outstanding at any time under the Plan shall not exceed
the number of Shares which then remain available for issuance under the Plan.
The Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan. (b)
Additional Shares. In the event that any outstanding Option for any reason
expires or is canceled or otherwise terminated, the Shares allocable to the
unexercised portion of such Option shall again be available for the purposes of
the Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8.
(c) Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price. To the extent required by applicable law, the Exercise Price of
an Option shall not be less than eighty-five percent (85%) of the Fair Market
Value of a Share on the date of grant. Subject to the preceding sentence, the
Exercise Price under any Option shall be determined by the Committee in its sole
discretion.
(d) Withholding Taxes. As a condition to the exercise of an Option,
the Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements
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<PAGE> 8
as the Committee may require for the satisfaction of any federal, state, local
or foreign withholding tax obligations that may arise in connection with the
disposition of Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date
(including the date any performance conditions are satisfied) when all or any
installment of the Option is to become exercisable. The Options shall become
exercisable pursuant to the vesting formula specified in the Agreement and in
any event at the end of the sixth year from the date of grant. The
exercisability of any Option shall be determined by the Committee in its sole
discretion, subject to the requirements of applicable law.
(f) Term. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten (10) years from the date of grant. Subject
to the preceding sentence, the Committee at its sole discretion shall determine
when an Option is to expire.
(g) Nontransferability. No Option shall be transferable by the
Optionee other than by will or by the laws of descent and distribution. An
Option may be exercised during the lifetime of the Optionee only by him or by
his guardian or legal representative. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during his
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.
(h) Exercise of Options on Termination of Service. Each Option shall
set forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding the foregoing, and to the extent required by applicable law,
each Option shall provide that the Optionee shall have the right to exercise the
vested portion of any Option held at termination for at least 30 days following
termination of service with the Company for any reason, and that the Optionee
shall have the right to exercise the Option for at least six months if the
Optionee's service terminates due to death or Disability.
(i) No Rights as a Shareholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
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<PAGE> 9
(j) Modification, Extension and Assumption of Options. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price or for other consideration.
(k) Restrictions on Transfer of Shares. Any Shares issued upon
exercise of an Option shall be subject to such rights of repurchase, rights of
first refusal and other transfer restrictions as the Committee may determine.
Such restrictions shall be set forth in the applicable Stock Option Agreement
and shall apply in addition to any restrictions that may apply to holders of
Shares generally.
SECTION 7. PAYMENT FOR SHARES.
The entire Exercise Price of Shares issued under the Plan shall be
payable by cashier's check or money order in lawful money of the United States
of America at the time when such Shares are purchased.
SECTION 8. ADJUSTMENT OF SHARES.
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants under Section 5, (ii) the
number of Shares covered by each outstanding Option or (iii) the Exercise Price
under each outstanding Option.
(b) Reorganizations. In the event that the Company is a party to a
merger or reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization.
(c) Reservation of Rights. Except as provided in this Section 8, an
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Shares
subject to an
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<PAGE> 10
Option. The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 9. LEGAL REQUIREMENTS.
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
SECTION 10. NO ADDITIONAL RIGHTS.
No provision of the Plan, nor any Option granted under the Plan, shall
be construed to give any person any right to become or to remain a Consultant.
SECTION 11. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. The Plan shall terminate automatically
ten (10) years after its adoption by the Board of Directors and may be
terminated on any earlier date pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may
amend the Plan at any time and from time to time. Rights and obligations under
any Option granted before amendment of the Plan shall not be materially altered,
or impaired adversely, by such amendment, except with consent of the person to
whom the Option was granted. An amendment of the Plan shall be subject to the
approval of the Company's stockholders only to the extent required by applicable
laws, regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Option previously granted under the
Plan.
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SECTION 12. EXECUTION.
To record the adoption of the Plan by the Board of Directors as of
November 30, 1994, the Company has caused its authorized officer to execute the
same.
HEALTHCAP, INC.
By /s/ Colleen L. Thomas
-----------------------------------
Colleen L. Thomas
Secretary
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