<PAGE>
================================================================================
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-SB
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
----------------
CLINICOR, INC.
(Name of Small Business Issuer in Its Charter)
NEVADA 88-0309093
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
307 CAMP CRAFT ROAD, SUITE 200, AUSTIN, TEXAS 78746
(Address of Principal Executive Office) (Zip Code)
(512) 327-7524
(Issuer's Telephone Number, Including Area Code)
----------------
Securities to be registered under Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of Class)
================================================================================
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Clinicor, Inc. (together with its predecessor, described below, "Clinicor"
or the "Company") is a full service clinical research organization ("CRO")
serving the pharmaceutical, biotechnology and medical device industries. The
Company designs, manages and monitors clinical trials in North America and
provides clinical and product development services, including data management,
statistical and regulatory consultation services for its clients. The Company
generates substantially all of its revenue from the clinical testing of new
pharmaceutical, device and biotechnology products.
A predecessor company, also named Clinicor, Inc. (the "Predecessor
Company"), was formed as a Texas corporation in September 1992. On February 27,
1995, the Predecessor Company was merged into Pegasus Tax and Financial Planning
Services, Inc., a Nevada corporation which had been formed in December 1993.
The surviving Nevada corporation changed its name to Clinicor, Inc. References
herein to "Clinicor" or the "Company" denote the existing Nevada corporation and
the Predecessor Company. References herein to "Pegasus" denote the Nevada
corporation prior to the merger.
The Company performs and manages clinical trials in locations throughout the
United States and Mexico through the use of its centralized patient recruiting
department and computer database system located in its facility in Austin,
Texas. In addition, the Company has designated three cities as Regional Research
Centers where it maintains full-time clinical management staff (Austin, Denver
and San Antonio).
The Company's principal executive offices are located at 307 Camp Craft
Road, Suite 200, Austin, Texas 78746, and its telephone number is (512) 327-
7524.
BUSINESS
The Company designs, manages and monitors clinical trials throughout North
America and provides clinical and product development services, including data
management and statistical and regulatory consultation services for its clients.
In addition to these services, the Company directly controls study patient
recruitment and performance of clinical trials. Other CROs typically subcontract
these functions to individual investigative sites.
NEW PRODUCT DEVELOPMENT
Before a new pharmaceutical, biotechnology, medical device or diagnostic
product may be marketed, it generally must undergo extensive testing and
regulatory review to determine that it is safe and effective. This development
process consists of two stages, pre-clinical and clinical. In the pre-clinical
stage, the sponsor of the new product conducts laboratory analyses and animal
tests, generally over a one to three year period, to determine the basic
biological activity and chemical processes and safety of the product. Upon
successful completion of the pre-clinical phase, the product undergoes a series
of clinical tests in humans, including healthy volunteers as well as patients
with the targeted disease or condition. These tests are generally longer in
duration, at times averaging from two to six years. In the United States, pre-
clinical and clinical testing must comply with the requirements of Good Clinical
Practices ("GCP") and other standards promulgated by the Food and Drug
Administration ("FDA") and other federal and state governmental authorities. GCP
stipulates procedures which are designed to ensure the quality and integrity of
data obtained from clinical testing and to protect the rights and safety of
clinical subjects.
In the United States, a sponsor must file an Investigational New Drug
Application ("IND"), an Investigational Device Exemption ("IDE") or other filing
with the FDA before the commencement of human testing of an investigational
product. The filing includes pre-clinical testing results and sets forth the
sponsor's plans for conducting human clinical trials. The design of these plans,
also referred to as study "protocols," is critical to the success of the
development effort because the protocol must correctly anticipate the data and
results that the FDA will require before approving the product.
<PAGE>
Human trials usually start on a small scale to assess safety and then expand
to larger trials to test for both safety and efficacy. Trials are usually
grouped into four phases, with multiple trials generally conducted within each
phase.
Phase I. Phase I trials are usually conducted on healthy volunteers,
typically 20 to 80 persons, to develop basic safety data relating to toxicity,
metabolism, absorption and other pharmacological actions.
Phase II. Phase II trials are conducted on a relatively small number of
subjects, typically 100 to 200 patients, who suffer from the product's targeted
disease or condition. Phase II trials offer the first evidence of clinical
efficacy, as well as additional safety data.
Phase III. Phase III trials are typically conducted on a larger
population of several hundred to several thousand patients who suffer from the
targeted disease or condition. Phase III trials are designed to measure safety
and efficacy on a large scale as well as side effects. Before granting an
approval to market, the FDA generally requires completion of two pivotal, multi-
site Phase III trials to demonstrate and confirm safety and efficacy.
Phase IV. As a condition of granting marketing approval, the FDA may
require that a sponsor continue to conduct additional clinical trials, known as
Phase IV trials, to monitor long-term risks and benefits, study different dosage
levels, or evaluate different safety and efficacy parameters in target patient
populations. In addition, Phase IV trials may be necessary to support a
sponsor's promotional claims.
Clinical trials often represent the most expensive and time-consuming part
of the overall development process. The information generated during these
trials is critical for gaining marketing approval from the FDA or other
regulatory agencies. After the successful completion of Phase III trials, the
sponsor of a new product must submit a New Drug Application ("NDA") or other
application to the FDA. This application is a comprehensive filing that
includes, among other things, the results of all pre-clinical and clinical
studies, information about the product's composition, and the sponsor's plans
for producing, packaging and labelling the product.
A clinical trial is usually a scientific experiment to test the efficacy and
safety of an investigational product. It follows a detailed plan as documented
in the protocol. The investigational product is administered to patients who
meet specific inclusion/exclusion criteria. Typically, the investigational
product is compared to another approved product and/or a placebo. Usually,
neither the patient nor the physician investigator knows which patients receive
which substance, although that information is readily available if needed. The
protocol will specify when, how often and how much of the study product a
patient will receive, how often they will be examined by the investigator during
the study (i.e., the number and timing of patient visits) and what measurements
and assessments will be made and recorded at each patient visit. The resulting
data is recorded in source documents and transcribed into Case Report Forms
("CRFs"). The recorded data is monitored to verify its accuracy and consistency
with source documents. The data from the CRFs is entered into a computer
database for biostatistical analysis.
CLINICAL TRIAL MANAGEMENT MODEL
Traditionally, clinical trials have been managed by pharmaceutical
companies' in-house staffs of Clinical Research Associates ("CRAs") who in turn
subcontract (outsource) the actual performance of the trials to physician
investigators serving as investigational sites. The investigators enroll
qualified patients into studies from their practices one-by-one. Administrative
tasks are handled by a clinical coordinator, typically a nurse who has
additional duties within the physician's practice.
The function of CRAs is primarily to monitor compliance of the investigative
site with the protocol and adherence to GCP. If investigational sites fail to
produce qualified patients, they must be replaced
2
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with additional sites to reach overall and minimal per site patient recruitment
quotas in order to maintain statistical validity.
The major full-service CROs have organized themselves along the same lines
as pharmaceutical companies. They employ the same traditional methodology of
subcontracting the actual performance of the clinical trials to investigational
sites.
The Company's model removes the physician investigator as the primary source
of study patients. Rather than relying on the patient population of one
investigator in a particular city, the Company's approach is to recruit from all
of the potential study patients in an entire geographic area. Patients are
recruited via advertising, referral programs and other means. Potential
patients call the Company's centralized patient recruiting department where
trained personnel prescreen, schedule and capture relevant data on each patient
included in the Company's customized patient database system.
Whenever possible, the Company assembles a number of patients to enter a
study in group clinics which are generally scheduled on evenings and weekends.
This approach works particularly well for studies involving chronic medical
conditions. A group clinic may include from as few as ten to as many as 300
patients. The Company contracts with a physician to serve as the independent
investigator, and the Company staffs the clinic with experienced, part-time
Company employees who perform all of the study coordinator functions.
SERVICES
The Company's services include clinical trials management, clinical data
management, biostatistical analysis and product registration services. The
Company will provide these products separately or as an integrated, "turn-key"
package. Services from each of these categories can be utilized for the
development and preparation of a variety of regulatory filings, e.g., New Drug
Applications ("NDA"), Premarket Approval Applications ("PMA"), and Product
License Applications ("PLA").
Clinical Trials Management Services. The Company offers complete services
-----------------------------------
for the design, placement, performance, recruitment and management of clinical
trial programs. The Company has performed services in connection with trials in
many therapeutic areas. The Company has the ability to examine a product's
existing pre-clinical and clinical data for the purpose of designing protocols
for clinical trials in order to demonstrate the product's safety and efficacy in
the treatment of the targeted disease.
The Company manages every aspect of trials in Phases I through IV, including
design of operations manuals, identification and recruitment of trial
investigators, initiation of sites, recruitment of patients, site monitoring
visits to determine compliance with protocol procedures, adherence to GCP and
proper collection of data, data management, interpretation of trial results and
report preparation. The Company's current projects involve Phase I, II, III and
IV clinical trials.
The Company assists clients with one or more of the following steps of
clinical trials:
. Study Protocol. The protocol defines the disease and treatment the study
seeks to examine and the statistical tests that will be conducted. Accordingly,
the protocol defines: (i) the targeted patient population; (ii) the frequency
and type of laboratory and clinical measures that are to be recorded and
analyzed; (iii) the number of patients required to produce a statistically valid
result; (iv) the period of time over which the measurements must be recorded;
and (v) the frequency and dosage of drug or other product administration.
. Case Report Forms. Once the study protocol has been finalized, special
forms for recording study-specific data must be developed. These forms are
called Case Report Forms ("CRFs"). Study data are transcribed onto CRFs from
original source documents. The CRF for one patient in a given study may consist
of as many as 100 pages or more.
3
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. Site and Investigator Recruitment. The drug or other product is
administered to patients by investigators at hospitals, clinics or other
locations, referred to as sites. Potential investigators may be identified by
the sponsor or the CRO. The investigators are then solicited to participate in
the study. Generally, the Company locates properly qualified investigators who
contract directly with the Company. Most studies with which the Company is
involved are performed at Company-managed sites.
. Patient Enrollment. One of the Company's main competitive strengths is
its ability to quickly and efficiently recruit patients using mass marketing
techniques and a centralized patient management system. Patients are
prescreened for eligibility by trained personnel using an on-line computer
scheduling and database system which captures relevant data for each patient.
Prospective patients are required to review information about the study drug or
other product and possible side effects and sign an informed consent to record
their knowledge and acceptance of potential risks. Patients also undergo a
medical examination performed by the investigator to determine whether they meet
the requirements of the study protocol. Patients then receive the study drug or
other product and are examined by the investigator as specified by the study
protocol.
. Study Monitoring and Data Collection. As patients are examined and
tests are conducted in accordance with the study protocol, data are recorded on
source documents and laboratory reports and are then transcribed onto CRFs. The
data are collected from study sites by specially trained CRAs. CRAs visit sites
regularly to ensure that the CRFs are completed correctly and are consistent
with the underlying source documents and that all data specified in the protocol
are collected. The CRAs take completed CRFs to the study coordinating site,
where the CRFs are reviewed for consistency and accuracy before the information
is entered into an electronic database.
. Report Writing. The results of statistical analysis of data collected
during the trial, together with other clinical data, are included in a final
report generated for inclusion in regulatory documents.
. Medical Affairs. Throughout the course of a clinical trial, the Company
may provide various medical research and services, including medical monitoring
of clinical trials, interpretation of clinical trial results, and preparation of
clinical study reports.
Clinical Data Management and Biostatistical Services. The Company's data
----------------------------------------------------
management professionals assist in the design of protocols and CRFs, as well as
training manuals and training sessions for investigational staff, to ensure that
data are collected in an organized and consistent format. Databases are
designed according to the analytical specifications of the project and the
particular needs of the client. Prior to data entry, the Company's personnel
screen CRFs for errors, omissions and other deficiencies. The Company provides
clients with data abstraction, data review and coding, data entry, database
verification and editing, and problem data resolution.
The Company's biostatistics professionals provide biostatistical consulting,
database design, data analysis, statistical reporting, and assistance in all
phases of drug development. These professionals develop and review protocols,
design appropriate analysis plans and design report formats to address the
objectives of the study protocol as well as the client's individual objectives.
Working with the programming staff, biostatisticians perform appropriate
analyses and produce tables, graphs, listings and other applicable displays of
results according to the analysis plan. Biostatisticians assist clients before
panel hearings at the FDA.
These services are utilized by clients to process data that have previously
been collected by either the client itself or the Company as part of a distinct
phase in the drug development process. The Company believes that its data
management and biostatistical services capabilities can be utilized by a client
more effectively when packaged as part of its total clinical trials management
services. This permits a faster and less costly clinical trial process, because
the data are collected and analyzed more rapidly. The Company emphasizes its
"turn-key" approach in its marketing efforts.
4
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Product Registration Services. The Company provides comprehensive product
-----------------------------
registration services throughout the United States. The Company provides
regulatory strategy formulation, document preparation, and Good Manufacturing
Practice consultation. The Company also acts as liaison with the FDA and other
regulatory agencies. Although these services have not generated material
revenue to date, the Company offers them in order to provide a full range of
services for its clients.
The Company works closely with clients to devise regulatory strategies and
comprehensive product development programs. The Company's scientific and
regulatory affairs experts review existing published literature, assess the
scientific background of a product, assess the competitive and regulatory
environment, identify deficiencies and define the steps necessary to obtain
registration in the most expeditious manner. Through this service, the Company
helps its clients determine the feasibility of developing a particular product
or product line.
The Company's scientific and regulatory affairs professionals have
experience in the analysis, preparation and submission of FDA regulatory
documents covering a wide range of products, including drugs and over-the-
counter products. The Company also offers the preparation of regulatory
documentation for submission to regulatory authorities.
CLIENTS
The Company has performed or is currently performing studies for 22
different clients, including five of the 15 largest pharmaceutical companies in
the world. The Company's clients include pharmaceutical companies based in the
United States, Great Britain, Ireland, Japan, Mexico and Switzerland. All of
the Company's foreign-based clients have operations in the United States. The
Company's revenues have historically been derived primarily from services
performed in the United States. During the fourth quarter of 1995, the Company
began work on an estimated $400,000 study in Mexico.
The Company derives a significant portion of its revenue from a relatively
limited number of projects or clients. Concentrations of business in the CRO
industry are typical, and the Company is likely to experience such
concentrations in the remainder of 1996 and future years. In 1994, three
clients each accounted for more than 10% of the Company's total revenue, or 37%,
32% and 24%, respectively. In 1995, four clients each accounted for more than
10% of the Company's total revenue, or 27%, 19%, 12% and 11%, respectively. For
the six months ended June 30, 1996, four clients each accounted for more than
10% of the Company's total revenue, or 24%, 17%, 14% and 12%. The Company's
total revenue for 1994, 1995 and the six months ended June 30, 1996, were
provided from seven, 16 and 12 separate clients, respectively.
COMPETITION
The Company primarily competes against in-house departments of
pharmaceutical companies, other full service CROs, and, to a lesser extent,
universities and teaching hospitals. Some of these competitors have
substantially greater capital, technical and other resources than the Company.
CROs generally compete on the basis of previous experience, medical and
scientific expertise in specific therapeutic areas, quality of contract
research, ability to organize and manage large-scale trials on a global basis,
ability to manage large, complex medical databases, ability to provide
statistical and regulatory services, ability to recruit investigators, ability
to integrate information technology with systems to improve the efficiency of
contract research, an international presence, financial viability and price.
The Company believes that it competes favorably in these areas with the
exception of a significant international presence.
The CRO industry is highly fragmented, with participants ranging from
several hundred small, limited-service providers to several large, full-service
CROs with global operations. Some of the largest CROs are Corning Lab Services,
Inc. (a subsidiary of Corning, Inc.),
5
<PAGE>
Quintiles Transnational Corporation, Parexel International Corporation,
Pharmaceutical Product Development, Inc. and ClinTrials Research, Inc. The
trend toward CRO industry consolidation has resulted in heightened competition
among the larger CROs for clients and acquisition candidates. In addition,
consolidation within the pharmaceutical industry as well as a trend toward the
concentration by pharmaceutical companies of outsourcing among fewer CROs has
led to heightened competition for CRO contracts.
GOVERNMENT REGULATION
The clinical investigation of new pharmaceutical, biotechnology and medical
device products is highly regulated by governmental agencies. The purpose of
federal regulations is to ensure that only those products which have been proven
to be safe and effective are made available to the public. The FDA has set
forth regulations and guidelines that pertain to applications to initiate trials
of products, approval and conduct of studies, report and record retention,
informed consent, applications for the approval of new products, and post-
marketing requirements. Pursuant to FDA regulations, CROs that assume
obligations of a drug sponsor are required to comply with applicable FDA
regulations and are subject to regulatory action for failure to comply with such
regulations. In the United States, the historical trend has been in the
direction of increased regulation by the FDA, although the FDA in the last three
years has made some modifications to expedite certain processes and recent
legislative initiatives have been proposed to accelerate that trend. The
Company believes that many pharmaceutical, biotechnology and medical device
companies do not have the staff and/or the available expertise to comply with
all of the regulations and standards, and this has contributed and will continue
to contribute to the growth of the CRO industry.
The services provided by the Company are ultimately subject to FDA
regulation in the United States and comparable agencies in other countries,
although the level of applicable regulation in other countries is generally less
comprehensive than regulation present in the United States. The Company is
obligated to comply with FDA regulations governing such activities as selecting
qualified investigators, obtaining required forms from investigators, recruiting
patients, verifying that patient informed consent is obtained, monitoring the
validity and accuracy of data, verifying drug/device accountability, and
instructing investigators to maintain records and reports. The Company must
also maintain records for each study for specified periods for inspection by the
study sponsor and the FDA. The FDA has the authority to audit the Company's
compliance with Federal regulations and guidelines, and if such audits document
that the Company has failed to adequately comply, it could have a material
adverse effect on the Company. In addition, the Company's failure to comply
with applicable regulations could possibly result in termination of ongoing
research or the disqualification of data, either of which could have a material
adverse effect on the Company, including, without limitation, damage to the
Company's reputation.
INTELLECTUAL PROPERTY
The Company has registered CLINICOR(R) as a service mark with the United
States Patent and Trademark Office.
EMPLOYEES
At September 30, 1996, the Company had 145 employees, 40 of which were full-
time.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company is a contract research organization ("CRO") providing Phase I
through Phase IV clinical trials management, monitoring, regulatory consulting
and data management services for the pharmaceutical, biotechnology and medical
device industries. Most of the Company's competitors provide study monitoring,
consulting and data management services. Clinicor provides these services in
addition to managing clinical trials, including recruitment of eligible
patients. The Company commenced operations in September 1992 and has achieved
its growth through internal development.
The Company's contracts for services generally vary from three months to
over one year in duration. A portion of the contract fee is typically required
to be paid when the contract is initiated, with the balance payable in
installments over the contract's duration. The installment payments are
typically performance-based, relating payment to previously negotiated events
such as patient enrollment, patient completion or delivery of databases.
Clients generally may terminate or delay the performance of a contract,
potentially causing periods of excess capacity and reductions in service revenue
and net income. Trials may be terminated or delayed for a variety of reasons,
including unexpected or undesired results, production problems resulting in
shortages of the product or delays in supplying the product, adverse patient
reaction to the product, or the client's decision to de-emphasize a particular
trial. If a trial is terminated, the contract generally provides for a short
continuation or wind-down period, as the Company performs required investigator
site closure and data retrieval. The Company's contracts generally require
clients to make all scheduled payments through the termination date; therefore,
the Company is typically entitled to all amounts owed for work performed through
the notice of termination and all costs associated with termination of the
study. In addition, contracts may require the payment of a separate, early
termination fee, the amount of which usually declines as the trial progresses.
Revenue for contracts is recognized on a percentage of completion basis as
work is performed. Contracts are generally based on a fixed price per patient
plus either fixed or variable fees for additional service components such as
monitoring, project management, advertising, travel, data management, consulting
and report writing. Payments received on contracts in excess of amounts earned
are recorded as deferred revenue.
The Company's backlog consists of anticipated service revenue from clinical
trials and other services that have not been completed. To qualify as
"backlog," anticipated projects must be represented by contracts or letter
agreements or must be projects for which the Company has commenced a significant
level of effort based upon client commitment and approval of a written budget.
Once work commences, service revenue is recognized over the life of the
contract. At December 31, 1994 and 1995, the Company's backlog was
approximately $5 million and $10 million, respectively. The Company's backlog
at June 30, 1995 and 1996 was approximately $10 million. Included in each of
the above backlog balances is an approximate $3 million contract that was
scheduled to begin in June 1995, but which has been postponed indefinitely by
the sponsor. The Company believes that its backlog as of any date is not
necessarily a meaningful predictor of future results, and no assurances can be
given that the Company will fully realize all of its backlog as service revenue.
Clinical costs are direct expenses of performing studies and include
investigator fees, patient stipends, laboratory costs, advertising costs and
other direct costs. Selling, general and administrative expenses consist
primarily of compensation and benefits for study management, selling, general
and administrative personnel, professional services, facility costs for the
Company's corporate headquarters, equipment, information systems and other
overhead items.
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RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, certain items
included in the Company's audited statements of operations for the years ended
December 31, 1994 and 1995 and its unaudited statements of operations for the
six months ended June 30, 1995 and 1996. The trends illustrated in the
following table may not be indicative of future results.
<TABLE>
<CAPTION>
Year Ended December 31, Six Months Ended June 30,
----------------------------------------- ------------------------------------------------
1994 1995 1995 1996
------------------- -------------------- ------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Service Revenue $2,301,455 100.0% $ 2,005,582 100.0% $1,043,976 100.0% $1,557,534 100.0%
---------- ----------- ---------- ----------
Operating costs and expenses
Clinical costs 1,348,606 58.6 1,221,701 60.9 509,638 48.8 643,957 41.3
Selling, general and administrative 1,201,797 52.2 1,872,597 93.4 824,735 78.9 1,041,010 66.8
Depreciation and amortization 49,191 2.1 60,217 3.0 27,558 2.6 51,072 3.2
---------- ----------- ---------- ----------
Total operating costs and expenses 2,599,594 113.0 3,154,515 157.3 1,361,931 130.3 1,736,039 111.3
---------- ----------- ---------- ----------
Loss from operations (298,139) -13.0 (1,148,933) -57.3 (317,955) -30.4 (178,505) -11.4
---------- ----------- ---------- ----------
Interest expense (21,496) -0.9 (28,293) -1.4 (9,671) -0.9 (18,911) -1.2
Loss from discontinued operations (32,500) -1.4 0 0.0 0 0.0 0 0.0
---------- ----------- ---------- ----------
Net loss $ (352,135) -15.3 $(1,177,226) -58.7 $ (327,626) -31.3 $ (197,416) -12.6
========== =========== ========== ==========
</TABLE>
Six Months Ended June 30, 1996 Compared to the Six Months Ended June 30, 1995
- -----------------------------------------------------------------------------
Service revenue increased $514,000, or 49%, from $1,044,000 to $1,558,000
for the six months ended June 30, 1995 and 1996, respectively. The increase is
attributable to an increase in the volume of clinical trials, data management
and consulting engagements. Direct costs increased from $510,000 for the six
months ended June 30, 1995 to $644,000 for the six months ended June 30, 1996,
an increase of $134,000, or 26%. The increase in direct costs is consistent
with the increase in service revenue between the same periods.
Selling, general and administrative expense increased $216,000, or 26%, from
$825,000 for the six months ended June 30, 1995 to $1,041,000 for the six months
ended June 30, 1996. The increase is attributable to approximately equal
increases in personnel and marketing costs. The Company has historically added
personnel in excess of its current operating needs and has invested in business
promotion activities in order to build its client base and study contract
backlog. The Company anticipates that this trend will continue over the next
year. It is the Company's policy to expense such costs as they are incurred.
Depreciation and amortization expense increased $23,000, or 82%, from
$28,000 for the six months ended June 30, 1995 to $51,000 for the six months
ended June 30, 1996. The Company invested $129,000 in equipment and computer
systems for the six months ended June 30, 1996 as compared to $29,000 for the
six months ended June 30, 1995. These additions were primarily to the Company's
computerized information systems.
Interest expense increased $9,200, or 95%, from $9,700 for the six months
ended June 30, 1995 to $18,900 for the six months ended June 30, 1996. The
increase is primarily due to interest incurred on loans from shareholders that
were initiated in the third quarter of 1995, partially offset by the continued
reduction of interest incurred due to the diminishing outstanding balances of
capitalized lease obligations.
Year Ended December 31, 1995 Compared to the Year Ended December 31, 1994
- -------------------------------------------------------------------------
Service revenue decreased $295,000, or 13%, from $2,301,000 to $2,006,000
for the years ended December 31, 1994 and 1995, respectively. The decrease is
attributable to the indefinite postponement of a $3,000,000 study that was
originally scheduled to begin June 1995. The start of this study has not
8
<PAGE>
been rescheduled by the sponsor. Direct costs decreased from $1,349,000 for the
year ended December 31, 1994 to $1,222,000 for the year ended December 31, 1995,
a decrease of $127,000, or 9%. The decrease in direct costs is due primarily to
the decrease in service revenue between the same periods. Direct costs, as a
percentage of service revenue, increased from 59% for the year ended December
31, 1994 to 61% for the year ended December 31, 1995.
Selling, general and administrative expense increased $671,000, or 56%, from
$1,202,000 for the year ended December 31, 1994 to $1,873,000 for the year ended
December 31, 1995. The increase is primarily attributable to personnel
additions. The Company added business development personnel and other staff to
enable it to solicit and service increased levels of revenue. Other factors
related to the increase in selling, general and administrative expense between
years are increases in professional fees, marketing expenses and shareholder
relations expenses. In connection with its merger with Pegasus, the Company
became a non-reporting public company in February 1995. The Company anticipates
that it will continue to incur future costs related to being a publicly held
entity.
Depreciation and amortization expense increased $11,000, or 22%, from
$49,000 for the year ended December 31, 1994 to $60,000 for the year ended
December 31, 1995. The Company invested $55,000 in equipment and computer
systems for the year ended December 31, 1995 as compared to $143,000 for the
year ended December 31, 1994. These additions were primarily to the Company's
computerized information systems.
Interest expense increased $7,000, or 32%, from $21,000 for the year ended
December 31, 1994 to $28,000 for the year ended December 31, 1995. The increase
is due to interest incurred on loans from shareholders that were initiated in
the third quarter of 1995, partially offset by the continued reduction of
interest incurred due to the diminishing outstanding balances of capitalized
lease obligations.
In connection with the February 27, 1995 merger with Pegasus, an inactive,
non-reporting, publicly held Nevada corporation, the Company recognized a loss
from discontinued operations of $32,500 as of December 31, 1994, to reflect
Pegasus' pre-merger results from discontinued operations for the year then
ended.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations and growth with
proceeds from private placements of equity securities, advances from
shareholders and borrowing arrangements under capital lease obligations and
lines of credit. Investing activities have consisted of capital expenditures
for medical and office equipment and leasehold improvements and various prepaid
expense items.
In February 1995, immediately prior to its merger with the Company, Pegasus
issued 750,000 shares of Common Stock for total proceeds of $750,000. Effective
September 15, 1995, the Company initiated a private placement offering, which
terminated on February 16, 1996. In connection with the offering, the Company
sold 573,400 Units consisting of shares of Common Stock and Warrants, for gross
proceeds of $1,433,500, which provided the Company net proceeds of $1,273,538
after deducting related offering expenses and commissions.
On July 15, 1996, the Company sold 3,500 shares of Preferred Stock to an
institutional investor for gross proceeds of $3,500,000, which provided the
Company net proceeds of approximately $3,100,000 after deducting related
issuance expenses of approximately $400,000. The attached proforma balance
sheet as of June 30, 1996, presents the Company's financial condition as of that
date as adjusted for the effect of the preferred stock sale (see "Financial
Statements"). Subsequent to the preferred stock sale, the Company had a balance
of cash and cash equivalents of approximately $3,500,000, and it had
approximately $3,400,000 of working capital. The Company believes its available
cash and cash equivalents will be sufficient to meet its foreseeable cash needs.
9
<PAGE>
In September 1996, the Company obtained a one-year $1,000,000 secured line
of credit with an independent financial institution.
Although the Company is not engaged in any acquisition discussions at this
time, the Company will consider acquiring domestic and international businesses
offering services similar or complementary to those offered by the Company. Any
such acquisitions may require additional external financings, and in such event
the Company may from time to time seek to obtain funds from public or private
issuances of equity or debt securities. There can be no assurances that the
Company will pursue acquisitions or that such financings for any such
acquisitions will be available on terms acceptable to the Company.
INCOME TAXES
Prior to the merger, Clinicor was an S Corporation, as defined by the
Internal Revenue Code ("Code"), for income tax reporting purposes. Pegasus was a
C Corporation, as defined by the Code. Subsequent to the merger, the Company is
a C Corporation for income tax reporting purposes. In accordance with the Code,
Clinicor's premerger accumulated net operating loss of approximately $500,000
will not be available to the Company as a carry-forward to offset future taxable
income.
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109") issued by the Financial Accounting Standards Board ("FASB"), under which
deferred tax assets and liabilities are provided on differences between
financial reporting and taxable income using the enacted tax rates.
Under SFAS 109, deferred tax assets may be recognized for temporary
differences that will result in deductible amounts in future periods. A
valuation allowance is recognized, if on the weight of available evidence, it is
more likely than not that some portion or all of the deferred tax asset will not
be realized.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS 121") issued by the FASB, is effective for financial statements for
fiscal years beginning after December 15, 1995. The standard establishes new
guidelines regarding when impairment losses on long-lived assets, which include
plant and equipment, certain identifiable intangible assets, and goodwill,
should be recognized and how impairment losses should be measured. The Company
does not expect adoption to have a material effect on its financial position or
results of operations.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" ("SFAS 123") issued by the FASB, is effective for specific
transactions entered into after December 15, 1995. The disclosure requirements
of SFAS 123 are effective for financial statements for fiscal years beginning no
later than December 15, 1995. The new standard established a fair value method
of accounting for stock-based compensation plans and for transactions in which
an entity acquires goods or services from non-employees in exchange for equity
instruments. The Company does not expect adoption to have a material effect on
its financial position or results of operations.
ITEM 3. DESCRIPTION OF PROPERTY
Clinicor currently leases approximately 5,900 square feet for its principal
offices in Austin, Texas. This lease expires in 1998, when the Company has an
option to renew the lease for an additional five years at the then current
market rate.
In October 1996, in order to accommodate the growth in its business and
operations, the Company leased approximately 15,200 square feet for a five-year
term in Austin, Texas. Upon completion of build-out, the Company will move its
corporate offices to this location. In connection with the lease the Company
has also obtained a right of first refusal on an adjacent 5,000 square feet.
Management intends to sublease the space it currently occupies through the
remaining term and believes that it will be able to do so. The Company believes
it will not encounter any unusual difficulty obtaining additional leased office
space at acceptable terms and rates if required for future expansion.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of October 21, 1996, information with
respect to the beneficial ownership of the Company's outstanding Common Stock by
(i) each director and executive officer of the Company, (ii) all directors and
executive officers of the Company as a group, and (iii) each shareholder who was
known by the Company to be the beneficial owner of more than 5% of the Company's
outstanding Common Stock. Pursuant to the beneficial ownership rules under the
Securities Exchange Act of 1934, as amended, each named person and all directors
and executive officers as a group are deemed to be the beneficial owners of
securities that may be acquired within 60 days of October 21, 1996 through the
exercise of options or warrants. Accordingly, the number of shares and
percentages set forth opposite each shareholder's name in the table below
assumes the exercise of all such options and warrants. However, the number of
shares of Common Stock issuable upon exercise by any given shareholder are not
included in calculating the percentage of Common Stock beneficially owned by any
other shareholder. Except as otherwise indicated, the persons or entities
listed below have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them.
10
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Shares Beneficially Percent of
Beneficial Owner Owned Class
- ------------------- ------------------- -----------
<S> <C> <C>
The Oracle Group 2,353,033/(1)/ 36.7%
712 Fifth Avenue, 45th Floor
New York, New York 10019
Robert S. Sammis 1,007,950/(2)/ 24.6%
307 Camp Craft Rd., #200
Austin, Texas 78746
O'Donnell Family Limited Partnership 828,400/(3)/ 20.3%
307 Camp Craft Rd., #200
Austin, Texas 78746
Robert K. Williams, III 469,506/(4)/ 11.3%
153 Kingswood Circle
Danville, California 94506
Randolph J. Haag 273,881/(5)/ 6.5%
359 Jacaranda
Danville, California 94506
Thomas P. O'Donnell 307,950/(6)/ 7.5%
307 Camp Craft Rd., #200
Austin, Texas 78746
Arthur P. Haag 153,000/(7)/ 3.7%
11747 Quail Creek Drive
Houston, Texas 77070
Robert M. Day, Ph.D. 10,000/(8)/ 0.2%
307 Camp Craft Rd., #200
Austin, Texas 78746
Susan M. Georgen-Saad -0- 0%
307 Camp Craft Rd., #200
Austin, Texas 78746
Stuart Weisbrod, Ph.D. 10,000 0.2%
712 Park Avenue, 45th Floor
New York, New York 10019
Zola P. Horovitz, Ph.D. -0- 0%
30 Philip Drive
Princeton, NJ 08540
All Directors and Executive Officers as 1,197,617/(9)/ 28.7%
a group (7 persons)
</TABLE>
11
<PAGE>
____________________________
(1) "The Oracle Group," as used herein, refers to the following funds: Oracle
Partners, L.P., Quasar International Partners, C.V., Oracle Institutional
Partners, L.P. and GSAM Oracle Fund, Inc. The shares listed include
2,333,333 shares that are issuable to The Oracle Group pursuant to The
Oracle Group's option to convert 3,500 shares of 8% Convertible Preferred
Stock to the Company's Common Stock. Larry N. Feinberg is the Managing
General Partner of Oracle Partners, L.P. and Oracle Institutional Partners,
L.P. Oracle Investment Management, Inc., which is owned by Mr. Feinberg,
acts as the investment manager to Quasar International Partners, L.P. and
GSAM Oracle Fund, L.P. Mr. Feinberg may be deemed to beneficially own the
shares owned by The Oracle Group.
(2) Mr. O'Donnell and Mr. Sammis have entered into agreements with each of
Drs. Dell, Ramsdell and Shulman, pursuant to which Messrs. Sammis and
O'Donnell are jointly entitled to direct the manner in which the aggregate
291,283 shares owned by Drs. Dell, Ramsdell and Shulman shall be voted.
Mr. Sammis may therefore be deemed to beneficially own these shares. Also
includes 16,667 shares issuable to Mr. Sammis pursuant to immediately
exercisable options.
(3) Ms. Kristina Breen O'Donnell is the sole officer and director of the
general partner of the O'Donnell Family Limited Partnership and has voting
and dispositive power with respect to the 828,400 shares owned by the
Partnership. Ms. O'Donnell may therefore be deemed to beneficially own
these shares.
(4) Includes (i) 109,400 shares held by Guarantee and Trust Co. FBO Robert K.
Williams III Sep/IRA, as to which Mr. Williams has voting and dispositive
power and (ii) 51,606 shares issuable to Mr. Williams pursuant to
immediately exercisable sales agent warrants.
(5) Includes (i) 50,000 shares issuable to Mr. Randolph J. Haag pursuant to
immediately exercisable options and (ii) 51,606 shares issuable to Mr. Haag
pursuant to immediately exercisable sales agent warrants.
(6) Mr. O'Donnell and Mr. Sammis have entered into agreements with each of
Drs. Dell, Ramsdell and Shulman, pursuant to which Messrs. Sammis and
O'Donnell are jointly entitled to direct the manner in which the aggregate
291,283 shares owned by Drs. Dell, Ramsdell and Shulman shall be voted.
Mr. O'Donnell may therefore be deemed to beneficially own these shares.
Also includes 16,667 shares issuable to Mr. O'Donnell pursuant to
immediately exercisable options.
(7) Includes 50,000 shares issuable to Mr. Arthur P. Haag pursuant to
immediately exercisable options.
(8) Includes 10,000 shares issuable to Dr. Robert M. Day pursuant to
immediately exercisable options.
(9) Includes (i) 291,283 shares owned by Drs. Dell, Ramsdell and Shulman, as
to which Messrs. Sammis and O'Donnell have voting power; (ii) 16,667 shares
issuable to Robert S. Sammis pursuant to immediately exercisable options;
(iii) 16,667 shares issuable to Thomas P. O'Donnell pursuant to immediately
exercisable options; (iv) 50,000 shares issuable to Arthur P. Haag pursuant
to immediately exercisable options; and (v) 10,000 shares issuable to Dr.
Robert M. Day pursuant to immediately exercisable options.
In any election of directors, the holders of the Preferred Stock, voting
separately as a class, are entitled to elect that number of directors as is
proportionate to their ownership interest in the Company, determined on an as-
converted basis. On an as-converted basis, the holders of the Preferred Stock
currently have a 36.3% interest in the Company, which interest may increase over
time as mandatory in-kind dividends are paid with respect to the Preferred
Stock. Upon any default in the payment of dividends on the Preferred Stock,
each director who has been elected by the holders of the Preferred Stock will be
entitled to two votes on all matters on which the directors are entitled to
vote, while each director elected by the holders of Common Stock shall continue
to have the right to cast one vote. Accordingly, a default in the payment of
dividends on the Preferred Stock could result in the directors who have been
elected by the holders of the Preferred Stock (currently Dr. Weisbrod and Dr.
Horovitz) having voting control with respect to matters presented to the Board.
12
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the directors
and executive officers of the Company.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Thomas P. O'Donnell 47 Chairman of the Board, President,
Chief Executive Officer, Director
Robert S. Sammis, MBA 44 Executive Vice President, Chief
Operating Officer, Secretary, Director
Arthur P. Haag 67 Director
Stuart T. Weisbrod, Ph.D. 42 Director
Zola P. Horovitz, Ph.D. 62 Director
Robert M. Day, Ph.D. 42 Vice President of Scientific Affairs
Susan M. Georgen-Saad, CPA 39 Vice President, Chief Financial Officer,
Treasurer
</TABLE>
All current directors hold office until the 1997 annual meeting of the
Company's shareholders and until their successors are duly elected and
qualified; thereafter, directors will be elected annually. The executive
officers are appointed annually by the Board of Directors and serve at the
discretion of the Board. No family relationships exist among any of the
directors and executive officers of the Company.
Thomas P. O'Donnell, Chairman of the Board, has been the President, Chief
Executive Officer and a director of the Company since its inception. From March
1991 until September 1992, Mr. O'Donnell was the Chief Executive Officer of
another CRO, Barton Research, Inc. From 1987 until March 1991, Mr. O'Donnell
was President of Biomedical Research Group, a CRO specializing in analgesic
studies. While President of Biomedical, Mr. O'Donnell expanded its medical
specialty areas into ophthalmics, gastrointestinal and anti-infectives. From
1980 to 1987, Mr. O'Donnell was Chief Executive Officer of SKO, Inc., a
corporation with interests in manufacturing, transportation, and office
products. Prior to 1980, Mr. O'Donnell was a health care specialist and manager
with the public accounting firm of Arthur Andersen & Co. Mr. O'Donnell holds a
business degree from the University of Notre Dame. Mr. O'Donnell has provided
expert testimony before the Health Care Financing Administration of the
Department of Health and Human Services and has served on the Board of Trustees
of various hospitals and ambulatory surgical centers.
Robert S. Sammis has been the Company's Executive Vice President, Chief
Operating Officer, Secretary and a director since the Company's inception. From
March 1991 until September 1992, Mr. Sammis served as Director of Barton
Research, Inc., and from August 1991 until September 1992, he served as Barton's
Executive Vice President and Chief Operating Officer. From 1986 until August
1992, Mr. Sammis was engaged as a practicing CPA specializing in business
consultation. Mr. Sammis spent five years with Arthur Andersen & Co. where he
was an audit manager in the firm's health care practice. Mr. Sammis holds an
MBA degree from the University of Texas.
13
<PAGE>
Arthur P. Haag has been a director of the Company since February 1995 and,
until November 1996, served as its Chairman. Prior to the merger of Clinicor
and Pegasus, Mr. Haag was Chairman and Chief Executive Officer of Pegasus. Mr.
Haag is also currently President and CEO of Neutrex, Inc., a privately-held
Houston-located specialty chemical materials firm with which he has been
associated since 1992. From 1990 to 1992, Mr. Haag served as President and a
Director of Advanced Temperature Devices, Inc. Between 1986 and 1990, Mr. Haag
was co-founder and Chief Executive Officer of CytoDiagnostics, Inc. and
ElectroFusion, Inc. From 1982 until 1987, Mr. Haag was CEO of Catalyst
Resources, Inc., a subsidiary of Phillips Petroleum Company. He was President
of the Catalyst Division at Dart Industries, Inc. from 1970 to 1982. Prior to
1970, he was the founder and Chief Executive Officer of PureChem Corporation
which was subsequently sold to Dart Industries, Inc.
Stuart T. Weisbrod, Ph.D. joined the Company as a director in November 1996.
Since February 1995, Dr. Weisbrod has been a partner with Oracle Partners, L.P.,
a firm that invests in health care, bioscience and related industries. Prior to
that, he was a partner in the Harpel Advisory Company with responsibility for
the firm's health care and venture capital investment activities. From 1990 to
1993, Dr. Weisbrod served as a First Vice President at Merrill Lynch with
responsibility for investment research. From 1986 to 1990, he was a
biotechnology analyst with Prudential Bache. Dr. Weisbrod received his Ph.D. in
Biotechnology from Princeton University in 1980. From 1980 to 1982 he was an
American Cancer Society Postdoctoral Fellow at the Medical Research Council
Laboratory in Cambridge, England, followed by a second fellowship at Cold Spring
Harbor Laboratory. Dr. Weisbrod received an MBA from Columbia University in
1984.
Zola P. Horovitz, Ph.D. joined the Company as a director in November 1996.
Dr. Horovitz worked for the Bristol-Myers Squibb Corporation and one of its
predecessor entities, The Squibb Institute for Medical Research, for 35 years
until his retirement in 1994. Since his retirement, Dr. Horovitz has served as
a consultant to the biotechnology and pharmaceutical industries. Dr. Horovitz
received an M.S. in Pharmacology in 1958 and his Ph.D. in Pharmacology in 1960,
both from the University of Pittsburgh. Dr. Horovitz serves as a director of
Diacrin Inc., Biocryst Pharmaceuticals Inc., Synaptic Pharmaceutical Corp.,
Procept Inc., Magainin Pharmaceuticals, Inc., AVIGEN Inc. and Roberts
Pharmaceuticals Co. and several privately-held companies.
Robert M. Day, Ph.D., Vice President of Scientific Affairs, joined the
Company in June 1995. Dr. Day's experience includes the establishment of
complete clinical development programs and extensive interaction with the FDA.
Prior to joining Clinicor, Dr. Day was a Vice President of Clinical Research at
Arcturus Pharmaceutical Corporation. From 1992 to 1994 he was Associate Director
of Clinical Affairs at Dermik Laboratories (Rhone-Poulenc Rorer). From 1988 to
1992, Dr. Day was with Glaxo, Inc. where he served as Associate Director of
Clinical Research for Glaxo Dermatology. From 1984 to 1988, Dr. Day was with
Allergan, Inc. serving in the clinical research and development departments of
both the eyecare and dermatology units. He received his Ph.D. in Biological
Science in 1983 from the University of California, Irvine. Dr. Day received a
Bachelor of Science degree from Brown University where he graduated with Honors
in 1976. He is a co-inventor in a patent covering an antifungal/antiinflammatory
drug delivery system. Dr. Day is a current member of the Board of Trustees for
the National Psoriasis Foundation.
Susan M. Georgen-Saad, Vice President, Chief Financial Officer and
Treasurer, joined the Company in June 1996. Prior to joining the Company, Ms.
Georgen-Saad was Senior Vice President, Finance, for the Texas Workers'
Compensation Insurance Fund, a competitive insurance company with assets of $1.3
billion and annual revenue of over $600 million. From 1991 to 1994, she
maintained a professional practice as a financial services consultant. From
1984 to 1991, Ms. Georgen-Saad served as a Chief Financial and Chief Operating
Officer in the mortgage and financial services industries. Prior
14
<PAGE>
to that, she was with the audit division of KPMG Peat-Marwick from 1979 to 1984.
Ms. Georgen-Saad received a BBA in accounting from the University of Notre Dame,
and she is a licensed CPA in Texas.
CERTAIN LEGAL PROCEEDINGS
As was indicated above, Thomas P. O'Donnell was affiliated with SKO, Inc.
("SKO"), a privately owned company, from 1980 to 1987. As an officer and
principal shareholder of SKO, Mr. O'Donnell executed personal guarantees of
SKO's bank debt and other obligations. SKO suffered financial reversals,
largely as the result of the insolvency of its primary lender, and in 1991 Mr.
O'Donnell filed for protection under Chapter 11 of the United States Bankruptcy
Code. His bankruptcy case was later converted to a Chapter 7 liquidation
proceeding.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
for the year ended December 31, 1995, earned by or paid to the Company's Chief
Executive Officer and the other persons who were executive officers of the
Company in 1995 (the "named executive officers").
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------- -------------
Awards
-------------
Securities
Other Annual Underlying All Other
Salary Compensation Options/(1)/ Compensation
Name and Principal Position ($) ($) (#) ($)
- --------------------------- ------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Thomas P. O'Donnell................ 90,000 0 150,000 1,523/(2)/
Chairman of the Board,
President and Chief
Executive Officer
Robert S. Sammis................... 90,000 0 150,000 1,523/(2)/
Executive Vice President, Chief
Operating Officer and Secretary
Robert M. Day, Ph.D................ 70,000 0 10,000 0
Vice President of Scientific
Affairs
</TABLE>
____________________________
(1) The table does not include options which have lapsed.
(2) The Company paid insurance premiums totalling $6,092 on term life
insurance policies on Mr. O'Donnell and Mr. Sammis. Each policy is in the
amount of $2,000,000, with $1,000,000 payable to the Company and $1,000,000
payable to a beneficiary designated by the officer.
STOCK OPTIONS
In December 1994, the Board of Directors and the shareholders approved the
1995 Employee and Consultant Stock Option Plan (the "Option Plan"), under which
options to purchase a maximum total of 2,000,000 shares of Common Stock may be
granted. Options granted under the Option Plan may be either "incentive stock
options" as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or non-statutory stock options. Incentive stock options
may be granted to an employee of the Company, including officers and directors.
Non-statutory stock options may be granted
15
<PAGE>
to consultants as well as non-employee directors. The Option Plan is currently
administered by the Board of Directors, which has the authority to determine
optionees, the number of shares covered by each option, the type of option
(i.e., incentive or non-statutory), the times at which an option may be
exercised, the exercise price, the method of payment, and certain other option
terms. As of September 30, 1996, options representing the right to purchase
437,720 shares of Common Stock were outstanding under the Option Plan.
The exercise price of any option granted under the Option Plan may not be
less than 85%, in the case of a non-statutory stock option, or 100%, in the case
of an incentive stock option, of the fair market value of the Common Stock at
the time of grant, as determined by the Board of Directors. There is no limit on
the number of shares of Common Stock which may be granted under an option,
although the aggregate fair market value of the stock subject to incentive stock
options that become exercisable for the first time during any one calendar year
may not exceed $100,000 per optionee. Options may be granted under the Option
Plan for terms of up to ten years. Options are not transferable other than upon
death and may be exercised at various periods up to 90 days after the death or
termination of employment of the optionee to the extent the option was then
exercisable.
Pursuant to the Option Plan, the following named executive officers were
granted options in 1995 to purchase Common Stock of the Company in the amounts
and at the prices set forth in the chart below. All of the options shown are
incentive stock options. None of the options have been exercised.
<TABLE>
<CAPTION>
Number of Percent Of
Securities Total
Underlying Options
Options Granted to Exercise or
Granted/(1)/ Employees in Base Price Expiration
Name (#) Fiscal Year/(1)/ ($/Sh) Date
- ---- ------------------- ----------------- ------------ ----------
<S> <C> <C> <C> <C>
Thomas P. O'Donnell... 100,000/(2)/ 31% 1.25 2/27/2000
50,000/(3)/ 15% 1.10 8/22/2000
Robert S. Sammis...... 100,000/(2)/ 31% 1.25 2/27/2000
50,000/(3)/ 15% 1.10 8/22/2000
Robert M. Day, Ph.D... 10,000/(4)/ 3% 1.00 6/1/2001
</TABLE>
____________________________
(1) The table does not include options which have lapsed.
(2) The 100,000 share options held by Thomas P. O'Donnell and Robert S. Sammis
will vest in increments, subject to the Company's achieving certain
performance criteria. One-half of the options will vest at any time after
January 1, 1998 that the Company has achieved $12 million in service
revenue or $2 million in pre-tax earnings for the previous twelve-month
period. Options for the remaining shares will vest at any time after
January 1, 1999 that the Company has achieved $18 million in service
revenue or $3 million in pre-tax earnings for the previous twelve-month
period.
(3) These options vest over a three-year period in equal annual increments,
beginning on August 22, 1996.
(4) These options vested in full on June 1, 1996.
The following table sets forth information concerning the aggregate number
and value of unexercised options held by the named executive officers at
December 31, 1995. No options were exercised by the named executive officers
during the year ended December 31, 1995.
16
<PAGE>
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options At In-The-Money Options At
Fiscal Year-End (#) Fiscal Year-End ($)
--------------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
--------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas P. O'Donnell... 0 150,000/(1)/ $0 $45,000
Robert S. Sammis...... 0 150,000/(1)/ 0 45,000
Robert M. Day, Ph.D... 0 10,000 0 5,000
</TABLE>
____________________________
(1) The table does not include options which have lapsed.
EMPLOYMENT AGREEMENTS
Messrs. O'Donnell and Sammis are each parties to five-year employment
contracts with the Company, pursuant to which they are entitled to salaries of
$150,000 and $135,000 per year, respectively. The Company may terminate either
such agreement with or without cause; provided, however, if employment is
terminated without cause, then the executive in question is entitled to receive
a severance payment equal to two times the compensation received from the
Company in the 12 months prior to the date of termination. If employment is
terminated either voluntarily by the executive or by the Company for cause, then
no severance is payable; provided, however, that if the executive terminates his
employment following a material reduction in his level of responsibility, then
such termination shall be deemed to be termination without cause by the Company,
and the executive shall be entitled to the severance payment described above.
In any event, the executive in question is bound by a noncompetition covenant
until the earlier of (i) June 30, 1999 or (ii) two years following termination
of employment.
Dr. Day is party to a two-year employment agreement with the Company,
pursuant to which he is entitled to a salary of $120,000 annually. The Company
may terminate his employment with or without cause; provided, however, if
employment is terminated without cause, Dr. Day is entitled to continue to
receive his salary for either the unexpired portion of the two-year contract
period or six months, whichever period is greater.
DIRECTOR COMPENSATION
The Company reimburses directors for expenses incurred, if any, in attending
meetings of the Board of Directors. The Company does not pay director fees to
directors for their service on the Board. However, Arthur Haag and Zola
Horovitz are consultants to the Company, and each receives an annual retainer of
$18,000. In addition, for as long as he serves as a director and consultant to
the Company, Dr. Horovitz will receive annual options to purchase 5,000 shares
of Common Stock under the Option Plan.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Merger. As is disclosed elsewhere herein, on February 27, 1995, Clinicor,
------
Inc., a Texas corporation (referred to herein as the "Predecessor Company"), was
merged into Pegasus Tax and Financial Planning Services, Inc. In connection
with the merger (the "Merger"), the Predecessor Company ceased to exist and
Pegasus, as the surviving entity, changed its name to Clinicor, Inc.
Immediately prior to the Merger, the principal shareholders of Pegasus included
Randolph J. Haag and Russell Armstrong. The principal shareholders of the
Predecessor Company were Patricia J. O'Donnell
17
<PAGE>
and Robert S. Sammis, who owned 48.0% and 37.5% of the Predecessor Company,
respectively. Patricia J. O'Donnell is the mother of Thomas P. O'Donnell.
Of the shares of the Predecessor Company that were outstanding prior to the
Merger, 6,000 and 4,000 of such shares had been issued to Patricia J. O'Donnell
and Robert S. Sammis, respectively, in September 1992 for a per share purchase
price of $0.10. On November 11, 1994, the Predecessor Company issued 687.5
shares of its Common Stock to Robert S. Sammis in consideration of personal
guarantees rendered by Mr. Sammis with respect to the Predecessor Company's
lease of office space, computer systems, office equipment, furniture and medical
equipment.
Immediately prior to the Merger, Pegasus sold an aggregate of 750,000 shares
of Common Stock at a purchase price of $1.00 per share to Randolph J. Haag,
Irawan Onggara and Russell Armstrong. Such individuals purchased 375,000,
187,500 and 187,500 shares of Common Stock of Pegasus, respectively.
In the Merger, each share of Pegasus common stock (a total of 1,421,000
shares) remained outstanding. Each of the Predecessor Company's 12,500 shares
of Common Stock was converted into 166.4 shares of the Company (a total of
2,080,000 shares), such that after the Merger the Company had a total of
3,501,000 shares outstanding.
Agreements Ancillary to Merger. In connection with the Merger, the parties
------------------------------
thereto agreed that Thomas P. O'Donnell, Robert S. Sammis and Arthur P. Haag
(the father of Randolph J. Haag) would serve as directors of the Company for a
two-year period from and after the Merger. The parties also entered into a
number of agreements, the most significant of which are briefly described below.
Unless otherwise indicated, all of such agreements were entered into on February
27, 1995.
The Company, Randolph J. Haag, Irawan Onggara and Russell Armstrong entered
into a Preemptive Rights Agreement, pursuant to which the Company granted to the
three named individuals a right of first refusal for a period of three years to
purchase a portion of all new securities issued by the Company. Such portion is
equal to their percentage ownership of the Company on the date of execution of
the agreement. Messrs. Haag, Onggara and Armstrong subsequently relinquished
all of their rights under the Preemptive Rights Agreement, as more fully
described below.
The Company and Randolph J. Haag entered into an Investment Banking Rights
Agreement, pursuant to which the Company granted to Mr. Haag a right of first
refusal for a period of three years to provide certain investment banking
services to the Company, on terms to be mutually agreed upon by the parties. No
amounts were paid to Mr. Haag under the agreement. The Investment Banking
Rights Agreement has been terminated, as discussed below.
In March 1996, Randolph Haag relinquished all rights under any and all
agreements to which he and the Company are parties in exchange for a cash
payment of $25,000 and a contractual grant of options to purchase 50,000 shares
at an exercise price of $1.00 per share. The option expires on February 28,
2001.
For due diligence services performed in connection with the Merger, Mr.
Arthur P. Haag, currently a director of the Company, received options to
purchase up to 25,000 shares of the Company's Common Stock at a purchase price
of $0.10 per share. Such options expire on February 27, 1998.
In anticipation of the Merger, Messrs. Sammis and O'Donnell entered into a
Voting and Pre-Merger Agreement with each of Steven J. Dell, M.D., William M.
Ramsdell, M.D. and David G. Shulman, M.D., who were shareholders of the
Predecessor Company. Pursuant to such agreements, each of the named physicians
agreed to vote their shares of Common Stock of the Company in such manner as may
be determined by Messrs. O'Donnell and Sammis. These agreements terminate upon
the closing
18
<PAGE>
of an underwritten public offering of the Company which results in aggregate net
proceeds to the Company of at least $5.0 million.
Private Placement Offering. From September 1995 to February 1996, the
--------------------------
Company engaged in a private placement offering (the "Private Offering") of
Units consisting of Common Stock and Warrants to purchase Common Stock. See
"Recent Sales of Unregistered Securities." The Units were offered through SJ
Capital, Inc. (the "Sales Agent"), which acted as the Company's sales agent.
Randolph J. Haag was affiliated with the Sales Agent at the time of the Private
Offering and received 103,212 Sales Agent Warrants and consulting and commission
fees of $76,478 from the Sales Agent in connection with the Private Offering.
See "Description of Securities--Warrants."
Indemnified Lawsuit. In connection with their separation from a previous
-------------------
employer and the formation of the Predecessor Company, Thomas P. O'Donnell and
Robert S. Sammis became involved in certain disputes with the previous employer
and one of its shareholders and creditors. These disputes culminated in the
previous employer's filing of a lawsuit against Mr. Sammis in which various
causes of action were alleged. The Company has agreed to indemnify Mr. Sammis
and Mr. O'Donnell in connection with their disputes with the previous employer
and to indemnify Mr. Sammis in connection with the lawsuit. As of October 31,
1996, the Company has incurred approximately $82,000 in fees in connection with
such lawsuit, of which approximately $68,500 has been paid. In the opinion of
the Company's management, the outcome of this lawsuit will not have a material
adverse effect on the financial position or results of operations of the
Company.
Preferred Stock Sale. In July 1996, the Company issued 3,500 shares of
--------------------
Preferred Stock to Oracle Partners, L.P. and certain of its affiliates. See
"Recent Sales of Unregistered Securities." For information concerning the
conversion rate and other provisions of the Preferred Stock, see "Description of
Securities--Preferred Stock." In connection with the sale of the Preferred
Stock, the Company entered into a Settlement Agreement with Russell Armstrong,
Irawan Onggara and Century Financial Partners, Inc. ("CFP"). Pursuant to the
Settlement Agreement, Messrs. Armstrong and Onggara and CFP waived their
preemptive rights and certain other claims in connection with the issuance of
the Preferred Stock and waived all other rights and claims arising under the
Preemptive Rights Agreement in exchange for aggregate cash consideration of
$100,000.
Other Transactions. The Company has from time to time retained Future
------------------
Protocol, Inc., an Austin-based computer consulting firm of which Robert S.
Sammis is a shareholder and serves as a director, to perform certain services
for the Company. The total amount paid by the Company to Future Protocol, Inc.
was $1,130 during fiscal 1995 and $126,288 for the nine months ended September
30, 1996. Management believes that the terms of its arrangement with Future
Protocol, Inc. are as favorable to the Company as the terms that might be
obtained by contracting with an unrelated party. See Note 5 of Notes to
Financial Statements.
During 1995, Robert S. Sammis and Patricia J. O'Donnell advanced funds to
the Company to be used as working capital. The Company has executed two
unsecured promissory notes dated October 1, 1995 in the original principal
amount of $61,000 and $120,000 payable to Mr. Sammis and Mrs. O'Donnell,
respectively. As of October 31, 1996, such amounts remain outstanding. Each note
is payable upon demand and bears interest at 8.0% per annum. See Note 7 of Notes
to Financial Statements.
ITEM 8. LEGAL PROCEEDINGS
In October 1996, suit was filed against the Company in the State District
Court of Travis County, Texas, by Barton Research, Inc. ("Barton"), a CRO that
formerly employed Thomas P. O'Donnell and Robert S. Sammis. Barton had
previously filed suit against Mr. Sammis, charging Mr. Sammis with financial
improprieties and alleging that various actions of Mr. Sammis caused damage to
Barton. The Company has indemnified Mr. Sammis in connection with the suit (the
"Indemnified Lawsuit"). See "Certain Relationships and Related Transactions--
Indemnified Lawsuit." In the petition filed in October 1996, Barton joined
Clinicor in its lawsuit and alleged that Clinicor was established with the
intent to compete with and destroy Barton. The suit further alleges that
Clinicor conspired with Mr. Sammis to interfere with Barton's business contracts
and opportunities. Finally, the suit alleges that Clinicor is the real party in
interest in the Indemnified Lawsuit.
19
<PAGE>
Management has consulted with its trial counsel regarding the plaintiff's
claims. In the view of management, plaintiff's claims are without merit and
will not have a material adverse effect on the financial position of the
Company.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's Common Stock has, since March 1995, traded on the Nasdaq
Bulletin Board. Set forth below for the fiscal quarters indicated are the range
of high and low bids of the Common Stock on the Nasdaq Bulletin Board:
<TABLE>
<CAPTION>
1995 1996
---------------- -----------------
High Low High Low
----- ----- ----- -----
<S> <C> <C> <C> <C>
First Quarter 4-5/8 3 2-1/4 1-3/4
Second Quarter 4-1/4 2 4-5/8 1-7/8
Third Quarter 2-5/8 2 4 2-5/8
Fourth Quarter 3 1-3/4
</TABLE>
The foregoing quotations, which were obtained from Prophet Information Services,
Inc., reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.
As of October 21, 1996, there were approximately 59 shareholders of record
of the Company's Common Stock.
The Company has never paid dividends on its Common Stock and does not
anticipate that it will do so in the foreseeable future. The Company is
prohibited from paying dividends on its Common Stock without the consent of the
holders of at least two-thirds of the Company's Preferred Stock.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
The Company has made the following sales of its Common Stock and Preferred
Stock since October 1993. None of the sales have involved the use of
underwriters. Issuances during the period prior to February 27, 1995 were made
by Pegasus.
<TABLE>
<CAPTION>
Amount of
Date of Sale Class of Securities Total
or Issuance Securities (Shares) Purchasers Consideration
- ------------------------- ---------- ----------- ------------------ --------------------
<S> <C> <C> <C> <C>
1. December 1993 Common 450,000 3 individuals services rendered
2. December 1993 Common 1,200,000 4 individuals $ 6,000.00
3. January 1994 Common 521,000 41 individuals $ 26,050.00
and entities
4. February 1995 Common 750,000 3 individuals $ 750,000.00
5. February 1995 Common 2,080,000 6 individuals securities exchanged
6. October 1995 through Common 573,400 28 individuals $1,433,500.00
February 1996 and entities
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Amount of
Date of Sale Class of Securities Total
or Issuance Securities (Shares) Purchasers Consideration
- ------------ ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
7. July 1996 Preferred 3,500 4 entities $3,500,000.00
</TABLE>
Sales pursuant to items 1, 2, 5, 6 and 7 were made in reliance upon Section
4(2) of the Securities Act of 1933 and/or Rule 506 thereunder. Sales pursuant
to items 3 and 4 were made in reliance upon Section 3(b) of the Securities Act
of 1933 and Rule 504 thereunder. Sales pursuant to item 1 above were in
consideration of services rendered, which were valued by the Board of Directors
at $450.00 in the aggregate. The issuance of shares pursuant to item 5 above
was in connection with the merger of the Company and the Predecessor Company.
The transaction described in item 6 above also included the sale of Warrants and
the issuance of Sales Agent Warrants, as described elsewhere herein. See
"Description of Securities--Warrants" and Note 1 of Notes to Financial
Statements. The Company has also granted options to purchase an aggregate of
604,679 shares of the Company's Common Stock, of which options to purchase
554,679 were granted pursuant to the Option Plan. See "Executive Compensation--
Stock Options" and Note 1 of Notes to Financial Statements. Option grants under
the Option Plan were made in reliance upon Section 3(b) of the Securities Act of
1933 and Rule 701 thereunder. A contractual option to purchase 50,000 shares of
Common Stock was granted in reliance upon Section 4(2) of the Securities Act of
1933.
ITEM 11. DESCRIPTION OF SECURITIES
The Company is authorized to issue 75,000,000 shares of Common Stock and
5,181 shares of Preferred Stock. There are currently outstanding 4,086,400
shares of Common Stock and 3,500 shares of Preferred Stock. There are also
outstanding certain Warrants and Sales Agent Warrants, as well as options to
purchase 487,720 shares of Common Stock.
Common Stock. All 4,086,400 issued and outstanding shares of Common Stock
------------
are validly issued, fully paid and non-assessable. Holders of the Company's
Common Stock are entitled to receive dividends when and as declared by the
Company's Board of Directors out of the funds legally available therefor,
subject to the rights of holders of Preferred Stock, as set forth below.
Holders of Common Stock are entitled to one vote for each share held of record
on each matter submitted to a vote of shareholders. The shares of the Company's
Common Stock have no preemptive or conversion rights except as set forth herein,
nor redemption or sinking fund provisions, and are not liable for further call
or assessment. In the event of the liquidation, dissolution or winding-up of the
Company, each share of the Company's Common Stock is entitled to share pro rata
in any distribution of the Company's assets after payment of all liabilities,
subject to the rights of holders of Preferred Stock, as set forth below.
Preferred Stock. In accordance with the Company's Articles of
---------------
Incorporation, as amended, the Board of Directors is authorized to issue up to
5,181 shares of 8% Convertible Preferred Stock, without par value (the
"Preferred Stock"). There are currently outstanding 3,500 shares of the
Preferred Stock.
The Preferred Stock carries a liquidation preference of $1,000 per share.
The Preferred Stock provides for annual cumulative dividends, which for a five-
year period following issuance are payable in kind and which accrue at the rate
of 8% per annum. On the fifth anniversary of the date of issuance, the dividend
rate increases to 10% per annum, and the rate thereafter increases by an
additional 2% on each successive anniversary date. Dividends accruing after the
fifth anniversary date are payable in cash. The Preferred Stock is redeemable
at the option of the Company at any time after July 9, 1998; there is no
mandatory redemption. The Preferred Stock is convertible into that number of
shares of Common Stock of the Company as is equal to the liquidation preference
of the Preferred Stock being converted
21
<PAGE>
divided by a "conversion value," which is initially $1.50 and which is subject
to adjustment if certain events occur.
Each share of the Preferred Stock entitles the holder thereof to one vote in
all matters submitted to a vote of the shareholders of the Company, except for
the election of directors. In any election of directors, the holders of the
Preferred Stock, voting separately as a class, are entitled to elect that number
of directors, and to remove such directors, as is proportionate to their
ownership interest in the Company, determined on an as-converted basis. In the
event of any liquidation or dissolution of the Company, the holders of the
Preferred Stock will have a preferential right to assets in the amount of the
aggregate liquidation preference of the Preferred Stock. Upon any default in
the payment of dividends, each director who has been elected by the holders of
Preferred Stock will be entitled to two votes on all matters on which the
directors are entitled to vote, while each director elected by the holders of
Common Stock shall have the right to cast one vote.
The holders of the Preferred Stock have various other rights, including
registration rights, pursuant to the Company's Articles of Incorporation, as
amended, and pursuant to a Stock Purchase Agreement entered into with the
holders of the Preferred Stock.
Warrants. The Company issued 573,400 Warrants to investors in a recent
--------
private placement. Two Warrants entitle the holder thereof to purchase one
share of Common Stock for $1.00 per share, as adjusted for certain events.
Warrants are only exercisable during specified Window Periods, during which the
Company shall undertake good faith efforts to establish the availability of an
exemption from registration of the sale of the underlying Common Stock under
applicable federal and state securities laws. The exercise period for the
Warrants expires September 30, 1998 (the "Warrant Term"), subject to certain
rights of the Company to accelerate or delay such expiration. The Exercise
Price is subject to adjustment upon certain events such as stock splits, stock
dividends and similar transactions. The Warrant Term may be discontinued in
connection with certain mergers and other extraordinary transactions or after
the exercise of 50% of the Warrants upon notice by the Company to the warrant
holders of record. The Warrants are also subject to redemption by the Company
in certain events.
The Company also issued 114,680 Sales Agent Warrants to the firm that acted
as sales agent in the private placement. Upon exercise of a Sales Agent Warrant
at an exercise price of $2.50, the holder receives one share of the Company's
Common Stock and one Warrant to purchase Common Stock. Such Warrants are
substantially identical to the Warrants described above, but may be exercised
for a period of three years after issuance, subject to certain rights of the
Company to accelerate or delay expiration.
Subject to compliance with applicable securities laws and the provisions set
forth in a Registration Rights Agreement between the Company and the original
holders of the Warrants, Warrants are transferable. The holders of Warrants, as
such, are not entitled to vote, to receive dividends or to exercise any of the
rights of stock holders for any purpose. The Warrants may be transferred
separately from the Common Stock with which they were issued.
The Company may at any time and from time to time extend the Warrant Term or
reduce the exercise price, provided written notice of such extension or
reduction is given to the registered holders of the Warrants prior to the
expiration date then in effect.
Options. See "Stock Options" under Item 6 for a discussion of the 1995
-------
Employee and Consultant Stock Option Plan. There are currently 437,720 options
outstanding under the Option Plan. There is also outstanding a contractual
option to purchase 50,000 shares of the Company's Common Stock.
Transfer Agent. The Company's transfer agent for all securities is Pacific
--------------
Stock Transfer Company, P.O. Box 93385, Las Vegas, Nevada 89193-3385, (702) 361-
3033.
22
<PAGE>
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 78.751 and 78.752 of the Nevada General Corporation Law permit a
Nevada corporation, subject to certain conditions, to indemnify its present and
former directors, officers, employees and agents, and certain other persons who
are or were serving in similar capacities in other entities at the request of
the corporation, with respect to liability arising from their capacity as such;
to advance expenses to such persons; and to purchase and maintain insurance or
other arrangements on behalf of such persons.
Article IX of the Company's Articles of Incorporation, as amended, included
as Exhibit 3(a) hereto, limits the personal liability of a director or officer
------------
of the Company to the Company or the shareholders for damages for breach of
fiduciary duty to acts or omissions which involve intentional misconduct, fraud
or a knowing violation of law. Current Nevada law expressly authorizes the
foregoing limitation on liability.
Article X of the Company's Articles of Incorporation, as amended, included
as Exhibit 3(a) hereto, and Article VII of the Company's Amended and Restated
------------
Bylaws, included as Exhibit 3(b) hereto, essentially provide for officers,
------------
directors, employees and agents to be indemnified, and to receive reimbursement
of reasonable expenses incurred in advance of the final disposition of a
proceeding, to the maximum extent permitted by Nevada law.
In June 1996, the Company obtained a liability policy which insures its
officers and directors against loss arising from claims by reason of their legal
liability for acts as officers and directors, subject to limitations and
conditions set forth in the policy. The policy provides coverage of up to
$1,000,000 per claim with a maximum of $1,000,000 per policy period.
ITEM 13. FINANCIAL STATEMENTS
The index to the Company's Financial Statements appears under Item 15 of the
Form 10-SB.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on
accounting or financial disclosure.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following financial statements of the Company are filed as part of
this report:
Report of BDO Seidman, LLP, Independent Certified Public Accountants F-1
Balance Sheets - December 31, 1995 and June 30, 1996 (unaudited) F-2
Statements of Operations - Years ended December 31, 1994 and 1995
and Six Months ended June 30, 1995 and 1996 (unaudited) F-3
Statements of Shareholders' Equity - December 31, 1993, 1994 and 1995
and Six Months Ended June 30, 1996 (unaudited) F-4
Statements of Cash Flows - Years ended December 31, 1994 and 1995
and Six Months ended June 30, 1995 and 1996 (unaudited) F-5
23
<PAGE>
Summary of Significant Accounting Policies F-6
Notes to Financial Statements F-6
(b) Exhibits
2 Not applicable
3(a) Articles of Incorporation, as amended
3(b) Amended and Restated Bylaws
4(a) Stock Purchase Agreement dated as of July 15, 1996 between the
registrant and Oracle Partners, L.P., Quasar International Partners,
C.V., Oracle Institutional Partners, L.P. and GSAM Oracle Fund, Inc.
4(b) Certificate of Amendment of Certificate of Incorporation of the
registrant, incorporated herein by reference to Exhibit 3(a)
4(c) Amended and Restated Bylaws of the registrant, incorporated herein by
reference to Exhibit 3(b)
4(d) Terms of Warrants issued by the registrant
4(e) Registration Rights Agreement effective December 1, 1995 by and among
the registrant and certain individuals and entities
4(f) Sales Agent Warrant dated May 20, 1996 issued to SJ Capital, Inc.
4(g) Preemptive Rights Agreement effective February 27, 1995 among the
registrant and Randolph Haag, Russell Armstrong and Irawan Onggara
4(h) Settlement Agreement dated as of July 8, 1996 between the registrant
and Russell Armstrong, Irawan Onggara and Century Financial Partners,
Inc.
7 Not applicable
9 Not applicable
10(a) Voting and Pre-Merger Agreement dated February 14, 1995 among the
registrant, Thomas P. O'Donnell, Robert S. Sammis and Steven J. Dell,
M.D.
10(b) Voting and Pre-Merger Agreement dated February 14, 1995 among the
registrant, Thomas P. O'Donnell, Robert S. Sammis and William M.
Ramsdell, M.D.
10(c) Voting and Pre-Merger Agreement dated February 14, 1995 among the
registrant, Thomas P. O'Donnell, Robert S. Sammis and David Shulman,
M.D.
10(d) Sales Agent Agreement effective September 15, 1995 between the
registrant and SJ Capital, Inc.
24
<PAGE>
10(e) Agreement and Plan of Merger effective February 27, 1995 between
Pegasus Tax and Financial Planning Services, Inc., Randolph Haag,
Russell Armstrong, Clinicor, Inc., Robert S. Sammis and Thomas P.
O'Donnell
10(f) Covenant Not to Compete Agreement effective February 27, 1995 among
the registrant, Thomas P. O'Donnell and Robert S. Sammis
10(g) Statement Regarding Employee Proprietary Information and Inventions
Agreement dated February 27, 1995 between the registrant and Thomas P.
O'Donnell
10(h) Statement Regarding Employee Proprietary Information and Inventions
Agreement dated February 27, 1995 between the registrant and Robert S.
Sammis
10(i) Agreement dated March 5, 1996 between the registrant and Randolph J.
Haag
10(j) Option Agreement dated March 5, 1996 between the registrant and
Randolph J. Haag
10(k) Clinicor, Inc. 1995 Employee and Consultant Stock Option Plan
10(l) Stock Option Agreement dated February 27, 1995 between the registrant
and Thomas P. O'Donnell
10(m) Stock Option Agreement dated February 27, 1995 between the registrant
and Robert S. Sammis
10(n) Employment Agreement dated July 15, 1996 between the registrant and
Thomas P. O'Donnell
10(o) Employment Agreement dated July 15, 1996 between the registrant and
Robert S. Sammis
10(p) Employment Agreement dated May 1, 1995 between the registrant and
Robert M. Day
10(q) Unsecured Note dated October 1, 1995 executed by the registrant and
payable to Robert Sammis
10(r) Unsecured Note dated October 1, 1995 executed by the registrant and
payable to Patricia J. O'Donnell
10(s) Letter Agreement dated August 21, 1996 between the registrant and
Zola P. Horovitz
10(t) Lease dated October 23, 1996 between the registrant and Lake Austin
Commons, Ltd.
11 Statement regarding Computation of Per Share Earnings
14 Not applicable
16 Not applicable
21 Not applicable
24 Not applicable
27 Financial Data Schedule
25
<PAGE>
28 Not applicable
99 Not applicable
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
CLINICOR, INC.
Date________________________ By_________________________________
Susan M. Georgen-Saad
Vice President, Chief
Financial Officer and Treasurer
26
<PAGE>
Independent Auditors' Report
Clinicor, Inc.
Board of Directors
Austin, Texas
We have audited the accompanying balance sheet of Clinicor, Inc. (the "Company")
as of December 31, 1995, and the related statements of operations, stockholders'
equity, and cash flows for each of the two years ended December 31, 1994 and
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Clinicor, Inc. at December 31,
1995, and the results of its operations and cash flows for each of the two years
ended December 31, 1994 and 1995 in conformity with generally accepted
accounting principles.
BDO Seidman, LLP
April 18, 1996, except for
Note 2 which is as of July 16, 1996
F-1
<PAGE>
CLINICOR, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
==============================================================================================================================
PRO FORMA
NOTE 2
JUNE 30, JUNE 30,
DECEMBER 31, 1996 1996
1995 (UNAUDITED) (UNAUDITED)
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS
Current:
Cash and cash equivalents $ 267,281 $ 161,977 $ 3,359,017
Accounts receivable (Notes 3 and 4) 633,540 559,487 559,487
Prepaid and other current assets 7,570 8,765 8,765
----------- ----------- -----------
Total current assets 908,391 730,229 3,927,269
Equipment and computer systems, net (Note 5) 192,897 262,581 262,581
Other assets, net 6,445 101,644 404,604
----------- ----------- -----------
TOTAL ASSETS $ 1,107,733 $ 1,094,454 $ 4,594,454
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of obligations under capital leases (Note 6) $ 25,751 $ 15,202 $ 15,202
Accounts payable 180,301 277,395 277,395
Accrued study costs 315,000 232,875 232,875
Accrued liabilities 133,239 70,839 70,839
Accrued payroll and payroll taxes (Note 7) 168,990 108,148 108,148
Deferred revenue 45,000 35,000 35,000
Notes payable to stockholders (Note 7) 181,000 181,000 181,000
----------- ----------- -----------
Total current liabilities 1,049,281 920,459 920,459
Obligations under capital leases, less current portion (Note 6) 35,167 26,276 26,276
----------- ----------- -----------
Total liabilities 1,084,448 946,735 946,735
----------- ----------- -----------
Commitments and contingencies (Note 9)
Stockholders' equity (Note 1):
Common stock 3,939 4,086 4,086
Convertible preferred stock -- -- 3,500,000
Additional paid-in capital 1,788,499 2,110,202 2,110,202
----------- ----------- -----------
Contributed capital 1,792,438 2,114,288 5,614,288
Accumulated deficit (1,769,153) (1,966,569) (1,966,569)
----------- ----------- -----------
Total stockholders' equity 23,285 147,719 3,647,719
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,107,733 $ 1,094,454 $ 4,594,454
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements. F-2
<PAGE>
CLINICOR, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
===================================================================================================================================
YEARS ENDED DECEMBER 31, 6 MONTHS ENDED JUNE 30,
------------------------------ -------------------------------
1995 1996
1994 1995 (UNAUDITED) (UNAUDITED)
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Service Revenue $ 2,301,455 $ 2,005,582 $ 1,043,976 $ 1,557,534
Operating costs and expenses
Clinical costs 1,348,606 1,221,701 509,638 643,957
Selling, general and administrative 1,201,797 1,872,597 824,735 1,041,010
Depreciation and amortization 49,191 60,217 27,558 51,072
----------- ----------- ----------- -----------
Total operating costs and expenses 2,599,594 3,154,515 1,361,931 1,736,039
----------- ----------- ----------- -----------
Loss from operations (298,139) (1,148,933) (317,955) (178,505)
Other income and expenses
Interest expense 21,496 28,293 9,671 18,911
----------- ----------- ----------- -----------
Loss from continuing operations (319,635) (1,177,226) (327,626) (197,416)
Loss from disposal of assets of
discontinued operations (Note 1) (32,500) -- -- --
----------- ----------- ----------- -----------
NET LOSS $ (352,135) $(1,177,226) $ (327,626) $ (197,416)
=========== =========== =========== ===========
PER SHARE AMOUNTS
Loss from continuing operations $ (0.15) $ (0.34) $ (0.10) $ (0.04)
Loss from discontinued operations
(Note 1) (0.02) 0.00 0.00 0.00
----------- ----------- ----------- -----------
Net loss $ (0.17) $ (0.34) $ (0.10) $ (0.04)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES AND COMMON STOCK
EQUIVALENTS USED IN COMPUTING
PER SHARE AMOUNTS (NOTE 1) 2,084,025 3,495,832 3,337,008 4,756,828
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements. F-3
<PAGE>
CLINICOR, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
===================================================================================================================================
ADDITIONAL
COMMON STOCK PAID-IN
SHARES* AMOUNT CAPITAL DEFICIT TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993 1,661,810 $ 2,831 $ 4,800 $ (239,792) $ (232,161)
Net loss -- -- -- (352,135) (352,135)
Common stock issued by Pegasus Tax and
Financial Planning Services, Inc. 521,000 521 25,529 -- 26,050
Common stock issued by Clinicor, Inc. 690 69 -- -- 69
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1994 2,183,500 3,421 30,329 (591,927) (558,177)
Net loss -- -- -- (1,177,226) (1,177,226)
Common stock issued on February 27, 1995 (Note 1) 750,000 750 749,250 -- 750,000
Common stock retired on February 27, 1995 (Note 1) (1,500,000) (1,500) 1,500 -- --
Conversion of common stock in connection with
the February 27, 1995 merger (Note 1):
Common stock retired (12,500) (1,250) 1,250 -- --
Common stock issued 2,080,000 2,080 (2,080) -- --
Stock options granted February 27, 1995 (Note 1) -- -- 45,000 -- 45,000
Common stock issued in connection with the
Company's private placement dated
September 15, 1995 (Note 1) 438,000 438 963,250 -- 963,688
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1995 3,939,000 3,939 1,788,499 (1,769,153) 23,285
Net loss (unaudited) -- -- -- (197,416) (197,416)
Common stock issued in connection with the
Company's private placement dated
September 15, 1995 (Note 1) (unaudited) 135,400 135 309,715 -- 309,850
Common stock issued on May 20, 1996 (Note 1) 12,000 12 11,988 -- 12,000
----------- ----------- ----------- ----------- -----------
Balance at June 30, 1996 (unaudited) 4,086,400 $ 4,086 $ 2,110,202 $(1,966,569) $ 147,719
=========== =========== =========== =========== ===========
* $.001 par, 75,000,000 shares authorized.
</TABLE>
The accompanying notes are an integral part of these financial statements. F-4
<PAGE>
CLINICOR, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
===================================================================================================================================
YEARS ENDED DECEMBER 31, 6 MONTHS ENDED JUNE 30,
--------------------------- ---------------------------
1995 1996
1994 1995 (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (352,135) $(1,177,226) $ (327,626) $ (197,416)
Adjustments to reconcile net loss to cash provided by
(used in) operating activities:
Depreciation and amortization 49,191 60,217 27,558 51,072
Compensatory stock -- 45,000 45,000 --
Changes in current assets and liabilities:
Accounts receivable 53,114 (306,803) 20,424 74,053
Prepaid expenses and other assets (3,666) 546 230 (1,195)
Accounts payable 124,729 (319,558) (326,412) 97,094
Accrued study costs -- 189,297 (60,879) (82,125)
Accrued liabilities 212,680 (52,837) (40,703) (62,400)
Accrued payroll and payroll taxes -- (19,879) (25,726) (60,842)
Deferred revenue -- 45,000 -- (10,000)
Billings in excess of costs and estimated earnings (58,780) -- -- --
----------- ----------- ----------- -----------
Cash provided by (used in) operating activities 25,133 (1,536,243) (688,134) (191,759)
----------- ----------- ----------- -----------
INVESTING ACTIVITIES:
Purchases of equipment and computer systems (50,462) (54,964) (29,407) (128,935)
Decrease in other assets 989 -- -- --
----------- ----------- ----------- -----------
Cash used in investing activities (49,473) (54,964) (29,407) (128,935)
----------- ----------- ----------- -----------
FINANCING ACTIVITIES:
Payments on capital leases (41,785) (50,125) (23,059) (9,420)
Proceeds from notes payable to stockholders -- 181,000 -- --
Deferred issuance costs -- -- -- (97,040)
Net proceeds from issuing common stock 26,119 1,713,688 750,000 321,850
Proceeds from short-term notes, net 27,267 -- -- --
----------- ----------- ----------- -----------
Cash provided by financing activities 11,601 1,844,563 726,941 215,390
----------- ----------- ----------- -----------
Net increase (decrease) in cash (12,739) 253,356 9,400 (105,304)
Cash and cash equivalents at beginning of period 26,664 13,925 13,925 267,281
----------- ----------- ----------- -----------
Cash and cash equivalents at end of period $ 13,925 $ 267,281 $ 23,325 $ 161,977
=========== =========== =========== ===========
Interest paid $ 21,496 $ 23,556 $ 9,671 $ 11,671
=========== =========== =========== ===========
Non-cash financing activities:
Capital lease obligations entered into $ 92,509 $ -- $ -- $ --
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements. F-5
<PAGE>
CLINICOR, INC.
NOTES TO FINANCIAL STATEMENTS - Information at and for the period ended June 30,
1996 is unaudited
================================================================================
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------
(a) Description of operations
-------------------------
Clinicor, Inc. ("Clinicor") is a contract research organization serving
companies in the pharmaceutical, biotechnology and medical device
industries. Clinicor manages, monitors and performs clinical trials which
are studies of investigational drugs and medical devices performed with
human patients to support Sponsors' applications to the Food and Drug
Administration.
(b) Summary of significant accounting policies
------------------------------------------
BASIS OF PRESENTATION
Clinicor follows the accrual basis of accounting. The accompanying
financial statements have been prepared in conformity with generally
accepted accounting principles.
On February 27, 1995, Clinicor was merged into a non-reporting publicly
held, inactive Nevada corporation ("Pegasus") in a reverse merger
transaction which has been accounted for in a manner similar to a "pooling
of interests." The surviving corporation assumed the name Clinicor, Inc.
(the "Company"). Accordingly, the Company's financial statements include
the accounts of Pegasus at cost basis for the entire period presented.
Pegasus had no results of operations in 1995.
START-UP EXPENSES
During its first three years of operation, the Company incurred significant
start-up expenses in the form of salaries, advertising to recruit patients,
travel and other general and administrative costs. These expenses were
necessary to build the Company's capacity to perform multiple study
contracts simultaneously and to perform individual, multiple-site study
contracts in excess of $1 million. All start-up costs have been expensed as
they were incurred.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist primarily of funds invested in short-term
interest bearing accounts. The Company considers all highly liquid
investments purchased with initial maturities of three months or less to be
cash equivalents.
REVENUE AND EXPENSE RECOGNITION; AND ACCOUNTS RECEIVABLE AND ACCRUED STUDY
COSTS
Revenue is recognized based upon the percentage of completion of each
study. Study contracts generally provide for payments based upon the
achievement of defined benchmarks. Accordingly, accounts receivable include
accrued revenues which are not billable as of the balance sheet date
because a defined benchmark has not been completely achieved (Note 4).
Deferred revenue represents amounts of payments received in excess of
revenue recognized. Clinical costs are direct expenses of performing
studies, including investigators, patient stipends, laboratories,
advertising, labor and other direct costs. Clinical costs incurred but
unpaid are recorded as accrued study costs. The reported amount of accounts
receivable and accrued study costs require management to make estimates
that could differ from actual results.
F-6
<PAGE>
CLINICOR, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
EQUIPMENT AND COMPUTER SYSTEMS
Equipment and computer systems are stated at cost. Depreciation is
calculated on the double-declining balance method and the straight-line
method over the estimated useful lives of the assets ranging from five to
seven years. Repair and maintenance costs are charged to expense as
incurred.
NET LOSS PER COMMON SHARE
Net loss per common share has been calculated by dividing the Company's net
loss by the weighted average number of shares of the Company's outstanding
common stock and common stock equivalents.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
F-7
<PAGE>
CLINICOR, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial statements, as defined by Statement of Accounting
Standards No. 107, "Disclosure of Information about Financial Instruments
with Off-Balance Sheet Risk and Financial Instruments with Concentration of
Credit Risk" ("SFAS 107"), include cash and cash equivalents, accounts
receivable, and amounts due under accounts payable, capital leases and
notes payable. These financial instruments are accounted for on a
historical basis which, due to the nature of these financial instruments,
approximates fair value.
INTERIM FINANCIAL INFORMATION
The financial statements at June 30, 1996 and for the six months ended June
30, 1995 and 1996 are unaudited, but include all adjustments (consisting
only of normal recurring adjustments) which the Company considers necessary
for a fair presentation of the financial position at such dates and the
operating results and cash flows for those periods. Results for interim
periods are not necessarily indicative of results to be expected for the
entire year.
COMMON STOCK
The authorized capital stock of the Company consists of 75,000,000 shares
of common stock with par value per share of $0.001. At the time of the
merger, Pegasus had 1,421,000 shares of common stock issued and
outstanding, of which 750,000 were issued immediately prior to the merger
for total proceeds of $750,000. In connection with the merger, Clinicor
shareholders converted 100% of Clinicor's 12,500 issued and outstanding
shares of common stock into 2,080,000 new shares of the surviving
corporation's common stock, and the surviving corporation changed its name
to Clinicor. Immediately subsequent to the merger, the Company had
3,501,000 shares of common stock issued and outstanding.
Effective September 15, 1995, the Company initiated a private placement
offering ("Offering") whereby Units were offered for sale to qualified
investors at $2.50 per Unit. Each Unit provides the purchaser one share of
the Company's common stock and one Warrant which enables Warrant holders
the right to purchase one share of the Company's common stock for every two
Warrants exercised at a price of $1.00 per share. In addition, the Sales
Agent for the Offering received Sales Agent Warrants equal to 20% of the
number of Units sold. Each Sales Agent Warrant provides the holder the
right to buy one Unit (as described above) at an exercise price of $2.50
per Unit.
The Offering was terminated on February 16, 1996. In connection with the
Offering, the Company sold 573,400 Units for gross proceeds of $1,433,500,
which provided the Company net proceeds of $1,273,538 after deducting
Offering expenses of $45,282 and commissions of $114,680, as shown in the
following table:
F-8
<PAGE>
CLINICOR, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
<TABLE>
<CAPTION>
Net Commission
Units Proceeds and Expenses Proceeds
------- ---------- ------------ --------
<S> <C> <C> <C> <C>
Units sold prior to
December 31, 1995 438,000 $1,095,000 $131,312 $ 963,688
Units sold after
December 31, 1995 135,400 338,500 28,650 309,850
------- ---------- -------- ----------
Total units sold in
the offering 573,400 $1,433,500 $159,962 $1,273,538
======= ========== ======== ==========
</TABLE>
At December 31, 1995, after giving effect to the sale of 438,000 Units, the
Company had 3,939,000 shares of common stock issued and outstanding.
Warrants and Sales Agent Warrants issued in connection with the Offering
were as follows at December 31, 1995:
<TABLE>
<CAPTION>
Common Aggregate
Share Exercise
Number Equivalents Price
------- ----------- ---------
<S> <C> <C> <C>
Warrants 438,000 219,000 $1.00
Sales Agent Warrants 87,600 131,400 2.00
-------
350,400
=======
</TABLE>
At February 16, 1996, following termination of the Offering, after giving
effect to the sale of 573,400 Units, the Company had 4,074,400 shares of
common stock issued and outstanding.
The exercise period for the Warrants expires September 30, 1998, subject to
certain rights of the Company to accelerate or delay such expiration. The
exercise period for the Warrants underlying the Sales Agent Warrants
expires three years after the date of issuance of the Warrants.
Total Warrants and Sales Agent Warrants issued in connection with the
Offering were as follows at February 16, 1996:
<TABLE>
<CAPTION>
Common Aggregate
Share Exercise
Number Equivalents Price
------- ----------- ---------
<S> <C> <C> <C>
Warrants 573,400 286,700 $1.00
Sales Agent Warrants 114,680 172,020 2.00
-------
458,720
=======
</TABLE>
In December 1994, the Company and the shareholders approved the 1995
Employee and Consultant Stock Option Plan (the "Option Plan"), under which
options to purchase a maximum total of 2,000,000 shares of common stock may
be granted. The exercise price of options granted under the Option Plan is
generally the fair market value of the common stock at the time of grant.
The terms of each option (including duration of the options, which is
typically
F-9
<PAGE>
CLINICOR, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
5 to 10 years, and provisions as to vesting) are determined by the Board of
Directors at the time of grant and are set forth in an option agreement
between the Company and the optionee.
At December 31, 1995, the Company had total outstanding options as follows:
<TABLE>
<CAPTION>
Number Exercise
of Shares Price
--------- --------
<S> <C>
212,720 $1.25
100,000 1.10
65,000 1.00
50,000 .10
-------
427,720
=======
</TABLE>
At December 31, 1995, options to purchase 55,000 shares had vested. Of the
212,720 options with an exercise price of $1.25 per share, 108,481 of these
options vest anytime after January 1, 1998, if for any previous twelve-
month period the Company achieves revenues of $12 million or pre-tax
earnings of $2 million. The remaining 104,239 of these options vest anytime
after January 1, 1999, if for any previous twelve-month period the Company
achieves revenues of $18 million or pre-tax earnings of $3 million.
NOTE 2 - SUBSEQUENT EVENT
- ---------------------------
On July 15, 1996, the Company issued to Oracle Partners, L.P. and certain
affiliates 3,500 shares of convertible preferred stock, no par value (the
"Preferred Stock"), for total consideration of $3.5 million. The Preferred Stock
carries a liquidation preference of $1,000 per share. The Preferred Stock
provides for annual cumulative dividends, which for a five-year period following
issuance are payable in kind and which accrue at the rate of 8% per annum. On
the fifth anniversary of the date of issuance, the dividend rate increases to
10% per annum, and the rate thereafter increases by an additional 2% on each
successive anniversary date. Dividends accruing after the fifth anniversary date
are payable in cash.
The Preferred Stock is redeemable at the option of the Company at any time after
July 9, 1998; there is no mandatory redemption. The Preferred Stock is
convertible into that number of shares of Common Stock of the Company as is
equal to the liquidation preference of the Preferred Stock being converted
divided by a "conversion value," which is initially $1.50 and which is subject
to adjustment if certain events occur.
The holders of the Preferred Stock have various rights, including registration
rights, pursuant to the Company's Articles of Incorporation, as amended, and
pursuant to a Stock Purchase Agreement entered into with the holders of the
Preferred Stock. The sale and issuance of the preferred stock is reflected in
the unaudited pro forma balance sheet at June 30, 1996.
NOTE 3 - SIGNIFICANT CLIENTS
- ----------------------------
The Company has had up to four clients who each accounted for more than 10% of
the Company's revenues. Revenues from up to four clients aggregated
approximately $1,396,000 and $2,142,000 for the years ended December 31, 1995
and 1994, respectively. For the six months ended June 30, 1996, four clients
accounted for $1,045,000 of the Company's revenues. For the six months ended
June 30, 1995, two clients accounted for $739,884 of the Company's revenues.
F-10
<PAGE>
CLINICOR, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 4 - ACCOUNTS RECEIVABLE
- ----------------------------
The allocation of accounts receivable between billed and unbilled study revenues
consisted of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ --------
<S> <C> <C>
Billed Receivables $383,906 $435,914
Unbilled Receivables 249,634 123,573
-------- --------
$633,540 $559,487
======== ========
</TABLE>
NOTE 5 - EQUIPMENT AND COMPUTER SYSTEMS
- ---------------------------------------
Equipment and computer systems, office equipment and medical equipment consist
of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ --------
<S> <C> <C>
Computer systems $153,504 $244,026
Office equipment 98,164 122,041
Medical equipment 57,717 57,987
-------- --------
309,385 424,054
Less accumulated
depreciation and amortization 116,488 161,473
-------- --------
$192,897 $262,581
======== ========
</TABLE>
Depreciation expense was $56,534 and $45,509 for the years ended December 31,
1995 and 1994, respectively, and $25,716 and $49,231 for the six months ended
June 30, 1995 and 1996, respectively. Approximately $49,000 of the net
equipment and computer system balances were pledged as collateral to secure
capitalized lease obligations (Note 7).
An officer of the Company is also a director and shareholder of a company from
whom approximately $53,000 of computer equipment and services were purchased in
arms-length transactions as of June 30, 1996.
NOTE 6 - CAPITAL LEASES
- -----------------------
The Company leases certain equipment under capital lease agreements. The net
book value of the Company's equipment acquired under capital lease agreements
was approximately $108,000 (net of accumulated amortization of $63,000) at
December 31, 1995, and $85,000 (net of accumulated amortization of $77,000) at
June 30, 1996.
The following schedule represents future minimum lease payments together with
the present value of the net minimum lease payments at December 31, 1995, and
June 30, 1996.
F-11
<PAGE>
CLINICOR, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ --------
<S> <C> <C>
1996 $32,290 $15,920
1997 18,647 14,778
1998 17,403 13,534
1999 5,198 4,231
------- -------
Total minimum lease payments 75,538 48,463
Less amount representing interest 12,620 6,985
------- -------
Present value of net minimum lease payments 60,918 41,478
Less current portion of capital lease
obligations 25,751 15,202
------- -------
$35,167 $26,276
======= =======
</TABLE>
NOTE 7 - OTHER LIABILITIES
- --------------------------
Other liabilities include short-term borrowings to be repaid to an officer of
the Company as part of his compensation package. The Company is expected to pay
these amounts within the next fiscal year. Included in accrued payroll at
December 31, 1995, and June 30, 1996, are $130,000 and $87,000, respectively,
due to officers who are also directors of the Company who elected to defer
payments.
Certain stockholders, including an officer and director, advanced $181,000 to
the Company in 1995 under the terms of unsecured demand notes payable to the
stockholders. The notes bear interest at 8%, and at December 31, 1995 and June
30, 1996, accrued interest payable in connection with these notes totaled $4,737
and $11,977, respectively.
NOTE 8 - INCOME TAXES
- ---------------------
At December 31, 1995, the Company had a deferred tax asset of approximately
$320,000 (representing the tax effect of the Company's tax net operating loss
carryforward of approximately $1,300,000), which was offset by recognition of a
valuation allowance in that amount since the Company could not determine that it
was more likely than not it would be realized.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
- --------------------------------------
The Company has indemnified an individual serving as an officer and director
with respect to expenses and liabilities in connection with a lawsuit brought
against the officer/director by a former employer. The Company is also
advancing litigation expenses with respect to a third party claim by the
officer/director against the majority shareholder of the former employer. The
officer/director has agreed to turn over to the Company any award or recovery of
expenses received in connection with these actions. In the opinion of the
Company's management, the outcome of these lawsuits will not have a material
adverse effect on the financial position or results of operations of the
Company.
The Company leases certain facilities under noncancelable operating leases with
initial terms of one year or more. Future minimum lease payments in the
aggregate consist of the following at December 31, 1995, and June 30, 1996:
F-12
<PAGE>
CLINICOR, INC.
NOTES TO FINANCIAL STATEMENTS
================================================================================
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
------------ --------
<S> <C> <C>
1996 $ 74,322 $ 38,092
1997 76,184 76,184
1998 23,395 23,395
-------- --------
$173,901 $137,671
======== ========
</TABLE>
Rental expense was $71,000 and $65,500 for the years ended December 31, 1995 and
1994, respectively, and $39,190 and $38,577 for the six months ended June 30,
1996 and 1995, respectively.
NOTE 10 - CONCENTRATION OF CREDIT RISK
- --------------------------------------
Financial investments which potentially expose the Company to concentrations of
credit risk, as defined by Statement of Financial Accounting Standards No. 105,
consist primarily of trade accounts receivable.
The majority of the Company's customer base are large pharmaceutical companies.
Although the Company is directly affected by the well being of the
pharmaceutical industry, management does not believe significant credit risks
existed at June 30, 1996.
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts.
F-13
<PAGE>
EXHIBIT 3(a)
STATE OF NEVADA [SEAL APPEARS HERE] SECRETARY OF STATE
I, CHERYL A. LAU, Secretary of State of the State of Nevada, do hereby
certify that PEGASUS TAX AND FINANCIAL PLANNING SERVICES, INC. did on the THIRD
day of DECEMBER, 1993, file in this office the original Articles of
Incorporation; that said Articles are now on file and of record in the office of
the Secretary of State of the State of Nevada, and further, that said Articles
contain all the provisions required by
the law of said State of Nevada.
[SEAL APPEARS HERE] IN WITNESS WHEREOF, I have hereunto set my
hand and affixed the Great Seal of State,
at my office in Carson City, Nevada, this
THIRD day of DECEMBER A.D. 1993
/s/ Cheryl A. Lau
-----------------------------------
Secretary of State
[SIGNATURE ILLEGIBLE]
By --------------------------------
Deputy
<PAGE>
ARTICLES OF INCORPORATION
OF
PEGASUS TAX AND FINANCIAL PLANNING SERVICES, INC.
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a Corporation under and pursuant to the laws
of the State of Nevada, and we do hereby certify that:
ARTICLE I - NAME: The exact name of this Corporation is:
Pegasus Tax and Financial Planning Services, Inc.
ARTICLE II - RESIDENT AGENT:
The Resident Agent of the Corporation is Max C. Tanner, Esq., The Law
Offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, Las Vegas, Nevada
89121.
ARTICLE III - DURATION: The corporation shall have perpetual existence.
ARTICLE IV - PURPOSES: The purpose, object and nature of the business for which
this Corporation is organized are:
(a) To engage in any lawful activity;
(b) To carry on such business as may be necessary, convenient, or
desirable to accomplish the above purposes, and to do all other things
incidental thereto which are not forbidden by law or by these Articles
of Incorporation.
ARTICLE V - POWERS: The of the Corporation shall be those powers granted by
78.060 and 78.070 of the Nevada Revised Statutes under which this corporation
is formed. In addition, the Corporation shall have the following specific
powers:
(a) To elect or appoint officers and agents of the Corporation and to fix
their compensation;
<PAGE>
(b) To act as an agent for any individual, association, partnership,
corporation or other legal entity;
(c) To receive, acquire, hold, exercise rights arising out of the
ownership or possession thereof, sell, or otherwise dispose of,
shares or other interests in, or obligations of, individuals,
associations, partnerships, corporations, or governments;
(d) To receive, acquire, hold, pledge, transfer, or otherwise dispose of
shares of the corporation, but such shares may only be purchased,
directly or indirectly, out of earned surplus;
(e) To make gifts or contributions for the public welfare or for
charitable, scientific or educational purposes, and in time of war, to
make donations in aid of war activities.
ARTICLE VI - CAPITAL STOCK:
Section 1. Authorized Shares. The total number of shares which this
-----------------
Corporation is authorized to issue is 75,000,000 shares of Common Stock at
$.001 par value per share.
Section 2. Voting Rights of Shareholders. Each holder of the Common Stock
-----------------------------
shall be entitled to one vote for each share of stock standing in his name
on the books of the corporation.
Section 3. Consideration for Shares. The Common Stock shall be issued for
------------------------
such consideration, as shall be fixed from time to time by the Board of
Directors. In the absence of fraud, the judgment of the Directors as to
the value of any property for shares shall be conclusive. When shares are
issued upon payment of the consideration fixed by the Board of Directors,
such shares shall be taken to be fully paid stock and shall be non-
assessable. The Articles shall not be amended in this particular.
Section 4. Pre-emptive Rights. Except as may otherwise be provided by the
------------------
Board of Directors, no holder of any shares of the stock of the
Corporation, shall have any preemptive right to purchase, subscribe for, or
otherwise acquire any shares of stock of the Corporation of any class nor
or hereafter authorized, or any securities exchangeable for or convertible
into such shares, or any warrants or other instruments evidencing rights or
options to subscribe for, purchase, or otherwise acquire such shares.
2
<PAGE>
Section 5. Stock Rights and Options. The Corporation shall have the power
------------------------
to create and issue rights, warrants, or options entitling the holders
thereof to purchase from the corporation any shares of its capital stock of
any class or classes, upon such terms and conditions and at such times and
prices as the Board of Directors provide, which terms and conditions shall
be incorporated in an instrument or instruments evidencing such rights. In
the absence of fraud, the judgment of the Directors as to the adequacy of
consideration for the issuance of such rights or options and the
sufficiency thereof shall be conclusive.
ARTICLE VII - ASSESSMENT OF STOCK: The capital stock of this Corporation, after
the amount of the subscription price has been fully paid in, shall not be
assessable for any purpose, and no stock issued as fully paid up shall ever be
assessable or assessed. The holders of such stock shall not be individually
responsible for the debts, contracts, or liabilities of the Corporation and
shall not be liable for assessments to restore impairments in the capital of the
Corporation.
ARTICLE VIII - DIRECTORS: For the management of the business, and for the
conduct of the affairs of the Corporation, and for the future definition,
limitation, and regulation of the powers of the Corporation and its directors
and shareholders, it is further provided:
Section 1. Size of Board. The members of the governing board of the
-------------
Corporation shall be styled directors. The number of directors of the
Corporation, their qualifications, terms of office, manner of election,
time and place of meeting, and powers and duties shall be such as are
prescribed by statute and in the by-laws of the Corporation. The name and
post office address of the directors constituting the first board of
directors, which shall be One (1) in number are:
NAME ADDRESS
Max C. Tanner 2950 East Flamingo Road
Suite G
Las Vegas, NV 89121
Section 2. Powers of Board. In furtherance and not in limitation of the
---------------
powers conferred by the laws of the State of Nevada, the Board of Directors
is expressly authorized and empowered:
3
<PAGE>
(a) To make, alter, amend, and repeal the By-Laws subject to the power of
the shareholders to alter or repeal the By-Laws made by the Board of
Directors.
(b) Subject to the applicable provisions of the ByLaws then in effect, to
determine, from time to time, whether and to what extent, and at what
times and places, and under what conditions and regulations, the
accounts and books of the Corporation, or any of them, shall be open
to shareholder inspection. No shareholder shall have any right to
inspect any of the accounts, books or documents of the Corporation,
except as permitted by law, unless and until authorized to do so by
resolution of the Board of Directors or of the Shareholders of the
Corporation;
(c) To issue stock of the Corporation for money, property, services
rendered, labor performed, cash advanced, acquisitions for other
corporations or for any other assets of value in accordance with the
action of the board of directors without vote or consent of the
shareholders and the judgment of the board of directors as to value
received and in return therefore shall be conclusive and said stock,
when issued, shall be fully-paid and non-assessable.
(d) To authorize and issue, without shareholder consent, obligations of
the Corporation, secured and unsecured, under such terms and
conditions as the Board, in its sole discretion, may determine, and to
pledge or mortgage, as security therefore, any real or personal
property of the Corporation, including after-acquired property;
(e) To determine whether any and, if so, what part, of the earned surplus
of the Corporation shall be paid in dividends to the shareholders, and
to direct and determine other use and disposition of any such earned
surplus;
(f) To fix, from time to time, the amount of the profits of the
Corporation to be reserved as working capital or for any other lawful
purpose;
(g) To establish bonus, profit-sharing, stock option, or other types of
incentive compensation plans for the employees, including officers and
directors, of the Corporation, and to fix the amount of profits to be
shared or distributed, and to determine the persons to participate in
any such plans and the amount of their respective participations.
4
<PAGE>
(h) To designate, by resolution or resolutions passed by a majority of the
whole Board, one or more committees, each consisting of two or more
directors, which, to the extent permitted by law and authorized by the
resolution or the By-Laws, shall have and may exercise the powers of
the Board;
(i) To provide for the reasonable compensation of its own members by By-
Law, and to fix the terms and conditions upon which such compensation
will be paid;
(j) In addition to the powers and authority herein before, or by statute,
expressly conferred upon it, the Board of Directors may exercise all
such powers and do all such acts and things as may be exercised or
done by the corporation, subject, nevertheless, to the provisions of
the laws of the State of Nevada, of these Articles of Incorporation,
and of the By-Laws of the Corporation.
Section 3. Interested Directors. No contract or transaction between this
--------------------
Corporation and any of its directors, or between this Corporation and any
other corporation, firm, association, or other legal entity shall be
invalidated by reason of the fact that the director of the Corporation has
a direct or indirect interest, pecuniary or otherwise, in such corporation,
firm, association, or legal entity, or because the interested director was
present at the meeting of the Board of Directors which acted upon or in
reference to such contract or transaction, or because he participated in
such action, provided that: (1) the interest of each such director shall
have been disclosed to or known by the Board and a disinterested majority
of the Board shall have nonetheless ratified and approved such contract or
transaction (such interested director or directors may be counted in
determining whether a quorum is present for the meeting at which such
ratification or approval is given); or (2) the conditions of N.R.S. 78.140
are met.
ARTICLE IX - LIMITATION OF LIABILITY OF OFFICERS OR DIRECTORS: The personal
liability of a director or officer of the corporation to the corporation or the
Shareholders for damages for breach of fiduciary duty as a director or officer
shall be limited to acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law.
ARTICLE X - INDEMNIFICATION: Each director and each officer of the corporation
may be indemnified by the corporation as follows:
5
<PAGE>
(a) The corporation may indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation), by reason of the fact that he 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 expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and
reasonably incurred by him in connection with the action, suit or
proceeding, if he acted in good faith and in a manner which he
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 his conduct was unlawful. The
termination of any action, suit or proceeding, by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent, does not of itself create a presumption that the person
did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation, and
that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(b) The corporation may indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed
action or suit by or in the right of the corporation, to procure a
judgment in its favor by reason of the fact that he 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 expenses including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit, if
he acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to
which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals there from, to be liable
to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the
action or suit was brought or other court of competent jurisdiction
determines upon application that
6
<PAGE>
in view of all the circumstances of the case the person is fairly and
reasonably entitled to indemnity for such expenses as the court deems
proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to subsections (a) and (b)
of this Article, or in defense of any claim, issue or matter therein,
he must be indemnified by the corporation against expenses, including
attorney's fees, actually and reasonably incurred by him in connection
with the defense.
(d) Any indemnification under subsections (a) and (b) unless ordered by a
court or advanced pursuant to subsection (e), must be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee
or agent is proper in the circumstances. The determination must be
made:
(i) By the stockholders;
(ii) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit
or proceeding;
(iii) If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(iv) If a quorum consisting of directors who were not parties to
the act, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.
(e) Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the corporation. The provisions of
this subsection do not affect any rights to advancement of expenses to
which corporate personnel other than directors or officers may be
entitled under any contract or otherwise by law.
7
<PAGE>
(f) The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(i) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled
under the certificate or articles of incorporation or any
bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court
pursuant to subsection (b) or for the advancement of expenses
made pursuant to subsection (c) may not be made to or on
behalf of any director or officer if a final adjudication
establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was
material to the cause of action.
(ii) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE XI - PLACE OF MEETING; CORPORATE BOOKS: Subject to the laws of the
State of Nevada, the shareholders and the Directors shall have power to hold
their meetings, and the Directors shall have power to have an office or offices
and to maintain the books of the Corporation outside the State of Nevada, at
such place or places as may from time to time be designated in the By-Laws or by
appropriate resolution.
ARTICLE XII - AMENDMENT OF ARTICLES: The provisions of these Articles of
Incorporation may be amended, altered or repealed from time to time to the
extent and in the manner prescribed by the laws of the State of Nevada, and
additional provisions authorized by such laws as are then in force may be added.
All rights herein conferred on the directors, officers and shareholders are
granted subject to this reservation.
ARTICLE XIII - INCORPORATOR: The name and address of the sole incorporator
signing these Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
1. Max C. Tanner 2950 East Flamingo Road, Suite G
Las Vegas, Nevada 89121
8
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 2nd day of December, 1993.
/s/ Max C. Tanner
-------------------------------------
Max C. Tanner
STATE OF NEVADA )
) SS:
COUNTY OF CLARK )
On December 2, 1993, personally appeared before me, a Notary Public, Max C.
Tanner, who acknowledged to me that he executed the foregoing Articles of
Incorporation for Pegasus Tax and Financial Planning Services, Inc., a Nevada
corporation.
/s/ June Y. Kelsey
------------------------------
Notary Public
[NOTARY SEAL APPEARS HERE]
9
<PAGE>
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
IN THE MATTER OF PEGASUS TAX AND FINANCIAL PLANNING SERVICES, INC.
We, The Law Offices of Max C. Tanner, do hereby certify that on the 2nd day
of December, 1993, we accepted the appointment as Resident Agent of the above-
entitled corporation in accordance with Sec. 78.090, NRS 1957.
Furthermore, that the principal office in this state is located at The Law
Offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, City of Las Vegas
89121, County of Clark, State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand this 2nd day of December,
1993.
THE LAW OFFICES OF MAX C. TANNER
By: /s/ Max C. Tanner
------------------------------
Max C. Tanner, Esq.
Resident Agent
10
<PAGE>
ARTICLES OF MERGER
OF
CLINICOR, INC. INTO
PEGASUS TAX AND FINANCIAL PLANNING SERVICES, INC.
FIRST: The name of the surviving corporation is Pegasus Tax and
Financial Planning Services, Inc., and the place of its incorporation is the
State of Nevada. The name of the corporation being merged into the surviving
corporation is Clinicor, Inc., and the place of its incorporation is the State
of Texas. Immediately upon the Consummation of this merger, the name of the
surviving corporation shall be changed to "Clinicor, Inc.", and references to
"Clinicor" in these Articles of Merger shall mean the surviving corporation.
SECOND: The Agreement and Plan of Merger (the "Plan of Merger") was
adopted by the Board of Directors of each of the corporations that is a party to
this merger.
THIRD: The plan of Merger was approved by the unanimous consent of
the stockholders of each of the corporations that is a party to this merger.
FOURTH: Article I of the Articles of Incorporation of Pegasus Tax
and Financial Planning Services, Inc. was amended as provided in the Plan of
Merger to read as follows:
"ARTICLE I - NAME: The exact name of this Corporation is:
Clinicor, Inc."
FIFTH: The complete executed Plan of Merger is on file at the place
of business of Clinicor at 307 Camp Craft Road, Suite 200, Austin, Texas 78746,
and a copy of the Plan of Merger will be furnished by Clinicor on request and
without cost, to any stockholder of any corporation which is a party to this
merger.
SIXTH: All corporations party to this merger have complied with
laws of their respective jurisdiction of incorporation concerning this merger.
SEVENTH: Clinicor designates the following address as the address to
which the Secretary of State of the State of Nevada is to mail any process
served on him or against the corporation: CT Corporation System, One East First
Street, Suite 1411, Reno, NV 89501.
Dated: February 18, 1995 PEGASUS TAX AND FINANCIAL PLANNING
----------- SERVICES, INC.
By: /s/ Arthur P. Haag
---------------------------------
Arthur Haag
President
ROSE APOLON
NOTARY PUBLIC. STATE OF TEXAS By: /s/ Arthur P. Haag
MY COMMISSION EXPIRES ---------------------------------
MARCH 23. 1998 Arthur Haag
Secretary
-1-
<PAGE>
FILED CERTIFICATE OF AMENDMENT
IN THE OFFICE OF THE
SECRETARY OF STATE OF OF
THE STATE OF NEVADA
ARTICLES OF INCORPORATION
JUL 15 1996
OF
No. C15780-93
/s/ Dean Heller CLINICOR, INC.
DEAN HELLER,
SECRETARY OF STATE
The undersigned, being the President and Secretary of CLINICOR, INC.,
do certify and set forth:
1. The name of the Corporation is CLINICOR, INC.
2. The articles of incorporation of said corporation were filed with
the Secretary of State on December 3, 1993.
3. The articles of incorporation are hereby amended to authorize an
additional 5,181 shares of Convertible Preferred Stock, without par value.
4. Article VI, Sections 1 and 2 of the articles of incorporation
which set forth the number and designation of authorized shares are amended to
read in their entirety as follows:
"Section 1. Authorized Shares. The aggregate number of shares which
-----------------
the Corporation shall have authority to issue is 75,005,181, of which 75,000,000
shares shall be designated "Common Stock", par value $.001 per share, and 5,181
shares shall be designated "Convertible Preferred Stock", without par value.
Section 2. Relative Rights. The following is a statement of the
---------------
designations, preferences, limitations and relative rights in respect of the
shares of each class of stock of the Corporation:
A. Common Stock
------------
Subject to the rights of the holders of the Convertible Preferred
Stock, the Common Stock shall be entitled to dividends out of funds legally
available therefor, when, as and if declared and paid to the holders of Common
Stock, and upon liquidation, dissolution or winding up of the Corporation, to
share ratably in the assets of the Corporation available for distribution to the
holders of Common Stock. Except as otherwise provided herein or by law, the
holders of the Common Stock shall have full voting rights and powers and each
share of Common Stock shall be entitled to one vote.
<PAGE>
B. Convertible Preferred Stock
---------------------------
Each share of Convertible Preferred Stock shall be subject to the
following provisions:
(1) Dividends.
---------
(a) Right to Receive Dividends. The holders of the
-------------------------
Convertible Preferred Stock shall be entitled to receive, when, if and as
declared by the Corporation's Board of Directors, out of funds legally available
therefor, cumulative dividends payable as set forth in this Section 1.
(b) Cumulative Dividends and Dividend Payment Dates.
-----------------------------------------------
Dividends on the Convertible Preferred Stock shall accrue and shall be
cumulative from the date of issuance of the shares of Convertible Preferred
Stock (the "Date of Original Issue"), whether or not earned or declared by the
Board of Directors of the Corporation. Until paid, the right to receive
dividends on the Convertible Preferred Stock shall accumulate, and shall be
payable in kind in additional shares of Convertible Preferred Stock, as set
forth below, in arrears, on June 30 and December 31 of each year (a "Dividend
Payment Date"), commencing on December 31, 1996 (the "Initial Dividend Payment
Date") except that if such Dividend Payment Date is not a business day, then the
Dividend Payment Date will be the immediately preceding business day.
Not later than noon on the business day immediately
preceding each Dividend Payment Date, the Corporation shall set aside a
sufficient number of shares of Convertible Preferred Stock for the payment of
declared dividends and shall deliver such shares of Convertible Preferred Stock
to the holders of shares of Convertible Preferred Stock as of the record date
for such dividend in payment of such declared dividends on such Dividend Payment
Date. Each such dividend declared by the Board of Directors on the Convertible
Preferred Stock shall be paid to the holders of record of shares of the
Convertible Preferred Stock as they appear on the Stock Register on the record
date which shall be the business day next preceding a Dividend Payment Date.
Dividends in arrears for any past dividend period may be declared by the Board
of Directors of the Corporation and paid on shares of the Convertible Preferred
Stock on any date fixed by the Board of Directors of the Corporation, whether or
not a regular Dividend Payment Date, to holders of record of shares of the
Convertible Preferred Stock as they appear on such Stock Register on the record
date, which shall not be greater than 15 days before such Dividend Payment Date,
as may be fixed by the Board of Directors of the Corporation. Any dividend
payment made on shares of the Convertible Preferred Stock shall first be
credited against the
2
<PAGE>
dividends accumulated with respect to the earliest dividend period for which
dividends have not been paid.
Except as hereinafter provided, no dividends shall be
declared or paid or set apart for payment on the shares of Common Stock or any
other class or series of capital stock of the Corporation for any dividend
period unless full cumulative dividends have been or contemporaneously are
declared and paid on the Convertible Preferred Stock through the most recent
Dividend Payment Date. If full cumulative dividends have not been paid on shares
of the Convertible Preferred Stock, all dividends declared on shares of the
Convertible Preferred Stock shall be paid pro rata to the holders of outstanding
shares of the Convertible Preferred Stock. Holders of the shares of Convertible
Preferred Stock shall not be entitled to any dividends, whether payable in cash,
property or stock, in excess of full cumulative dividends as set forth in this
paragraph. No interest or sum of money in lieu of interest shall be payable in
respect of any dividend payment or payments on the Convertible Preferred Stock
which may be in arrears.
(c) Dividend Rate. The dividend rate (the "Dividend Rate")
-------------
on each share of Convertible Preferred Stock shall be 8% per share per annum on
the Liquidation Preference (as hereinafter defined) of each such share for the
period from the Date of Original Issue until the Initial Dividend Payment Date
and, for each dividend period thereafter, which shall commence on the last day
of the preceding dividend period and shall end on the next Dividend Payment
Date, shall be at the Dividend Rate (as adjusted from time to time as
hereinafter provided) on such Liquidation Preference and no more. The amount of
dividends per share of the Convertible Preferred Stock payable for each dividend
period or part thereof shall be computed by multiplying the Dividend Rate for
such dividend period by a fraction the numerator of which shall be the number of
days in the dividend period or part thereof (calculated by counting the first
day thereof but excluding the last day thereof) such share was outstanding and
the denominator of which shall be 360 and multiplying the result by the
Liquidation Preference. Any such dividend declared shall be payable in kind in
additional shares of Convertible Preferred Stock. The Corporation shall issue,
in payment of such dividend, such number of shares of Convertible Preferred
Stock as will have an aggregate Liquidation Preference equal to the amount of
the dividend so payable by the Corporation. In furtherance thereof, the
Corporation shall reserve out of the authorized but unissued shares of
Convertible Preferred Stock, solely for issuance in respect of the payment of
dividends as herein described, a sufficient number of shares of Convertible
Preferred Stock to pay such dividends, when, if and as declared by the Board of
Directors of the Corporation. Notwithstanding anything to the contrary contained
herein, from and after the fifth anniversary of the Date of Original Issue, the
Dividend Rate shall
3
<PAGE>
increase to 10% per annum on the Liquidation Preference of the shares of
Convertible Preferred Stock, and thereafter, the Dividend Rate shall increase by
an additional 2% per annum on each successive Dividend Payment Date. All such
dividends accruing from and after the fifth anniversary of the Date of Original
Issue shall be payable in cash.
(d) Purchase of Convertible Preferred Stock if Dividends
----------------------------------------------------
are in Arrears. So long as any shares of the Convertible Preferred Stock are
- --------------
outstanding, the Corporation may not purchase or otherwise acquire for any
consideration (except through a redemption of all the outstanding shares of the
Convertible Preferred Stock) any shares of the Convertible Preferred Stock
during any period when dividends on the Convertible Preferred Stock are in
arrears for any past dividend period.
(2) Voting Rights.
-------------
(a) Except as otherwise provided herein or by law, the
holders of Convertible Preferred Stock shall have full voting rights and powers,
and they shall be entitled to vote on all matters as to which holders of Common
Stock shall be entitled to vote, voting together with the holders of Common
Stock as one class; provided, however, that solely with respect to the right to
elect and remove directors, the holders of the Convertible Preferred Stock shall
not be entitled to vote pursuant to this Section 2(a). The provisions of Section
2(b) hereof shall govern the rights of the holders of Convertible Preferred
Stock with respect to the election and removal of directors. Each holder of
shares of Convertible Preferred Stock shall be entitled to the number of votes
equal to the number of shares of Common Stock into which such shares of
Convertible Preferred stock could be converted. Fractional votes shall not,
however, be permitted and any fractional voting rights resulting from the above
formula (after aggregating all shares into which shares of Convertible Preferred
Stock held by each holder could be converted) shall be rounded to the nearest
whole number (with one-half being rounded upward).
(b) In addition to the rights specified in Section 2(a) and
Section 4 hereof, the holders of the Convertible Preferred Stock, voting
separately as one class, shall have the exclusive and special right at all times
to elect that number of directors to the Board of Directors of the Corporation
as is proportional to the percentage ownership of the Corporation's shares of
Common Stock, assuming conversion of all shares of Convertible Preferred Stock
then outstanding and at all times to remove such directors. Such directors shall
be elected by the vote of the holders of a majority, and removed by the vote of
the holders of two-thirds (2/3), of the shares of Convertible Preferred
4
<PAGE>
Stock then outstanding. The right of holders of the Convertible Preferred Stock
contained in this Section 2(b) may be exercised either at a special meeting of
the holders of Convertible Preferred Stock, or at any annual or special meeting
of the stockholders of the Corporation, or by written consent of such holders in
lieu of a meeting. Upon the written request of the holders of record of at
least 33-1/3% of the Convertible Preferred Stock then outstanding, the Secretary
of the Corporation shall call a special meeting of the holders of Convertible
Preferred Stock for the purpose of (i) removing any director elected pursuant to
this Section 2(b) and/or (ii) electing directors to fill a vacancy in the
directorship authorized to be filled by the holders of Convertible Preferred
Stock pursuant to this Section 2(b). Such meeting shall be held at the earliest
practicable date.
At any meeting held for the purpose of electing or removing
directors at which the holders of Convertible Preferred Stock shall have the
right to elect or remove directors as provided in this Section 2(b), the
presence, in person or by proxy, of the holders of record of two-thirds (2/3) of
the Convertible Preferred Stock then outstanding shall be required to constitute
a quorum of the Convertible Preferred Stock for such election.
A vacancy in the directorship to be elected by the holders
of Convertible Preferred Stock pursuant to this Section 2(b) may be filled only
by vote or written consent in lieu of a meeting of the holders of a majority of
the shares of Convertible Preferred Stock then outstanding and may not be filled
by the remaining directors.
(3) Rights on Liquidation.
---------------------
(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation (any such event being
hereinafter referred to as a "Liquidation"), before any distribution of assets
of the Corporation shall be made to or set apart for the holders of Common
Stock, the holders of Convertible Preferred Stock shall be entitled to receive
payment out of such assets of the Corporation in an amount equal to $1,000 per
share of Convertible Preferred Stock (such amount being referred to as the
"Liquidation Preference" for the Convertible Preferred Stock), plus any
accumulated and unpaid dividends thereon (whether or not earned or declared) on
the Convertible Preferred Stock. If the assets of the Corporation available for
distribution to the holders of Convertible Preferred Stock shall not be
sufficient to make in full the payment herein required, such assets shall be
distributed pro-rata among the holders of Convertible Preferred Stock based on
the aggregate Liquidation Preferences of the shares of Convertible Preferred
5
<PAGE>
Stock held by each such holder. If the assets of the Corporation available for
distribution to the holders of Convertible Preferred Stock shall exceed the
distribution required to be made to the holders of Convertible Preferred Stock
as herein described, such excess assets shall be distributed pro-rata among the
holders of Common Stock.
(b) Unless such event has been approved by the holders of at
least 66 2/3% of the shares of Convertible Preferred Stock in accordance with
Section 4 below, a merger or consolidation including the Corporation and a sale,
lease, transfer or other disposition of all or substantially all of the assets
of the Corporation shall be deemed a Liquidation.
(4) Actions Requiring the Consent of Holders of Preferred Stock.
-----------------------------------------------------------
As long as any shares of Convertible Preferred Stock are outstanding, the
consent of the holders of at least 66-2/3% of the shares of Convertible
Preferred Stock at the time outstanding, voting separately as a class, given in
person or by proxy, either in writing without a meeting or by vote at a meeting
called for the purpose, shall be necessary for effecting or validating any of
the following transactions:
(a) Any amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation, as amended, or the By-laws of the
Corporation which (i) increases the number of authorized shares of the
Convertible Preferred Stock, (ii) adversely affects the rights, preferences or
powers of the Convertible Preferred Stock or of the holders thereof, (iii)
decreases the required time for the giving of any notice to which the holders of
Convertible Preferred Stock may be entitled, or (iv) amends, alters or repeals
Section 4(g) hereof;
(b) The authorization or creation of, or the increase in the
number of authorized shares of any stock of any class, or any security
convertible into stock of any class, or the authorization or creation of any new
class of preferred stock (or any action which would result in another series of
preferred stock);
(c) Any merger or consolidation including the Corporation,
or any sale, lease, transfer or other disposition of all or substantially all of
the assets of the Corporation;
(d) Any Liquidation of the Corporation;
(e) The declaration or payment of any dividends to the
holders of Common Stock of the Corporation or any
6
<PAGE>
other class of capital stock of the Corporation, other than the Convertible
Preferred Stock;
(f) The repurchase or redemption of any shares of capital
stock of the Corporation, other than the redemption of the Convertible Preferred
Stock as herein provided; or
(g) Any increase in the number of directors of the
Corporation.
In furtherance and not in limitation of the foregoing, the
Corporation shall not in any manner, whether by amendment of the Articles of
Incorporation (including, without limitation, any Certificate of Designation),
merger, reorganization, recapitalization, consolidation, sale of assets, sale of
stock, tender offer, dissolution or otherwise, directly or indirectly, take any
action, or permit any action to be taken, solely or primarily for the purpose of
increasing the value of any class of stock of the Corporation if the effect of
such action is reasonably likely to reduce the value, security, rights or
preferences of the Convertible Preferred Stock.
(5) Redemption.
----------
(a) Following notice pursuant to paragraph 5(b)(ii) hereof
given to all holders of Convertible Preferred Stock during the period (the
"Redemption Period") commencing July ___, 1998 and continuing for so long as
shares of Convertible Preferred Stock are outstanding, the Corporation may at
the option of the Board of Directors, redeem in whole or in part the shares of
Convertible Preferred Stock subject to the right of the holder of Convertible
Preferred Stock to convert the same into shares of the Corporation's Common
Stock, as herein described. The Corporation shall effect any such redemption by
paying in cash for each such share to be redeemed an amount equal to the
Liquidation Preference, per share, plus any accumulated and unpaid dividends
thereon (whether or not earned or declared) on such shares to the Redemption
Date (as hereinafter defined) (such total amounts are hereinafter referred to as
the "Redemption Price").
(b) (i) In the event of any redemption pursuant hereto, the
Corporation shall effect such redemption as follows. The number of shares
subject to redemption shall be allocated pro rata among the holders of
outstanding shares of Convertible Preferred Stock based upon the number of
shares held by each such holder.
(ii) During the Redemption Period, and at least 30 but
no more than 60 days prior to the date fixed for any redemption of Convertible
Preferred Stock (the "Redemption Date"),
7
<PAGE>
written notice shall be mailed by first-class certified or registered mail,
return receipt requested, postage prepaid, to each holder of record of
Convertible Preferred Stock to be redeemed, notifying such holder of the
redemption to be effected, specifying the Redemption Date, the Redemption Price,
the place at which payment may be obtained and the date on which such holder's
rights to convert such Convertible Preferred Stock into Common Stock shall
terminate and calling upon such holder to surrender to the Corporation, in the
manner and at the place designated, his certificate or certificates representing
the shares to be redeemed (the "Redemption Notice"). Except as provided in
Section 5(b)(iii), on or after the Redemption Date, each holder of Convertible
Preferred Stock to be redeemed shall surrender to the Corporation the
certificate or certificates representing such shares, in the manner and at the
place designated in the Redemption Notice, and thereupon the Redemption Price of
such shares shall be payable to the order of the person whose name appears on
such certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled; provided, however, that the holder of any shares
-------- -------
of Convertible Preferred Stock shall have the right, at any time prior to the
close of business on any Redemption Date as may have been fixed in any
Redemption Notice with respect to such shares, to convert such shares into
shares of Common Stock in accordance with Section 6 below. In the event less
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(iii) From and after the close of business on the
Redemption Date, unless there shall have been a default in payment of the
Redemption Price, all rights of the holders of the shares of Convertible
Preferred Stock designated for redemption as holders of Convertible Preferred
Stock (except the right to receive the Redemption Price without interest upon
surrender of their certificate or certificates) shall cease with respect to such
shares, and such shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose whatsoever.
(iv) Three days prior to the Redemption Date, the
Corporation shall deposit the Redemption Price of all outstanding shares of
Convertible Preferred Stock designated for redemption in the Redemption Notice,
and not yet redeemed or converted, with a bank or trust company having aggregate
capital and surplus in excess of $50,000,000 as a trust fund for the benefit of
the respective holders of the shares designated for redemption and not yet
redeemed. Simultaneously, the Corporation shall deposit irrevocable instructions
and authorize such bank or trust company to pay, on and after the date fixed for
redemption or prior thereto, the Redemption Price of the Convertible Preferred
Stock to the holders thereof upon surrender of their certificates.
8
<PAGE>
Any monies deposited by the Corporation pursuant to this Section 5(b)(iv) for
the redemption of shares which are thereafter converted into shares of Common
Stock pursuant to Section 6 hereof no later than the close of business on the
Redemption Date shall be returned to the Corporation forthwith upon such
conversion. The balance of any monies deposited by the Corporation pursuant to
this Section 5(b)(iv) remaining unclaimed at the expiration of two years
following the Redemption Date shall thereafter be returned to the Corporation,
provided that the shareholder to which such monies would be payable hereunder
shall be entitled, upon proof of its ownership of the Convertible Preferred
Stock and payment of any bond requested by the Corporation, to receive such
monies but without interest from the Redemption Date.
(c) Redemption of Convertible Preferred Stock if Dividends
------------------------------------------------------
are in Arrears. Notwithstanding the provisions of this Section 5, shares of the
- --------------
Convertible Preferred Stock may not be redeemed, other than in whole, unless, at
the Redemption Date, all accumulated and unpaid dividends on the outstanding
shares of the Convertible Preferred Stock for all past dividend periods shall
have been or are being contemporaneously paid or declared and set apart for
payment.
(d) Status of Redeemed or Purchased Shares. Any shares of
--------------------------------------
the Convertible Preferred Stock at any time purchased, redeemed or otherwise
acquired by the Corporation shall not be reissued and shall be retired.
(6) Conversion.
----------
(a) Right to Convert. The holder of any share or shares of
----------------
Convertible Preferred Stock shall have the right at any time, at such holder's
option, to convert all or a portion of such shares of Convertible Preferred
Stock held by such holder into such number of fully paid and non assessable
shares of Common Stock as is determined by dividing (i) the aggregate
Liquidation Preference of the shares of Convertible Preferred Stock to be
converted by (ii) the Conversion Value (as hereinafter defined) then in effect
for such Convertible Preferred Stock. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any Convertible
Preferred Stock. With respect to any fraction of a share of Common Stock called
for upon any conversion, the Corporation shall pay to the holder an amount in
cash equal to such fraction multiplied by the current market value of a share,
determined in good faith by the Board of Directors of the Corporation.
(b) Mechanics of Conversion. Such right of conversion shall
-----------------------
be exercised by the holder of shares of Convertible Preferred Stock by giving
prior written notice to the
9
<PAGE>
Corporation (the "Conversion Notice") that such holder elects to convert a
stated number of shares of Convertible Preferred Stock (the "Conversion Shares")
into shares of Common Stock on the date specified in the Conversion Notice
(which date shall not be earlier than the date of the Conversion Notice), and by
surrender of the certificate or certificates representing such Conversion
Shares. The Conversion Notice shall also contain a statement of the name or
names (with addresses) in which the certificate or certificates for Common Stock
shall be issued. Promptly after the receipt of the Conversion Notice and
surrender of the Conversion Shares, the Corporation shall issue and deliver, or
cause to be delivered, to the holder of the Conversion Shares or his nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
issuable upon the conversion of such Conversion Shares. Such conversion shall be
deemed to have been effected as of the close of business on the date specified
in the Conversion Notice, and the person or persons entitled to receive the
shares of Common Stock issuable upon conversion shall be treated for all
purposes as the holder or holders of record of such shares of Common Stock as of
the close of business on such date.
(c) Common Stock Reserved. The Corporation shall at all
---------------------
times reserve and keep available out of its authorized but unissued Common
Stock, solely for issuance upon the conversion of shares of Convertible
Preferred Stock as herein provided, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion of all the shares of
Convertible Preferred Stock at the time outstanding. All such shares of Common
Stock shall have either been listed or approved for listing subject to official
notice of issuance with the National Association of Securities Dealers Automated
Quotation System, if such shares are then listed thereon, or on such other
securities exchange as such shares may be listed on at the time in question.
Such shares shall also have been registered under the Securities Exchange Act of
1934, as amended.
(d) Conversion Value. The initial conversion value for the
----------------
Convertible Preferred Stock shall be $1.50 per share of Common Stock, such value
to be subject to adjustment in accordance with the provisions of this Section
6(d). Such conversion value in effect from time to time, as adjusted pursuant to
this Section 6(d), is referred to herein as a "Conversion Value." All of the
remaining provisions of this Section 6(d) shall apply separately to each
Conversion Value in effect from time to time with respect to Convertible
Preferred Stock.
(i) In the event the Corporation shall, at any time or
from time to time, issue or sell any shares of Common Stock (including treasury
shares), other than any such sales pursuant to options or warrants that are
outstanding as of the date
10
<PAGE>
hereof, for a consideration per share less than the Conversion Value in effect
for the Convertible Preferred Stock immediately prior to the time of such issue
or sale, then, forthwith upon such issue or sale, the Conversion Value for the
Convertible Preferred Stock shall be reduced to a price equal to the
consideration per share paid for such Common Stock. For purposes of this
paragraph (d)(i), the following provisions shall also be applicable:
(A) In the event the Corporation shall, in any
manner, grant any right to subscribe for or to purchase, or any option for the
purchase of, Common Stock or any stock or other securities convertible into or
exchangeable for Common Stock (such convertible or exchangeable stock or
securities being hereinafter referred to as "Convertible Securities"), whether
or not such rights or options are immediately exercisable, and the minimum price
per share for which Common Stock is issuable pursuant to such rights or options
or upon conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount, if any, received or receivable by the Corporation
as consideration for the granting of such rights or options, plus the minimum
aggregate amount of additional consideration payable to the Corporation upon the
exercise of such rights or options, plus, in the case of such Convertible
Securities, the minimum aggregate amount of additional consideration payable
upon the conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of such rights or options or
upon the conversion or exchange of all such Convertible Securities) shall be
less than the Conversion Value in effect for the Convertible Preferred Stock,
immediately prior to the time of the granting of such rights or options, then
for the purposes of determining the Conversion Value for the Convertible
Preferred Stock, the Corporation shall be deemed to have issued shares of Common
Stock at such price per share as of the date of granting of such rights or
options, and the adjustment of the Conversion Value required by this paragraph
(d)(i) shall be made as of the date of granting of such rights or options;
provided, however, that no further adjustment of such Conversion Value shall be
- -------- -------
made upon the actual issue of Common Stock or Convertible Securities upon the
exercise of such rights or options or upon the issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
(B) In the event the Corporation shall in any
manner issue or sell any Convertible Securities, whether or not the rights to
convert or exchange thereunder are immediately exercisable, and the price per
share for which shares of Common Stock are issuable upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the total
amount, if any, received or receivable by the Corporation in consideration of
the issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if
11
<PAGE>
any, payable to the Corporation upon conversion or exchange thereof by (ii) the
total number of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities) shall be less than the Conversion Value in
effect for the Convertible Preferred Stock immediately prior to the time of the
issue or sale of such Convertible Securities, then for purposes of determining
the Conversion Value for such Convertible Preferred Stock, the Corporation shall
be deemed to have issued shares of Common Stock at such price per share as of
the date of the issue or sale of such Convertible Securities, and the adjustment
of the Conversion Value required by this paragraph (d)(i) shall be made as of
the date of the issue or sale of such Convertible Securities; provided, however,
-------- -------
that no further adjustment of such Conversion Value shall be made upon the
actual conversion or exchange of such Convertible Securities.
(C) In the event any shares of Common Stock or
Convertible Securities or any rights or options to purchase any such stock or
securities shall be issued for cash, the consideration received therefor, less
any out-of-pocket expenses incurred and any underwriting commissions or
concessions paid or allowed by the Corporation in connection therewith, shall be
deemed to be the amount of consideration received by the Corporation therefor.
The Board of Directors of the Corporation shall determine (irrespective of any
treatment thereof on the books of account of the Corporation) the fair value of
any consideration other than money received upon any such issue, and shall, in
case any of the foregoing is issued with other stock, securities or assets of
the Corporation determine in good faith what part of the consideration received
therefor is applicable to the issue of the Common Stock, Convertible Securities
or rights or options for the purchase thereof.
(ii) Notwithstanding the provisions of paragraph (d)(i)
hereof, in the event the Corporation shall, at any time, issue any shares of
Common Stock (A) by stock dividend or any other distribution upon any stock of
the Corporation payable in Common Stock or in Convertible Securities or (B) in
subdivision of its outstanding Common Stock, by reclassification or otherwise,
the Conversion Value then in effect shall be reduced proportionately, and, in
like manner, in the event of any combination of shares of Common Stock, by
reclassification or otherwise, the Conversion Value then in effect shall be
proportionately increased.
(iii) If any capital reorganization or reclassification
of the Common Stock of the Corporation, or consolidation or merger of the
Corporation with or into another corporation, or the sale or conveyance of all
or substantially all of its assets to another corporation shall be effected,
then, as a condition of such reorganization, reclassification, consolidation,
12
<PAGE>
merger or sale, lawful or adequate provision shall be made whereby the holders
of Convertible Preferred Stock shall thereafter have the right to receive, in
lieu of the shares of Common Stock of the Corporation immediately theretofore
receivable upon the exercise of their conversion rights, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for the number of outstanding shares of such Common Stock equal to the number of
shares of such Common Stock immediately theretofore receivable upon the exercise
of such rights had such reorganization, reclassification, consolidation, merger
or sale not taken place, and, in such case, appropriate provision shall be made
with respect to the rights and interests of the holders of Convertible Preferred
Stock to the end that such conversion rights (including, without limitation,
provisions for adjustment of the Conversion Value) shall thereafter be
applicable, as nearly as may be practicable in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise thereof. The
Corporation shall not effect any such consolidation, merger or sale without the
consent of the holders of Convertible Preferred Stock as herein described.
(iv) In the event that (A) there shall be any decrease
in the purchase price provided for in any right or option referred to in
paragraph (d)(i)(A) hereof or the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities referred to in
paragraph (d)(i)(A) hereof or paragraph (d)(i)(B) hereof, or (B) there shall be
any increase in the rate at which any Convertible Securities referred to in
paragraph (d)(i)(A) hereof or paragraph (d)(i)(B) hereof are convertible into or
exchangeable for shares of Common Stock, the Conversion Value in effect at the
time of such decrease or increase shall forthwith be reduced to the Conversion
Value which would have been in effect at such time had such outstanding rights
or options or Convertible Securities provided for such decreased purchase price
or additional consideration or increased conversion rate, as the case may be, at
the time initially granted, issued or sold.
(v) Each adjustment in each Conversion Value shall be
calculated to the nearest cent.
(vi) If any event occurs as to which in the opinion of
the Board of Directors the other provisions of this Section 6(d) are not
strictly applicable or if strictly applicable would not fairly protect the
conversion rights of the Convertible Preferred Stock in accordance with the
intent and principles of such provisions, then the Board of Directors shall make
an adjustment in the application of such provisions, in accordance with such
intent and principles, so as to protect such conversion rights as aforesaid, but
in no event shall any such adjustment have the effect of increasing any
Conversion Value as otherwise
13
<PAGE>
determined pursuant to this Section 6(d) except in the event of a combination of
shares of the type contemplated in paragraph (d)(ii) hereof and then in no event
in an amount greater than such Conversion Value as adjusted pursuant to
paragraph (d)(ii) hereof.
(e) Stock Transfer Taxes. The issue of stock certificates
--------------------
upon conversion of the Convertible Preferred Stock shall be made without charge
to the converting holder for any tax in respect of such issue. The Corporation
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of shares in any name other
than that of the holder of any of the Convertible Preferred Stock converted, and
the Corporation shall not be required to issue or deliver any such stock
certificate unless and until the person or persons requesting the issue thereof
shall have paid to the Corporation the amount of such tax or shall have
established to the satisfaction of the Corporation that such tax has been paid.
(f) Certificate as to Adjustments. Upon the occurrence of
-----------------------------
each adjustment or readjustment of the Conversion Value, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of Convertible
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Convertible Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Value at the time in effect for the Convertible Preferred Stock and
(iii) the number of shares of Common Stock and the amount, if any, or other
property which at the time would be received upon the conversion of Convertible
Preferred Stock owned by such holder.
(g) Notices of Record Date. In the event Of any fixing by
----------------------
the Corporation of a record date for the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any shares of
Common Stock or other securities, or any right to subscribe for, purchase or
otherwise acquire, or any option for the purchase of, any shares of stock of any
class or any other securities or property, or to receive any other right, the
Corporation shall mail to each holder of Convertible Preferred Stock at least
thirty (30) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution or rights, and the amount and character of such dividend,
distribution or right.
14
<PAGE>
(h) Notices. Any notice required by the provisions of this
-------
Section 6 to be given to the holders of shares of Convertible Preferred Stock
shall be deemed given upon receipt if personally delivered with receipt
acknowledged, or upon receipt if delivered by a reputable overnight courier
service or by United States first-class certified or registered mail, return
receipt requested, postage prepaid, and addressed to each holder of record at
his address appearing on the books of the Corporation.
(7) Purchase Rights. If at any time the Corporation grants,
---------------
issues or sells any options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of Common
Stock (the "Purchase Rights"), then each holder of Convertible Preferred Stock
will be entitled to acquire upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such holder could have acquired if such
holder had held the number of shares of Common Stock acquirable upon conversion
of such holder's Convertible Preferred Stock immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.
(8) Defaults.
--------
In the event of a default by the Corporation in the payment
of any dividend on a Dividend Payment Date, whether or not earned or declared,
each director elected by the holders of the Convertible Preferred Stock pursuant
to Section 2(b) hereof shall have the absolute right, immediately upon the
occurrence of any such default, to cast two votes on all matters as to which the
directors are entitled to vote, while each director elected by the holders of
Common Stock shall have the right to cast one vote with respect to such matters.
The Corporation shall give immediate written notice to the holders of
Convertible Preferred Stock of the occurrence of any default specified herein."
5. Article IX of the articles of incorporation, which limits the
personal liability of a director or officer to the Corporation or the
Shareholders, is amended to read in its entirety as follows:
"The personal liability of a director or officer of the
Corporation to the Corporation or the Shareholders for damages for breach of
fiduciary duty as a director or officer shall be limited to (a) acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law or (b) the payment of distributions in violation of N.R.S. 78.300."
15
<PAGE>
6. The amendment effected herein was authorized by resolutions
adopted by the unanimous written consent dated July __, 1996 of the Board of
Directors pursuant to Section 78.315 of the General Corporation Law of the State
of Nevada. The number of shares of the Corporation outstanding and entitled to
vote on an amendment to the articles of incorporation is 4,086,400; the said
changes and amendment have been consented to and approved by written consent
setting forth the action so taken and signed by the holders of a majority of the
outstanding shares entitled to vote thereon pursuant to Section 78.325 of the
General Corporation Law of the State of Nevada.
IN WITNESS WHEREOF, we have executed this Certificate and affirm that
the statements made herein are true under the penalties of perjury, this 11th
day of July, 1996.
CLINICOR, INC.
By:/s/ Thomas P. O'Donnell
--------------------------------
President
By:/s/ Robert S. Sammis
--------------------------------
Secretary
16
<PAGE>
STATE OF TEXAS )
: ss.:
COUNTY OF TRAVIS )
On the 11th day of July, 1996, before me came Thomas P. O'Donnell to
me known, who being by me duly sworn did depose and say that he resides at 2600
Lake Austin Blvd. #16204, city of Austin, state of Texas; that he is the
President of Clinicor, Inc., the corporation described in and which executed the
foregoing instrument; that he knows the seal of the said corporation; that it
was so affixed by the order of the Board of Directors of said corporation; and
that he signed his name thereto by like order.
/s/ Elizabeth Kay Hays
------------------------------
_________________ County
[SEAL] ELIZABETH KAY HAYS
NOTARY PUBLIC STATE OF TEXAS
MY COMMISSION EXPIRES
OCT. 31, 1996
STATE OF TEXAS )
: ss.:
COUNTY OF TRAVIS )
On the 11th day of July, 1996, before me came Robert S. Sammis to me
known, who being by me duly sworn did depose and say that he resides at 3709
Gilbert, city of Austin, state of Texas; that he is the Secretary of Clinicor,
Inc., the corporation described in and which executed the foregoing instrument;
that he knows the seal of the said corporation; that it was so affixed by the
order of the Board of Directors of said corporation; and that he signed his name
thereto by like order.
/s/ Elizabeth Kay Hays
------------------------------
_________________ County
[SEAL] ELIZABETH KAY HAYS
NOTARY PUBLIC STATE OF TEXAS
MY COMMISSION EXPIRES
OCT. 31, 1996
17
<PAGE>
STATE OF NEVADA
SECRETARY OF STATE
I hereby certify that this is a
true and complete copy of
the document as filed in this
office.
JUL 15 '96
/s/ DEAN HELLER
DEAN HELLER
<PAGE>
EXHIBIT 3(b)
AMENDED AND RESTATED
BY-LAWS OF
CLINICOR, INC.
ARTICLE I
SHAREHOLDERS
Section 1.01 Annual Meeting. The annual meeting of the shareholders shall
--------------
be held at such date and time as shall be designated by the board of directors
and stated in the notice of the meeting or in a duly-executed waiver of notice
thereof.
Section 1.02 Special Meetings. Special meetings of the shareholders shall
----------------
be called under the circumstances set forth in the Articles of Incorporation and
shall be called at the written request of the holders of not less than 10% of
the issued and outstanding shares of capital stock of the corporation.
Section 1.03 Place of Meetings. Any meeting of the shareholders of the
-----------------
corporation may be held at its principal office in the State of Nevada or such
other place in or out of the United States as the Board of Directors may
designate.
Section 1.04 Notice of Meetings.
------------------
(a) The secretary shall sign and deliver to all shareholders of record
written or printed notice of any meeting at least ten (10) days, but not
more than sixty (60) days, before the date of such meeting; which notice
shall state the place, date and time of the meeting, the general nature of
the business to be transacted, and, in the case of any meeting at which
directors are to be elected, the names of nominees, if any, to be presented
for election.
(b) In the case of any meeting, any proper business may be presented
for action, except that the following items shall be valid only if the
general nature of the proposal is stated in the notice or written waiver of
notice:
(1) Action with respect to any contract or transaction
between the corporation and one or more of its directors or another
firm, association, or corporation in which one or more of its
directors has a material financial interest;
(2) Adoption of amendments to the Articles of Incorporation;
or
<PAGE>
(3) Action with respect to the merger, consolidation,
reorganization, partial or complete liquidation, or dissolution of the
corporation.
(c) The notice shall be personally delivered or mailed by first class
mail to each shareholder of record at the last known address thereof, as
the same appears on the books of the corporation, and the giving of such
notice shall be deemed delivered the date the same is deposited in the
United States mail, postage prepaid. If the address of any shareholder
does not appear upon the books of the corporation, it will be sufficient to
address any notice to such shareholder at the principal office of the
corporation.
(d) The written certificate of the person calling any meeting, duly
sworn, setting forth the substance of the notice, the time and place the
notice was mailed or personally delivered to the several shareholders, and
the addresses to which the notice was mailed shall be prima facie evidence
of the manner and fact of giving such notice.
Section 1.05 Waiver of Notice. If all of the shareholders of the
----------------
corporation shall waive notice of a meeting, no notice shall be required, and,
whenever all of the shareholders shall meet in person or by proxy, such meeting
shall be valid for all purposes without call or notice, and at such meeting any
corporate action may be taken.
Section 1.06 Determination of Shareholders of Record.
---------------------------------------
(a) The Board of Directors may at any time fix a future date as a
record date for the determination of the shareholders entitled to notice of
any meeting or to vote or entitled to receive payment of any dividend or
other distribution or allotment of any rights or entitled to exercise any
rights in respect of any other lawful action. The record date so fixed
shall not be more than sixty (60) days prior to the date of such meeting
nor more than sixty (60) days prior to any other action. When a record
date is so fixed, only shareholders of record on that date are entitled to
notice of and to vote at the meeting or to receive the dividend,
distribution or allotment of rights, or to exercise their rights, as the
case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date.
(b) If no record date is fixed by the Board of Directors, then (1) the
record date for determining
-2-
<PAGE>
shareholders entitled to notice of or to vote at a meeting of shareholders
shall be at the close of business on the business day next preceding the
day on which notice is given or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held;
(2) the record date for determining shareholders entitled to give consent
to corporate action in writing without a meeting, when no prior action by
the Board of Directors is necessary, shall be the day on which written
consent is given; and (3) the record date for determining shareholders for
any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto, or the sixtieth
(60th) day prior to the date of such other action, whichever is later.
Section 1.07 Quorum: Adjourned Meetings.
--------------------------
(a) Except as set forth in the Articles of Incorporation, at any
meeting of the shareholders, a majority of the issued and outstanding
shares of the corporation, represented in person or by proxy, shall
constitute a quorum.
(b) If less than a majority of the issued and outstanding shares are
represented, a majority of shares so represented may adjourn from time to
time at the meeting, until holders of the amount of stock required to
constitute a quorum shall be in attendance. At any such adjourned meeting
at which a quorum shall be present, any business may be transacted which
might have been transacted as originally called. When a shareholders'
meeting is adjourned to another time or place, notice need not be given of
the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken, unless the adjournment is for
more than ten (10) days in which event notice thereof shall be given.
Section 1.08 Voting.
------
(a) Each shareholder of record, such shareholder's duly authorized
proxy or attorney-in-fact shall be entitled to one (1) vote for each share
of stock standing registered in such shareholder's name on the books of the
corporation on the record date.
(b) Except as otherwise provided herein, all votes with respect to
shares standing in the name of an individual on the record date (included
pledged shares) shall be cast only by that individual or such individual's
duly authorized proxy or
-3-
<PAGE>
attorney-in-fact. With respect to shares held by a representative of the
estate of a deceased shareholder, guardian, conservator, custodian or
trustee, votes may be cast by such holder upon proof of capacity, even
though the shares do not stand in the name of such holder. In the case of
shares under the control of a receiver, the receiver may cast votes carried
by such shares even though the shares do not stand in the name of the
receiver provided that the order of the court of competent jurisdiction
which appoints the receiver contains the authority to cast votes carried by
such shares. If shares stand in the name of a minor, votes may be cast
only by the duly-appointed guardian of the estate of such minor if such
guardian has provided the corporation with written notice and proof of such
appointment.
(c) With respect to shares standing in the name of a corporation on
the record date, votes may be cast by such officer or agents as the by-laws
of such corporation prescribe or, in the absence of an applicable by-law
provision, by such person as may be appointed by resolution of the Board of
Directors of such corporation. In the event no person is so appointed, such
votes of the corporation may be cast by any person (including the officer
making the authorization) authorized to do so by the Chairman of the Board
of Directors, President or any Vice President of such corporation.
(d) Notwithstanding anything to the contrary herein contained, no
votes may be cast by shares owned by this corporation or its subsidiaries,
if any. If shares are held by this corporation or its subsidiaries, if
any, in a fiduciary capacity, no votes shall be cast with respect thereto
on any matter except to the extent that the beneficial owner thereof
possesses and exercises either a right to vote or to give the corporation
holding the same binding instructions on how to vote.
(e) With respect to shares standing in the name of two or more
persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by the
entirety, voting trustees, persons entitled to vote under a shareholder
voting agreement or otherwise and shares held by two or more persons
(including proxy holders) having the same fiduciary relationship respect in
the same shares, votes may be cast in the following manner:
(1) If only one such person votes, the votes of such person binds
all.
-4-
<PAGE>
(2) If more than one person casts votes, the act of the majority
so voting binds all.
(3) If more than one person casts votes, but the vote is evenly
split on a particular matter, the votes shall be deemed cast
proportionately as split.
(f) Any holder of shares entitled to vote on any matter may cast a
portion of the votes in favor of such matter and refrain from casting the
remaining votes or cast the same against the proposal, except in the case
of elections of directors. If such holder entitled to vote fails to
specify the number of affirmative votes, it will be conclusively presumed
that the holder is casting affirmative votes with respect to all shares
held.
(g) If a quorum is present, the affirmative vote of holders of a
majority of the shares represented at the meeting and entitled to vote on
any matter shall be the act of the shareholders, unless a vote of greater
number or voting by classes is required by the laws of the State of Nevada,
the Articles of Incorporation and these By-Laws.
Section 1.09 Proxies. At any meeting of shareholders, any holder of
-------
shares entitled to vote may authorize another person or persons to vote by
proxy with respect to the shares held by an instrument in writing and subscribed
to by the holder of such shares entitled to vote. No proxy shall be valid after
the expiration of six (6) months from the date of execution thereof, unless
coupled with an interest or unless otherwise specified in the proxy. In no
event shall the term of a proxy exceed seven (7) years from the date of its
execution. Every proxy shall continue in full force and effect until its
expiration or revocation. Revocation may be effected by filing an instrument
revoking the same or a duly-executed proxy bearing a later date with the
secretary of the corporation.
Section 1.10 Order of Business. At the annual shareholders meeting, the
-----------------
regular order of business shall be as follows:
(1) Determination of shareholders present and existence of
quorum;
(2) Reading and approval of the minutes of the previous meeting
or meetings;
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(3) Reports of the Board of Directors, the president, treasurer
and secretary of the corporation, in the order named;
(4) Reports of committee;
(5) Election of directors;
(6) Unfinished business;
(7) New business;
(8) Adjournment.
Section 1.11 Absentees Consent to Meetings. Transactions of any meeting
-----------------------------
of the shareholders are as valid as though had at a meeting duly-held after
regular call and notice if a quorum is present, either in person or by proxy,
and if, either before or after the meeting, each of the persons entitled to
vote, not present in person or by proxy (and those who, although present, either
object at the beginning of the meeting to the transaction of any business
because the meeting has not been lawfully called or convened or expressly object
at the meeting to the consideration of matters not included in the notice which
are legally required to be included therein), signs a written waiver of notice
and/or consent to the holding of the meeting or an approval of the minutes
thereof. All such waivers, consents, and approvals shall be filed with the
corporate records and made a part of the minutes of the meeting. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person objects at the beginning of the meeting to the transaction of
any business because the meeting is not lawfully called or convened and except
that attendance at a meeting is not a waiver of any right to object to the
consideration of matters not included in the notice if such objection is
expressly made at the beginning. Neither the business to be transacted at nor
the purpose of any regular or special meeting of shareholders need be specified
in any written waiver of notice, except as otherwise provided in Section 1.04(b)
of these By-Laws.
Section 1.12 Action Without Meeting. Any action which may be taken by the
----------------------
vote of the shareholders at a meeting may be taken without a meeting if
consented to by the holders of a majority of the shares entitled to vote or such
greater proportion as may be required by the laws of the State of Nevada, the
Articles of Incorporation, or these By-Laws. Whenever action is taken by
written consent, a meeting of shareholders needs not be called or noticed.
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ARTICLE II
DIRECTORS
Section 2.01 Number, Tenure and Qualification. Except as otherwise
--------------------------------
provided herein, the Board of Directors of the corporation shall consist of at
least one (1) but no more than nine (9) persons, as determined from time to time
by the Board of Directors. Directors shall be elected at the annual meeting of
the shareholders of the corporation and shall hold office for one (1) year or
until their successors are elected and qualify.
Section 2.02 Resignation. Any director may resign effective upon giving
-----------
written notice to the chairman of the Board of Directors, the president, or the
secretary of the corporation, unless the notice specifies a later time for
effectiveness of such resignation.
Section 2.03 Reduction in Number. No reduction of the number of directors
-------------------
shall have the effect of removing any director prior to the expiration of his
term of office.
Section 2.04 Removal.
-------
(a) The Board of Directors or the shareholders of the corporation, by
a majority vote, may declare vacant the office of a director who has been
declared incompetent by an order of a court of competent jurisdiction or
convicted of a felony.
(b) Any director may be removed from office by the vote of
shareholders representing not less than two-thirds of the issued and
outstanding shares entitled to vote; provided, however, to the extent that
the holders of any class or series of shares are entitled to elect one or
more directors, unless otherwise provided in the Articles of Incorporation,
removal of any such director requires only a two-thirds vote of the holders
of the class or series in question, and not the votes of the outstanding
shares as a whole.
Section 2.05 Vacancies. Except as otherwise set forth in the Articles of
---------
Incorporation, a vacancy in the Board of Directors because of death,
resignation, removal, change in number of directors, or otherwise may be filled
by the shareholders at any regular or special meeting or any adjourned meeting
thereof or the remaining director(s) by the affirmative vote of a majority
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thereof. Each successor so elected shall hold office until the next annual
meeting of shareholders or until a successor shall have been duly elected and
qualified.
Section 2.06 Regular Meetings. Immediately following the adjournment of,
----------------
and at the same place as, the annual meeting of the shareholders, the Board of
Directors, including directors newly elected, shall hold its annual meeting
without notice, other than this provision, to elect officers of the corporation
and to transact such further business as may be necessary or appropriate. The
Board of Directors may provide by resolution the place, date and hour for
holding additional regular meetings.
Section 2.07 Special Meetings. Special meetings of the Board of Directors
----------------
may be called by the chairman and shall be called by the chairman upon the
request of any two (2) directors or the president of the corporation.
Section 2.08 Place of Meetings. Any meeting of the directors of the
-----------------
corporation may be held at its principal office in the State of Nevada, or at
such other place in or out of the United States as the Board of Directors may
designate. A waiver or notice signed by the directors may designate any place
for the holding of such meeting.
Section 2.09 Notice of Meetings. Except as otherwise provided in Section
------------------
2.06, the chairman shall deliver to all directors written or printed notice of
any special meeting, at least three (3) days before the date of such meeting, by
delivery of such notice personally or mailing such notice first class mail, or
by telegram. If mailed, the notice shall be deemed delivered two (2) business
days following the date the same is deposited in the United States mail, postage
prepaid. Any director may waive notice of any meeting, and the attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
unless such attendance is for the express purpose of objecting to the
transaction of business threat because the meeting is not properly called or
convened.
Section 2.10 Quorum: Adjourned Meetings.
--------------------------
(a) A majority of the Board of Directors in office shall constitute a
quorum.
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(b) At any meeting of the Board of Directors where a quorum is not
present, a majority of those present may adjourn, from time to time, until
a quorum is present, and no notice of such adjournment shall be required.
At any adjourned meeting where a quorum is present, any business may be
transacted which could have been transacted at the meeting originally
called.
Section 2.11 Action Without Meeting. Any action required or permitted to
----------------------
be taken at any meeting of the Board of Directors or any committee thereof may
be taken without a meeting if a written consent thereto is signed by all of the
members of the Board of Directors or of such committee. Such written consent
or consents shall be filed with the minutes of the proceedings of the Board of
Directors or committee. Such action by written consent shall have the same
force and effect as the unanimous vote of the Board of Directors or committee.
Section 2.12 Telephonic Meetings. Meetings of the Board of Directors may
-------------------
be held through the use of a conference telephone or similar communications
equipment so long as all members participating in such meeting can hear one
another at the time of such meeting. Participation in such a meeting
constitutes presence in person at such meeting.
Section 2.13 Board Decisions. The affirmative vote of a majority of the
---------------
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors.
Section 2.14 Powers and Duties. Except as otherwise provided in the
-----------------
Articles of Incorporation or the laws of the State of Nevada, the Board of
Directors is invested with the complete and unrestrained authority to manage the
affairs of the corporation, and is authorized to exercise for such purpose as
the general agent of the corporation, its entire corporate authority in such
manner as it sees fit. The Board of Directors may delegate any of its authority
to manage, control or conduct the current business of the corporation to any
standing or special committee or to any officer or agent and to appoint any
persons to be agents of the corporation with such powers, including the power to
sub-delegate, and upon such terms as may be deemed fit.
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ARTICLE III
OFFICERS
Section 3.01 Election. The Board of Directors, at its first meeting
--------
following the annual meeting of shareholders, shall elect a president, a
secretary and a treasurer to hold office for one (1) year next coming and until
their successors are elected and qualify. Any person may hold two or more
offices. The Board of Directors may, from time to time, by resolution, appoint
one or more vice presidents, assistant secretaries, assistant treasurers and
transfer agents of the corporation as it may deem advisable; prescribe their
duties; and fix their compensation.
Section 3.02 Removal: Resignation. Any officer or agent elected or
--------------------
appointed by the Board of Directors may be removed by it whenever, in its
judgment, the best interest of the corporation would be served thereby. Any
officer may resign at any time upon written notice to the corporation without
prejudice to the rights, if any, of the corporation under any contract to which
the resigning officer is a party.
Section 3.03 Vacancies. Any vacancy in any office because of death,
---------
resignation, removal, or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
Section 3.04 President. The president shall be the general manager and
---------
executive officer of the corporation, subject to the supervision and control of
the Board of Directors, and shall direct the corporate affairs, with full power
to execute all resolutions and orders of the Board of Directors not especially
entrusted to some other officer of the corporation. The president shall preside
at all meetings of the shareholders and shall sign the certificates of stock
issued by the corporation, and shall perform such other duties as shall be
prescribed by the Board of Directors.
Unless otherwise ordered by the Board of Directors, the president shall
have full power and authority on behalf of the corporation to attend and to act
and to vote at any meetings of the shareholders of any corporation in which the
corporation may hold stock and, at any such meetings, shall possess and may
exercise any and all rights and powers incident to the ownership of such stock.
The Board of Directors, by resolution from time to time, may confer
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like powers on any person or persons in place of the president to represent the
corporation for these purposes.
Section 3.05 Vice President. The Board of Directors may elect one or more
--------------
vice presidents who shall be vested with all the powers and perform all the
duties of the president whenever the president is absent or unable to act,
including the signing of the certificates of stock issued by the corporation,
and the vice president shall perform such other duties as shall be prescribed by
the Board of Directors.
Section 3.06 Secretary. The secretary shall keep the minutes all
---------
meetings of the shareholders and the Board of Directors in books provided for
that purpose. The secretary shall attend to the giving and service of all
notices of the corporation, may sign with the president in the name of the
corporation all contracts authorized by the Board of Directors or appropriate
committee, shall have the custody of the corporate seal, shall affix the
corporate seal to all certificates of stock duly issued by the corporation,
shall have charge of stock certificate books, transfer books and stock ledgers,
and such other books and papers as the Board of Directors or appropriate
committee may direct, and shall, in general perform all duties incident to the
office of the secretary. All corporate books kept by the secretary shall be open
for examination by any director at any reasonable time.
Section 3.07 Assistant Secretary. The Board of Directors may appoint an
-------------------
assistant secretary who shall have such powers and perform such duties as may be
prescribed for him by the secretary of the corporation or by the Board of
Directors.
Section 3.08 Treasurer. The treasurer shall be the chief financial
---------
officer of the corporation, subject to the supervision and control of the Board
of Directors, and shall have custody of all the funds and securities of the
corporation. When necessary or proper, the treasurer shall endorse on behalf of
the corporation for collection checks, notes and other obligations, and shall
deposit all monies to the credit of the corporation in such bank or banks or
other depository as the Board of Directors may designate, and shall sign all
receipts and vouchers for payments made by the corporation. Unless otherwise
specified by the Board of Directors, the treasurer shall sign with the president
all bills of exchange and promissory notes of the corporation, shall also have
the care and custody of the stocks, bonds, certificates, vouchers, evidence of
debts, securities and such other property belonging to the corporation as the
Board of Directors shall designate, and shall
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sign all papers required by law, by these By-laws or by the Board of Directors
to be signed by the treasurer. The treasurer shall enter regularly in the books
of the corporation, to be kept for that purpose, full and accurate accounts of
all monies received and paid on account of the corporation and whenever required
by the Board of Directors, the treasurer shall render a statement of any or all
accounts. The treasurer shall at all reasonable times exhibit the books of
account to any directors of the corporation and shall perform all acts incident
to the position of treasurer subject to the control of the Board of Directors.
The treasurer shall, if required by the Board of Directors, give a bond to the
corporation in such sum and with such security as shall be approved by the Board
of Directors for the faithful performance of all the duties of the treasurer and
for restoration to the corporation in the event of the treasurer's death,
resignation, retirement, or removal from office, of all books, records, papers,
vouchers, money and other property belonging to the corporation. The expense of
such bond shall be borne by the corporation.
Section 3.09 Assistant Treasurer. The Board of Directors may appoint an
-------------------
assistant treasurer who shall have such powers and perform such duties as may
be prescribed by the treasurer of the corporation or by the Board of Directors,
and the Board of Directors may require the assistant treasurer to give a bond to
the corporation in such sum and with such security as it may approve, for the
faithful performance of the duties of assistant treasurer, and for the
restoration to the corporation, in the event of the assistant treasurer's death,
resignation, retirement or removal from office, of all books, records, papers,
vouchers, money and other property belonging to the corporation. The expense of
such bond shall be borne by the corporation.
ARTICLE IV
CAPITAL STOCK
Section 4.01 Issuance. Shares of capital stock of the corporation shall
--------
be issued in such manner and at such times and upon such conditions as shall be
prescribed by the Board of Directors.
Section 4.02 Certificates. Ownership in the corporation shall be
------------
evidenced by certificates for shares of stock in such form as shall be
prescribed by the Board of Directors and shall be signed by the president or the
vice president and also by the secretary or an assistant secretary.
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Section 4.03 Surrender: Lost or Destroyed Certificates. All certificates
-----------------------------------------
surrendered to the corporation, except those representing shares of treasury
stock, shall be canceled and no new certificates shall be issued until the
former certificate for a like number of shares shall have been canceled, except
that in case of a lost, stolen, destroyed or mutilated certificate, a new one
may be issued therefor. However, any shareholder applying for the issuance of a
stock certificate in lieu of one alleged to have been lost, stolen, destroyed or
mutilated shall, prior to the issuance of a replacement, provide the corporation
with his, her or its affidavit of the facts surrounding the loss, theft,
destruction or mutilation and an indemnity bond in an amount and upon such terms
as the treasurer, or the Board of Directors, shall require. In no case shall
the bond be in amount less than twice the current market value of the stock and
it shall indemnify the corporation against any loss, damage, cost or
inconvenience arising as a consequence of the issuance of a replacement
certificate.
Section 4.04 Replacement Certificate. When the Articles of Incorporation
-----------------------
are amended in any way affecting the statements contained in the certificates
for outstanding shares of capital stock of the corporation or it becomes
desirable for any reason, including, without limitation, the merger or
consolidation of the corporation with another corporation or the reorganization
of the corporation, to cancel any outstanding certificate for shares and issue a
new certificate therefor conforming to the rights of the holder, the Board of
Directors may order any holders of outstanding certificates for shares to
surrender and exchange the same for new certificates within a reasonable time to
be fixed by the Board of Directors. The order may provide that a holder of any
certificate(s) ordered to be surrendered shall not be entitled to vote, receive
dividends or exercise any other rights of shareholders until the holder has
complied with the order provided that such order operates to suspend such rights
only after notice and until compliance.
Section 4.05 Transfer of Shares. No transfer of stock shall be valid as
------------------
against the corporation except on surrender and cancellation by the certificate
therefor, accompanied by an assignment or transfer by the registered owner made
either in person or under assignment. Whenever any transfer shall be expressly
made for collateral security and not absolutely, the collateral nature of the
transfer shall be reflected in the entry of transfer on the books of the
corporation.
Section 4.06 Transfer Agent. The Board of Directors may appoint one or
--------------
more transfer agents and registrars of transfer and
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may require all certificates for shares of stock to bear the signature of such
transfer agent and such registrar of transfer.
Section 4.07 Stock Transfer Books. The stock transfer books shall be
--------------------
closed for a period of ten (10) days prior to all meetings of the shareholders
and shall be closed for the payment of dividends as provided in Article V hereof
and during such periods as, from time to time, may be fixed by the Board of
Directors, and, during such periods, no stock shall be transferable.
Section 4.08 Miscellaneous. The Board of Directors shall have the power
-------------
and authority to make such rules and regulations not inconsistent herewith as it
may deem expedient concerning the issue, transfer and registration of
certificates for shares of the capital stock of the corporation.
ARTICLE V
DIVIDENDS
Section 5.01. Dividends may be declared, subject to the provisions of the
laws of the state of Nevada and the Articles of Incorporation, by the Board of
Directors at any regular or special meeting and may be paid in cash, property,
shares of corporate stock, or any other medium.
ARTICLE VI
OFFICES; RECORDS; SEAL AND FINANCIAL MATTERS
Section 6.01 Principal Office. The principal office of the corporation in
----------------
the State of Nevada shall be One East First Street, Suite 1600, Reno, Nevada
89501, and the corporation may have an office in any other state or territory
as the Board of Directors may designate.
Section 6.02 Records. The stock transfer books and a certified copy of
-------
the By-laws, Articles of Incorporation, any amendments thereto, and the minutes
of the proceedings of the shareholders, the Board of Directors, and committees
of the Board of Directors shall be kept at the principal office of the
corporation for the inspection of all who have the right to see the
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same and for the transfer of stock. All other books of the corporation shall be
kept at such places as may be prescribed by the Board of Directors. Every
director shall have the absolute right at any reasonable time to inspect and
copy all books, records and documents of every kind and to inspect the physical
properties of the corporation and/or its subsidiary corporations. Such
inspection may be made in person or by agent or attorney, and the right of
inspection includes the right to copy and make extracts.
Section 6.03 Corporate Seal. The Board of Directors may, by resolution,
--------------
authorize a seal, and the seal may be used by causing it, or a facsimile, to be
impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the corporation shall have the
authority to affix the seal to any document requiring it.
Section 6.04 Fiscal Year. The fiscal year-end of the corporation shall be
-----------
the calendar year or such other term as may be fixed by resolution of the Board
of Directors.
Section 6.05 Reserves. The Board of Directors may create, by resolution,
--------
out of the earned surplus of the corporation such reserves as the directors may,
from time to time, in their discretion, think proper to provide for
contingencies, or to equalize dividends or to repair or maintain any property of
the corporation, or for such other purpose as the Board of Directors may deem
beneficial to the corporation, and the directors may modify or abolish any such
reserves in the manner in which they were created.
ARTICLE VII
INDEMNIFICATION
Section 7.01 Indemnification. The corporation shall, unless prohibited
---------------
by Nevada Law, indemnify any person (an "Indemnitee") who is or was involved in
any manner (including, without limitation, as a party or a witness) or is
threatened to be so involved in any threatened, pending or completed action suit
or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, including without limitation, any action, suit or proceeding
brought by or in the right of the corporation to procure a judgment in its favor
(collectively, a "Proceeding") by reason of the fact that he 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
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corporation, partnership, joint venture, trust, employee benefit plan or other
entity or enterprise, against all Expenses and Liabilities actually and
reasonably incurred by him in connection with such Proceeding. The right to
indemnification conferred in this Article shall be presumed to have been relied
upon by the directors, officers, employees and agents of the corporation and
shall be enforceable as a contract right and inure to the benefit of heirs,
executors and administrators of such individuals.
Section 7.02 Indemnification Contracts. The Board of Directors is
-------------------------
authorized on behalf of the corporation, to enter into, deliver and perform
agreements or other arrangements to provide any Indemnitee with specific rights
of indemnification in addition to the rights provided hereunder to the fullest
extent permitted by Nevada Law. Such agreements or arrangements may provide (i)
that the Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding, must be paid by the corporation as they are
incurred and in advance of the final disposition of any such action, suit or
proceeding provided that, if required by Nevada Law at the time of such advance,
the officer or director provides an undertaking to repay such amounts if it is
ultimately determined by a court of competent jurisdiction that such individual
is not entitled to be indemnified against such expenses, (iii) that the
Indemnitee shall be presumed to be entitled to indemnification under this
Article or such agreement or arrangement and the corporation shall have the
burden of proof to overcome that presumption, (iii) for procedures to be
followed by the corporation and the Indemnitee in making any determination of
entitlement to indemnification or for appeals therefrom and (iv) for insurance
or such other Financial Arrangements described in Paragraph 7.02 of this
Article, all as may be deemed appropriate by the Board of Directors at the time
of execution of such agreement or arrangement.
Section 7.03 Insurance and Financial Arrangements. The corporation may,
------------------------------------
unless prohibited by Nevada Law, purchase and maintain insurance or make other
financial arrangements ("Financial Arrangements") on behalf of any Indemnitee
for any liability asserted against him and liability and expenses incurred by
him in his capacity as a director, officer, employee or agent, or arising out of
his status as such, whether or not the corporation has the authority to
indemnify him against such liability and expenses. Such other Financial
Arrangements may include (i) the creation of a trust fund, (ii) the
establishment of a program of self-insurance, (iii) the securing of the
corporation's obligation of indemnification by granting a security interest or
other lien on any assets of the corporation, or (iv) the establishment of a
letter of credit, guaranty or surety.
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Section 7.04 Definitions. For purposes of this Article:
-----------
Expenses. The word "Expenses" shall be broadly construed and, without
limitation, means (i) all direct and indirect costs incurred, paid or
accrued, (ii) all attorneys' fees, retainers, court costs, transcripts,
fees of experts, witness fees, travel expenses, food and lodging expenses
while traveling, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service, freight or other transportation fees
and expenses, (iii) all other disbursements and out-of-pocket expenses,
(iv) amounts paid in settlement, to the extent permitted by Nevada Law, and
(v) reasonable compensation for time spent by the Indemnitee for which he
is otherwise not compensated by the corporation or any third party,
actually and reasonably incurred in connection with either the appearance
at or investigation, defense, settlement or appeal of a Proceeding or
establishing or enforcing a right to indemnification under any agreement or
arrangement, this Article, the Nevada Law or otherwise; provided, however,
that "Expenses" shall not include any judgments or fines or excise taxes or
penalties imposed under the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or other excise taxes or penalties.
Liabilities. "Liabilities" means liabilities of any type whatsoever,
including, but not limited to, judgments or fines, ERISA or other excise
taxes and penalties, and amounts paid in settlement.
Nevada Law. "Nevada Law" means Chapter 78 of the Nevada Revised
Statutes as amended and in effect from time to time or any successor or
other statutes of Nevada having similar import and effect.
This Article. "This Article" means Paragraphs 7.01 through 7.04 of
these by-laws or any portion of them.
Power of Stockholders. Paragraphs 7.01 through 7.04, including this
Paragraph, of these By-laws may be amended by the stockholders only by vote
of the holders of sixty-six and two-thirds percent (66 2/3%) of the entire
number of shares of each class, voting separately, of the outstanding
capital stock of the corporation (even though the right of any class to
vote is otherwise restricted or denied); provided, however, no amendment or
repeal of this Article shall adversely affect any right of any Indemnitee
existing at the time such amendment or repeal becomes effective.
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Power of Directors. Paragraphs 7.01 through 7.04 and this Paragraph
of these By-laws may be amended or repealed by the Board of Directors only
by vote of eighty percent (80%) of the total number of Directors and the
holders of sixty-six and two-thirds percent (66 2/3) of the entire number
of shares of each class, voting separately, of the outstanding capital
stock of the corporation (even though the right of any class to vote is
otherwise restricted or denied); provided, however,no amendment or repeal
of this Article shall adversely affect any right of any Indemnitee existing
at the time such amendment or repeal becomes effective.
ARTICLE VIII
BY-LAWS
Section 8.01 Amendment. Amendments, changes and additions to these By-
---------
Laws may be made at any regular or special meeting of the Board of Directors by
a vote of not less than a majority of the entire Board.
Section 8.02 Conflicts. These By-laws are in all respects subject to and
---------
limited by the provisions of the Articles of Incorporation and the laws of the
State of Nevada. In the event of any conflict between these By-laws and the
Articles of Incorporation or the laws of the State of Nevada, the Articles of
Incorporation shall supersede and take precedence over these By-laws, and the
laws of the State of Nevada shall supersede and take precedence over the
Articles of Incorporation and these By-laws.
CERTIFICATION
I, the undersigned, being the duly elected secretary of the Corporation, do
hereby certify that the foregoing amended and restated By-laws were adopted by
the Board of Directors effective as of the 3rd day of July, 1996.
/s/ ROBERT S. SAMMIS
------------------------------
Robert S. Sammis, Secretary
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EXHIBIT 4(a)
================================================================================
STOCK PURCHASE AGREEMENT
dated as of
July 15, 1996
--
by and between
CLINICOR, INC.
and
ORACLE PARTNERS, L.P.
and the
ADDITIONAL PURCHASERS SET FORTH
ON EXHIBIT "A" HERETO
================================================================================
<PAGE>
TABLE OF CONTENTS
Page No.
--------
ARTICLE I - PURCHASE AND SALE OF SHARES............................... 1
1.1 Purchase and Sale......................................... 1
ARTICLE II - PURCHASE PRICE AND CLOSING................................ 1
2.1 Purchase Price............................................ 1
2.2 The Closing............................................... 1
2.3 Deliveries................................................ 2
2.4 Legends and Transfer Restrictions......................... 2
2.5 Registration Rights....................................... 3
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER.................. 12
3.1 Corporate Existence and Power............................. 12
3.2 Corporate Authorization................................... 12
3.3 Governmental Authorization................................ 13
3.4 Non-Contravention......................................... 13
3.5 Financial Statements...................................... 13
3.6 Compliance with Law....................................... 14
3.7 No Defaults............................................... 14
3.8 Litigation................................................ 14
3.9 Absence of Certain Changes................................ 14
3.10 No Undisclosed Liabilities................................ 15
3.11 Receivables............................................... 16
3.12 Backlog................................................... 16
3.13 Taxes..................................................... 16
3.14 Interests of Officers, Directors and Other Affiliates..... 16
3.15 Intellectual Property..................................... 17
3.16 Restrictions on Business Activities....................... 17
3.17 Title to Properties; Absence of Liens and Encumbrances;
Condition of Equipment.................................... 17
3.18 Vendors and Customers..................................... 18
3.19 Preemptive Rights......................................... 18
3.20 Insurance................................................. 18
3.21 Subsidiaries.............................................. 18
3.22 Capitalization............................................ 18
3.23 Rights, Warrants, Options................................. 19
3.24 Real Property............................................. 19
3.25 Labor Relations........................................... 20
i
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Page No.
--------
3.26 Employees, Employment Agreements and Employee
Benefit Plans....................................... 20
3.27 Absence of Certain Business Practices.................. 21
3.28 Services............................................... 21
3.29 Environmental Matters.................................. 22
3.30 Licenses; Compliance With Regulatory Requirements...... 22
3.31 Brokers................................................ 23
3.32 Arm's Length Transactions.............................. 23
3.33 Disclosure............................................. 23
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER........ 23
4.1 Existence and Power.................................... 23
4.2 Authorization.......................................... 23
4.3 Governmental Authorization............................. 24
4.4 Non-Contravention...................................... 24
4.5 Litigation............................................. 24
4.6 Investment............................................. 24
ARTICLE V - COVENANTS OF THE SELLER................................ 24
5.1 Actions Requiring Purchaser's Consent.................. 24
5.2 Additional Covenants................................... 25
5.3 Reporting Obligations.................................. 26
5.4 Confidentiality........................................ 27
5.5 Public Announcements................................... 28
5.6 Exclusivity............................................ 28
5.7 Board Representation; Advisory Fees.................... 28
5.8 Registration Statement Under Exchange ................. 29
ARTICLE VI - CONDITIONS TO THE CLOSING.............................. 29
6.1 Conditions to Obligations of Purchasers................ 29
6.2 Conditions to Obligations of the Seller................ 31
ARTICLE VII - INDEMNIFICATION........................................ 31
7.1 Survival of Representations and Warranties: Indemnity.. 31
ARTICLE VIII - MISCELLANEOUS.......................................... 33
8.1 Further Assurances..................................... 33
8.2 Fees and Expenses...................................... 33
8.3 Notices................................................ 33
ii
<PAGE>
Page No.
--------
8.4 Governing Law and Jurisdiction......................... 34
8.5 Binding upon Successors and Assigns.................... 35
8.6 Severability........................................... 35
8.7 Entire Agreement....................................... 35
8.8 Other Remedies......................................... 35
8.9 Amendment and Waivers.................................. 35
8.10 No Waiver.............................................. 35
8.11 Construction of Agreement; Knowledge................... 36
8.12 Counterparts........................................... 36
8.13 No Third Party Beneficiary............................. 36
iii
<PAGE>
INDEX OF EXHIBITS AND SCHEDULES
-------------------------------
EXHIBITS
Exhibit "A" List of Purchasers and Amounts thereof
Exhibit "B-1" Certificate of Amendment to Articles of Incorporation
Exhibit "B-2" Amended Bylaws
SCHEDULES
Schedule 3.5 Liabilities Incurred Outside the Ordinary Course of
Business
Schedule 3.6 Judgments
Schedule 3.7 Defaults
Schedule 3.8 Litigation
Schedule 3.9 Absence of Certain Changes
Schedule 3.14 Related Interests
Schedule 3.15 Intellectual Property
Schedule 3.17 Title to Properties
Schedule 3.19 Preemptive Rights
Schedule 3.21 Subsidiaries
Schedule 3.23 Rights, Warrants, Options
Schedule 3.24A Addresses of Real Property Owned
Schedule 3.24B Addresses of Real Property Leased
Schedule 3.26A Employment Agreements
Schedule 3.26B Employee Benefit Plans
Schedule 3.32 Related Party Transactions
Schedule 3.33 Disclosure
iv
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of July 15,
--
1996, by and between CLINICOR, INC., a Nevada corporation ("Seller"), and ORACLE
PARTNERS, L.P., a Delaware limited partnership ("Oracle"), and certain other
investors whose names are set forth on Exhibit "A" hereto (Oracle and the
investors set forth on Exhibit "A" hereto are collectively referred to herein as
the "Purchasers").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, each of the Purchasers, severally and not jointly, desires to
purchase from the Seller, and the Seller desires to sell to each of the
Purchasers, the number of shares of the Seller's Preferred Stock (as hereinafter
defined) as set forth on Exhibit "A" hereto.
NOW, THEREFORE, in consideration of the mutual promises and
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
SECTION 1.1 PURCHASE AND SALE. On the terms and subject to the
-----------------
conditions set forth in this Agreement, at the Closing (as defined in Section
2.2), the Seller will sell and each of the Purchasers, severally and not
jointly, will purchase the number of shares of the Seller's Convertible
Preferred Stock, without par value (the "Preferred Stock"), as is set forth
opposite such Purchaser's name on Exhibit "A" attached hereto. The terms and
provisions of the Preferred Stock are set forth in the Certificate of Amendment
to the Articles of Incorporation of the Seller, a true and correct copy of
which is attached hereto as Exhibit "B" (as so amended, the "Articles of
Incorporation"). The shares of Preferred Stock purchased or otherwise acquired
pursuant to this Agreement and the transactions contemplated hereby are referred
to herein as the "Shares."
ARTICLE II
PURCHASE PRICE AND CLOSING
SECTION 2.1 PURCHASE PRICE. The purchase price (the "Purchase Price")
--------------
to be paid by the Purchasers to the Seller to acquire the Shares shall be $1,000
per Share, for an aggregate Purchase Price of $3,500,000.
SECTION 2.2 THE CLOSING. The closing of the transactions contemplated
-----------
under this Agreement (the "Closing") shall take place at the offices of Kane
Kessler, P.C., 1350 Avenue of the Americas, 26th Floor, New York, New York at
10:00 a.m., New York time, on
<PAGE>
July 15, 1996 or at such other place, time or date as may be mutually agreed
--
upon in writing by the parties hereto (the "Closing Date").
SECTION 2.3 DELIVERIES.
----------
(A) DELIVERIES BY SELLER. At the Closing, the Seller will deliver or cause
--------------------
to be delivered to each Purchaser the following:
1. A stock certificate representing the Shares purchased by such
Purchasers, with all necessary stock issuance or transfer stamps
affixed thereto, duly completed and registered in the name of
each Purchaser (as set forth on Exhibit "A" hereto) on the stock
transfer book of the Seller.
2. A legal opinion of Graves, Dougherty, Hearon & Moody, counsel to
the Seller, in form and substance satisfactory to the Purchasers.
3. The Certificates and documents contemplated by Section 6.1(b);
4. A wire transfer (not to exceed $30,000) representing the
Purchasers' legal fees.
5. Such other documents as the Purchasers shall reasonably request.
(B) DELIVERIES BY PURCHASER. At the Closing, each Purchaser,
-----------------------
severally and not jointly, will deliver or cause to be delivered to the Seller
the following:
1. Payment of the Purchase Price in cash by either wire transfer of
immediately available funds or certified or cashier's check or in
accordance with the Seller's instructions (which instructions
shall be given to the Purchasers in writing no later than 3
business days prior to the Closing Date).
2. Such other documents as the Seller shall reasonably request.
SECTION 2.4 LEGENDS AND TRANSFER RESTRICTIONS. The Shares to be
---------------------------------
delivered by Seller at the Closing shall be subject to certain restrictions on
transfer and each certificate representing the Shares shall contain the
following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT, AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH
2
<PAGE>
REGISTRATION IS NOT, IN THE CIRCUMSTANCES, REQUIRED, OR EVIDENCE
SATISFACTORY TO THE COMPANY THAT THE SHARES HAVE BEEN SOLD IN
COMPLIANCE WITH RULE 144 PROMULGATED UNDER SAID ACT."
SECTION 2.5 REGISTRATION RIGHTS.
-------------------
(A) COVENANT TO REGISTER. As soon as the Seller is eligible to do so, but
--------------------
in no event later than 13 months following the date that the Seller has been
subject to the requirements of Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"); provided, however, that such 13-month
period may be extended by the Purchasers in their sole and absolute discretion,
Seller shall file a registration statement with the Securities and Exchange
Commission (the "Commission") to register the shares of Common Stock, par value
$.001 per share (the "Common Stock"), that are issuable by the Seller upon the
conversion of the Shares (the "Common Shares") for an offering to be made on a
continuous or delayed basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), covering all of the Common Shares.
Such registration statement shall be on Form S-3 under the Securities Act, if
such Form is then available for use by the Seller, or another appropriate form
that is available to the Seller permitting registration of such Common Shares
for resale by the Purchasers in the manner or manners reasonably designated by
them (including, without limitation, one or more underwritten offerings). The
Seller shall use its best efforts to prosecute the registration (the
"Registration") of the Common Shares pursuant to the Securities Act. The Seller
shall use its best efforts to cause the Common Shares to be registered as soon
as practicable after the filing of the registration statement relating to such
Common Shares, but in no event later than 180 days after the filing of such
registration statement. The Purchaser shall cooperate with the Seller to
provide all such necessary information as shall be required by the Seller to
file the registration statement relating to the Registration. In addition,
Seller shall use its best efforts to list, simultaneously with the Closing of
the transactions contemplated by this Agreement, the Common Shares on NASDAQ or
on such other securities exchange as the shares of Common Stock may then be
listed. Seller shall maintain the prospectus relating to the Common Shares
effective for so long as the Purchaser desires to dispose of the Common Shares,
not to exceed a period of five years from the date that the registration
statement was declared effective by the Commission. In the event that the
Registration is not effected within the foregoing time period, it is
acknowledged that the Purchasers will suffer liquidated damages, which the
Seller hereby agrees to pay to the Purchasers, in the form of options to
purchase 250,000 shares of Common Stock of the Seller at an exercise price of
$1.50 per share, which options shall be exercisable for a period of five years,
pro rata based upon the number of Shares owned by each Purchaser; provided,
however, that the Seller shall not be required to pay such liquidated damages in
the event that (i) an appropriate form to register the Common Shares for an
offering to be made on a continuous or delayed basis, such form to permit
updating through the incorporation by reference to periodic reports filed
pursuant to Section 13 or 15(d) of the Exchange Act, is not available to the
Seller at the time in question, or (ii) the Purchasers, in their sole
discretion, determine that the Registration has not been declared effective by
the
3
<PAGE>
Commission due to circumstances beyond the Seller's control. Notwithstanding
the payment of any such liquidated damages, the obligation of the Seller to
effect such Registration shall survive.
(B) DEMAND AND "PIGGYBACK" REGISTRATION RIGHTS.
------------------------------------------
(i) DEMAND REGISTRATION RIGHTS. If at any time after the date hereof
--------------------------
during which there is no effective registration statement relating to the Common
Shares, Seller shall be requested in writing by Purchasers holding at least a
majority of the Common Shares to effect the registration under the Securities
Act of Common Shares which the Purchasers reasonably expect to result in gross
aggregate proceeds upon such sale of at least $4,000,000, the Seller shall, as
expeditiously as possible, use its best efforts to effect the registration, on a
form of general use under the Securities Act, of all Common Shares which the
Seller has been requested to register. The Seller shall not be obligated to
cause to become effective more than two registration statements pursuant to
which Common Shares are registered under this Section 2.5(b)(i).
Notwithstanding the foregoing, if the Seller shall furnish to the Purchasers
requesting a registration under this Section 2.5(b)(i) a certificate signed by
the Chief Executive Officer of the Seller stating that in the good faith
judgment of the Board of Directors of the Seller it would be detrimental to the
Seller and its shareholders for such registration statement to be filed and it
is therefore essential to defer the filing of such registration statement, the
Seller shall have the right to defer taking action with respect to such filing
for a period of not more than 90 days after receipt of the request by the
Purchasers; provided, however, that the Seller may not utilize this right more
than once in any 12-month period. In addition, the Seller shall not be
obligated to effect, or to take any action to effect, any registration pursuant
to this Section 2.5(b)(i):
(A) During the period starting with the date 30 days prior to the
Seller's good faith estimate of the date of filing of, and ending on a date 120
days after the effective date of, a registration subject to Section 2.5(b)(ii)
hereto; provided that the Seller is actively employing in good faith its best
efforts to cause such registration statement to be filed and thereafter to
become effective;
(B) If the Purchasers propose to dispose of Common Shares in the
Registration that may be immediately registered or that are registered on Form
S-3 pursuant to a request made pursuant to Section 2.5(a) above;
(C) In the event that the sale contemplated by the Purchasers is a
public distribution of the Common Shares, if the Purchases do not request that
such offering be firmly underwritten by underwriters selected by Purchasers
(subject to the consent of the Seller, which consent will not be unreasonably
withheld); provided, however, that in the event such contemplated sale by the
Purchasers is to a limited number of purchasers, then the provisions of this
paragraph (C) shall not be applicable; or
4
<PAGE>
(D) In the event that the sale contemplated by the Purchasers is a
public distribution of the Common Shares, if the Seller and the Purchasers are
unable to obtain the commitment of the underwriter described in clause (C) above
to firmly underwrite the offer; provided, however, that in the event such
contemplated sale by the Purchasers is to a limited number of purchasers, then
the provisions of this paragraph (D) shall not be applicable.
(ii) "PIGGYBACK" REGISTRATION RIGHTS. At any time after the Closing
------------------------------
Date, the Seller shall, at least thirty (30) days prior to the filing of any
registration statement under the Securities Act (other than a registration
statement on Form S-8 or Form S-4 or any successor forms) relating to the public
offering of its Common Stock by the Seller or any of its security holders, give
written notice of such proposed filing and of the proposed date thereof to the
Purchasers, and if, on or before the twentieth (20th) day following the date on
which such notice is given, the Seller shall receive a written request from a
Purchaser requesting that the Seller include among the securities covered by
such registration statement some or all of the Common Shares held by or to be
held after conversion by such Purchaser, the Seller shall, subject to Section
2.5(c) hereof, include such Common Shares in such registration statement, if
filed, so as to permit such Common Shares to be sold or disposed of in the
manner and on the terms of the offering thereof set forth in such request.
(C) TERMS AND CONDITIONS OF REGISTRATION. Except as otherwise provided
------------------------------------
herein, in connection with any registration statement filed pursuant to Sections
2.5(a) or (b) herein, the following provisions shall apply:
(i) If such registration statement shall be filed pursuant to Section
2.5(b)(ii) hereof and if the managing underwriter advises the Seller in writing
that the inclusion in such registration of some or all of the Common Shares
sought to be registered by the Purchasers creates a substantial risk that the
proceeds or price per share that will be derived from such registration will be
reduced or that the number of shares to be registered at the insistence of the
Purchasers, plus the number of shares of Common Stock sought to be registered by
the Seller and any other stockholders of the Seller is too large a number to be
reasonably sold, then, in such event, the number of shares sought to be
registered for the Seller and the other stockholders of the Seller having
registration rights, as applicable, shall be reduced, pro rata in proportion to
--- ----
the number of shares sought to be registered to the number of shares recommended
be sold by the managing underwriter. In no event will any securities to be sold
by the Seller be excluded from such registration by reason of any underwriters'
cut-backs unless the Seller has agreed thereto with the underwriter.
(ii) If requested by the Purchasers in connection with a registration
statement filed pursuant to Section 2.5(a) or (b)(i), the Seller will enter into
an underwriting agreement with the underwriters for such offering, such
agreement to be reasonably satisfactory in form and substance to the Seller, the
Purchasers and the underwriters, and to contain such representations, warranties
and covenants by the Seller and such other terms as are customarily
5
<PAGE>
contained in such agreements used by the managing underwriter, including,
without limitation, restrictions of sales of Common Stock or other securities by
the Seller as may be reasonably agreed to between the Seller and such
underwriters, and indemnities and rights to contributions to the effect and to
the extent provided in Sections 2.5(d) and 2.5(e) hereof. The Purchasers shall
be a party to any underwriting agreement relating to an underwritten sale of
their Common Shares and may, at their option, require that any or all of the
representations, warranties and covenants of the Seller to or for the benefit of
such underwriters, shall also be made to and for the benefit of the Purchasers.
All representations and warranties of the Purchasers shall be made to or for the
benefit of the Seller.
(iii) The Seller shall provide a transfer agent and registrar (which
may be the same entity) for the Common Shares, not later than the effective date
of such registration.
(iv) All expenses in connection with the preparation and filing of a
registration statement filed pursuant to Sections 2.5(a) or 2.5(b) shall be
borne solely by the Seller, except for any transfer taxes payable with respect
to the disposition of such Common Shares, and any underwriting discounts and
selling commissions applicable solely to such sales of Common Shares, which
shall be paid by the Purchasers of the Shares being registered.
(v) The Seller shall use its best efforts to cause all of the shares
covered by such registration statement to be listed on NASDAQ or on such other
securities exchange as such shares may then be listed, on which similar shares
are listed for trading, if the listing of such registered shares is permitted by
such exchange.
(vi) Following the effective date of such registration statement, the
Seller shall, upon the request of the Purchasers, forthwith supply such number
of prospectuses (including exhibits thereto and preliminary prospectuses and
amendments and supplements thereto) meeting the requirements of the Securities
Act and such other documents as are referred to in the prospectus as shall be
reasonably requested by the Purchasers to permit the Purchasers to make a public
distribution of their Common Shares.
(vii) (A) Each Purchaser agrees that it will not effect any sales
of Common Shares pursuant to a Registration described in Section 2.5(a) after
such Purchaser has received notice from the Seller to suspend sales as a result
of the occurrence or existence of any Suspension Event (as defined in Section
2.5(c)(vii)(B) below) until the Seller provides notice to such Purchaser that
all Suspension Events have ceased to exist. In addition, each Purchaser agrees
that it will not effect any sales of Common Shares pursuant to the Registration
described in Section 2.5(a) after such Purchaser has received notice from the
Seller to suspend sales because the registration statement pursuant to which
such sale is to be effected, and the related prospectus or any supplement
thereto contains an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, until the Seller
notifies such Purchaser that the misstatement or omission has been corrected.
The Seller hereby covenants
6
<PAGE>
and agrees that it will use its best efforts to correct any such misstatement or
omission, or to cure any Suspension Event, and that it will give immediate
notice to the Purchasers of such correction or cure.
(B) Notwithstanding anything to the contrary set forth in this
Agreement, the Seller's obligation to file a registration statement pursuant to
Section 2.5(a) hereof and make any filings with any state securities authority,
to use its best efforts to cause a registration statement or any state
securities filings to become effective, or to amend or supplement such a
registration statement or any state securities filings shall be temporarily
suspended in the event of and during a Suspension Event. A "Suspension Event"
shall exist at such times that (i) the Seller is not eligible to use Form S-3
for the registration contemplated by Section 2(a) hereof, or (ii) the Seller is
conducting an underwritten primary offering and is advised by the underwriters
therein that sale of Common Shares under the registration statement filed
pursuant to Section 2.5(a) hereof would have a material adverse effect on the
Seller's offering, or (iii) negotiations and/or consummation are pending
relating to a transaction or the occurrence of some other event (x) where any of
the foregoing would require disclosure under applicable securities laws of
material information in a registration statement (or any other document
incorporated into a registration statement by reference) or such state
securities filings and (y) as to which the Seller has a bona fide business
purpose, as determined in good faith by its Board of Directors, for preserving
confidentiality or which renders the Seller unable to comply with the
Commission's requirements. Suspension of the Seller's obligations pursuant to
this Section 2.5(c)(vii)(B) shall continue only for so long as a Suspension
Event is continuing. Sellers shall notify each Purchaser immediately after any
Suspension Event occurs or ceases to exist.
(viii) The Purchasers may select the underwriter or underwriters, if
any, who are to undertake any offering and distribution of the Common Shares to
be included in a registration statement filed under the provisions of Section
2.5(a) or (b)(i) hereof, subject to the Seller's prior approval of the
underwriter, which approval shall not be unreasonably withheld.
(ix) The Seller shall use its best efforts to register the Common
Shares covered by any such registration statements filed pursuant to Section
2.5(a) or (b) under such securities or Blue Sky laws in addition to those in
which the Seller would otherwise sell shares, as the Purchasers shall request,
except that neither the Seller nor the Purchasers shall for any such purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction where it is not so
qualified. The fees and expenses incurred in connection with such registration
shall be borne by the Seller.
(x) The Purchasers shall cooperate fully with the Seller and provide
the Seller with all information reasonably requested by the Seller for inclusion
in the registration statement or as necessary to comply with the Securities Act.
The Seller shall cooperate fully with any underwriters selected by the
Purchasers and counsel to such underwriters, and shall provide reasonable and
customary access to the Seller's books and records (upon receipt from such
7
<PAGE>
underwriters of customary confidentiality agreements) in order to facilitate
such underwriters' review and examination of the Seller in connection with such
underwriting.
(xi) The Seller shall notify the Purchasers, at any time after
effectiveness when a prospectus relating thereto is required to be delivered
under the Securities Act within the period mentioned in subdivision (vii) of
this Section 2.5(c), of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of circumstances then existing (and upon receipt of such
notice and until a supplemented or amended prospectus as set forth below is
available, the Purchasers shall not offer or sell any securities covered by such
registration statement and shall return all copies of such prospectus to the
Seller if requested to do so by it), and at the request of the Purchasers
prepare and furnish the Purchasers as promptly as practicable, but in any event
within 90 days, a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing.
(xii) The Seller shall furnish to the Purchasers at the time of the
disposition of the Common Shares, a signed copy of an opinion of the Seller's
regular in-house or outside general counsel, or other counsel of the Seller's
selection reasonably acceptable to, and which opinion shall be reasonably
satisfactory in form and substance to, the Purchasers to the effect that: (a) a
registration statement covering such Common Shares has been filed with the
Commission under the Securities Act and has been declared effective by order of
the Commission, (b) said registration statement and prospectus contained therein
comply as to form in all material respects with the requirements of the
Securities Act, and nothing has come to such counsel's attention (after due
inquiry) which would cause such counsel to believe that either said registration
statement or such prospectus (other than the financial statements contained
therein, as to which such counsel need not express any opinion) contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein (in the case of
such prospectus, in light of the circumstances under which they were made) not
misleading, (c) after due inquiry such counsel knows of no legal or governmental
proceedings required to be described in such registration statement or
prospectus which are not described as required, or of any contracts or documents
of a character required to be described in such registration statement or such
prospectus to be filed as an exhibit to such registration statement or to be
incorporated by reference therein which are not described and filed as required
and (d) to such counsel's knowledge, no stop order has been issued by the
Commission suspending the effectiveness of such registration statement; it being
understood that such opinion may contain such qualifications and assumptions as
are customary in the rendering of similar opinions, and that such counsel may
rely, as to all factual matters treated therein, on certificates of the Seller
(copies of which shall be delivered to the Purchasers).
8
<PAGE>
(xiii) The Seller will use its best efforts to comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act, to the
extent it shall be required to do so pursuant to such sections, and at all times
while so required shall use its best efforts to comply with all other public
information reporting requirements of the Commission (including reporting
requirements which serve as a condition to utilization of Rule 144 promulgated
by the Commission under the Securities Act) from time to time in effect and
relating to the availability of an exemption from the Securities Act for the
sale of any of the Seller's Common Stock held by the Purchasers. The Seller
will also cooperate with the Purchasers in supplying such information and
documentation as may be necessary for the Purchasers to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of an exemption from the Securities Act for the
sale of any of the Seller's Common Stock held by the Purchasers.
(D) INDEMNIFICATION.
---------------
(i) In the event of the registration of any Common Shares of the
Seller under the Securities Act pursuant to the provisions of Sections 2.5(a) or
2.5(b), the Seller agrees to indemnify and hold harmless the Purchasers, each
underwriter, broker or dealer, if any, and their respective directors, officers
and employees, of such Common Shares, and each other person, if any, who
controls the holders of the Shares or the Common Shares (or a permitted assignee
thereof), such underwriter, broker or dealer within the meaning of the
Securities Act, from and against any and all losses, claims, damages or
liabilities (or actions in respect thereof), joint or several, to which the
Purchasers (and as applicable) its directors, officers or employees, or such
underwriter, broker or dealer or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Common Shares were registered under
the Securities Act, any preliminary prospectus or final prospectus relating to
such Common Shares, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Seller of any rule or regulation under the
Securities Act applicable to the Seller or relating to any action or inaction
required by the Seller in connection with any such registration and will
reimburse the Purchasers, each such underwriter, broker or dealer and
controlling person, and their respective directors, officers or employees, for
any legal or other expenses reasonably incurred by the Purchasers or such
underwriter, broker or dealer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Seller will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, such preliminary prospectus, such
final prospectus or such amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Seller by the Purchasers
and as applicable, such Purchasers' directors, officers or employees, or such
9
<PAGE>
underwriter, broker, dealer or controlling person for use in the preparation
thereof. Such indemnity shall remain in full effect irrespective of any
investigation by any person indemnified above.
(ii) In the event of the registration of any Common Shares of the
Purchasers under the Securities Act for sale pursuant to the provisions of this
Agreement, the Purchasers agree to indemnify and hold harmless the Seller, its
directors, officers and employees, from and against any losses, claims, damages
or liabilities, joint or several, to which the Seller, its directors, officers
or employees, may become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
Common Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus relating to such Common Shares, or any amendment
or supplement thereto, or arise out of or are based upon omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which untrue statement
or alleged untrue statement or omission or alleged omission was made therein in
reliance upon and in conformity with written information furnished to the Seller
by the Purchasers for use in the preparation thereof. Such indemnity shall
remain in full effect irrespective of any investigation by any person
indemnified above.
(iii) Promptly after receipt by a person entitled to indemnification
under this Section 2.5(d) (for purposes of this Section 2.5(d), an "Indemnified
Party") of notice of the commencement of any action or claim relating to any
registration statement filed under Sections 2.5(a) or 2.5(b) or as to which
indemnity may be sought hereunder, such Indemnified Party will, if a claim for
indemnification hereunder in respect thereof is to be made against any other
party hereto (for purposes of this Section 2.5(d), an "Indemnifying Party"),
give written notice to such Indemnifying Party of the commencement of such
action or claim, but the failure to so notify the Indemnifying Party will not
relieve it from any liability which it may have to any Indemnifying Party
otherwise than pursuant to the provisions of this Section 2.5(d) and shall also
not relieve the Indemnifying Party of its obligations under this Section 2.5(d),
except to the extent that the Indemnifying Party is damaged solely as a result
of the failure to give timely notice. In case any such action is brought
against an Indemnified Party, and it notifies an Indemnifying Party of the
commencement thereof, the Indemnifying Party will be entitled (at its own
expense) to participate in and, to the extent that it may wish, jointly with any
other Indemnifying Party similarly notified, to assume the defense with counsel
satisfactory to such Indemnified Party, of such action and/or to settle such
action and, after notice from the Indemnifying Party to such Indemnified Party
of its election so to assume the defense thereof, the Indemnifying Party will
not be liable to such Indemnified Party for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof, other than the reasonable cost of investigation; provided, however,
that no Indemnifying Party and no Indemnified Party shall enter into any
settlement agreement which would impose
10
<PAGE>
any liability on such other party or parties without the prior written consent
of such other party or parties.
(E) CONTRIBUTION. If the indemnification provided for in Section 2.5(d)
------------
hereof is unavailable to the Indemnified Party in respect of any losses, claims,
damages or liabilities referred to herein, then each such Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such losses, claims, damages
or liabilities (i) as between the Seller and the Purchasers on the one hand and
the underwriters on the other, in such proportion as is appropriate to reflect
the relative benefits received by the Seller and the Purchasers on the one hand
and the underwriters on the other from the offering of the Common Shares, or if
such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Seller and the Purchasers on the one hand and of the underwriters
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations and (ii) as between the Seller on the one hand and each
Purchaser on the other, in such proportion as is appropriate to reflect the
relative fault of the Seller and of each Purchaser in connection with such
statements or omissions, as well as any other relevant equitable considerations.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 2.5(e) exceed the amount that such Indemnifying
Party would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 2.5(d) hereof had been available
under the circumstances.
The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages and liabilities referred to in the next preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 2.5(e), no Purchaser or
underwriter shall be required to contribute any amount in excess of the amount
by which (i) in the case of a Purchaser, the net proceeds received by such
Purchaser from the sale of Common Shares or (ii) in the case of an underwriter,
the total price at which the Common Shares purchased by it and distributed to
the public were offered to the public exceeds, in any such case, the amount of
any damages that such Purchaser or underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(F) SURVIVAL. The indemnity and contribution agreements contained in this
--------
Section 2.5 shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement or any underwriting agreement, (ii) any
investigation made by or on behalf of any Indemnified Party or by or on behalf
of the Seller and (iii) the consummation of the sale or successive resales of
the Common Shares.
11
<PAGE>
(G) FUTURE REGISTRATION RIGHTS. Until such time as the Registration has
--------------------------
been declared effective by the Commission, the Seller shall not grant to any
third party any registration rights equal to or more favorable than those
contained in this Section 2.5; provided, however, that the foregoing prohibition
shall not prevent the Seller from granting to a third party specific
registration rights that are equal to those contained in this Section 2.5, as
long as all of the registration rights granted to such third party, taken as a
whole, are less favorable to the third party that those granted to the
Purchasers herein. In the event that the Registration shall fail to remain
effective (or a stop order shall be entered with respect thereto) while any of
the Common Shares remain unsold, the provisions of this Section 2.5(g) shall
become applicable once again.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to the Purchasers as follows:
SECTION 3.1 CORPORATE EXISTENCE AND POWER. Seller is a corporation
-----------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Nevada, and has all corporate powers required to carry on its business
as now conducted. Seller is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on Seller. For purposes of this Agreement, the term "Material
Adverse Effect" means, with respect to any person or entity, a material adverse
effect on the condition (financial or otherwise), business, properties, assets,
liabilities (including contingent liabilities), results of operations or current
prospects of the Seller or its Subsidiaries (as defined below). True and
complete copies of Seller's Articles of Incorporation, as amended, and Bylaws,
as amended (collectively, the "Articles and Bylaws") have previously been
provided to the Purchasers. For purposes of this Agreement, the term
"Subsidiary" means, with respect to any entity, any corporation or other
organization of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are directly or indirectly owned by such entity or
of which such entity is a partner or is, directly or indirectly, the beneficial
owner of 50% or more of any class of equity securities or equivalent profit
participation interests.
SECTION 3.2 CORPORATE AUTHORIZATION. The execution, delivery and
-----------------------
performance by Seller of this Agreement, and the consummation of the
transactions contemplated hereby (including, but not limited to, the sale,
issuance and delivery of the Shares, the subsequent issuance of additional
Shares as payment of the dividends on the Shares, when, if and as declared by
the Board of Directors of the Seller, and the subsequent issuance of the Common
12
<PAGE>
Shares upon conversion of the Shares) have been duly authorized and no
additional corporate action is required for the approval of this Agreement.
This Agreement constitutes the legal, valid and binding agreement of Seller
enforceable against it in accordance with its terms, except as may be limited by
bankruptcy, reorganization, insolvency, moratorium and similar laws of general
application relating to or affecting the enforcement of rights of creditors and
except that enforceability of its obligations hereunder are subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
SECTION 3.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery
--------------------------
and performance by Seller of this Agreement, and the consummation of the
transactions contemplated hereby (including, but not limited to, the sale,
issuance and delivery of the Shares, the subsequent issuance of additional
Shares as payment of the dividends on the Shares, when, if and as declared by
the Board of Directors of the Seller, and the subsequent issuance of the Common
Shares upon conversion of the Shares) by Seller require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority, other than the filing of the Certificate of Amendment to the Seller's
Articles of Incorporation with the Secretary of State of the State of Nevada.
SECTION 3.4 NON-CONTRAVENTION. The execution, delivery and
-----------------
performance by Seller of this Agreement, and the consummation by Seller of the
transactions contemplated hereby do not and will not (a) contravene or conflict
with the Articles and Bylaws of Seller; (b) contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to Seller, (c) constitute
a default under or give rise to a right of termination, cancellation or
acceleration or loss of any benefit under any material agreement, contract or
other instrument binding upon Seller or under any material license, franchise,
permit or other similar authorization held by Seller; or (d) result in the
creation or imposition of any Lien (as defined below) on any material asset of
Seller. For purposes of this Agreement, the term "Lien" means, with respect to
any asset, any mortgage, lien, pledge, charge, security interest, claim or
encumbrance of any kind in respect of such asset.
SECTION 3.5 FINANCIAL STATEMENTS. The audited balance sheet of the
--------------------
Seller as at December 31, 1995 and 1994, and the audited statements of income
and cash flows for the years then ended, and the unaudited balance sheet as at
March 31, 1996 and the unaudited statements of income and cash flows for the
three month period then ended (collectively, the "Financial Statements") were
prepared in accordance with generally accepted accounting principles (as in
effect from time to time) applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto), and such Financial
Statements fairly present in accordance with generally accepted accounting
principles in all material respects the financial position of the Seller as at
the dates thereof and the results of its operations and its cash flows for the
periods then ended, subject, in the case of the unaudited interim financial
statements, to normal, recurring year-end audit adjustments and the absence of
footnotes. Since March 31, 1996, except as disclosed in Schedule 3.5, the
------------
Seller has not incurred any liability
13
<PAGE>
or obligation of any kind, outside of the ordinary course of business, that
would be required to be reflected on the Financial Statement or in the notes
thereto under generally accepted accounting principles.
SECTION 3.6 COMPLIANCE WITH LAW. Seller is in compliance in all
-------------------
respects and has conducted its business so as to comply in all respects with all
laws, rules and regulations, judgments, decrees or orders of any court,
administrative agency, commission, regulatory authority or other governmental
authority or instrumentality, domestic or foreign, applicable to its operations.
Except as disclosed in Schedule 3.6, there are no judgments or orders,
------------
injunctions, decrees, stipulations or awards (whether rendered by a court or
administrative agency or by arbitration), including any such actions relating to
affirmative action claims or claims of discrimination, against Seller or against
any of its properties or businesses.
SECTION 3.7 NO DEFAULTS. Except as disclosed in Schedule 3.7,
----------- ------------
Seller is not, nor has it received notice that it would be with the passage of
time, giving of notice, or both, (i) in violation of any provision of its
Articles and Bylaws (ii) in default or violation of any term, condition or
provision of (A) any judgment, decree, order, injunction or stipulation
applicable to Seller or (B) any agreement, note, mortgage, indenture, contract,
lease or instrument, permit, concession, franchise or license to which Seller is
a party or by which Seller or its properties or assets may be bound.
SECTION 3.8 LITIGATION. Except as disclosed in Schedule 3.8, there
---------- ------------
is no action, suit, proceeding, judgment, claim or investigation pending or, to
the best knowledge of Seller, threatened against Seller (or any of its
Subsidiaries), which could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Seller or which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay any of the
transactions contemplated hereby, or which could lead to a claim, damages
payment, settlement, loss, liability, cost or expense to Seller in excess of
$25,000 in the aggregate. To the best knowledge of Seller, there is no basis
for the assertion of any of the foregoing.
SECTION 3.9 ABSENCE OF CERTAIN CHANGES. Since March 31, 1996,
--------------------------
Seller has conducted its business in the ordinary course and there has not
occurred, except as set forth on Schedule 3.9:
------------
(a) Any event that could reasonably be expected to have a Material
Adverse Effect on the Seller;
(b) Any amendments or changes in the Articles or Bylaws of Seller,
except for the Certificate of Amendment to the Seller's Articles of
Incorporation, a true, correct and complete copy of which, as of the date
hereof, is attached hereto as Exhibit "B-1", and except for the By-Law amendment
dated July 3, 1996, a true, correct and complete copy of which is attached
------
hereto as Exhibit "B-2";
14
<PAGE>
(c) Any damage, destruction or loss, whether or not covered by
insurance, that would, individually or in the aggregate, have a Material Adverse
Effect on the Seller;
(d) Any (i) incurrence, assumption or guarantee by Seller of any debt
for borrowed money; (ii) issuance or sale of any securities convertible into or
exchangeable for securities of Seller; (iii) issuance or sale of options or
other rights to acquire from Seller, directly or indirectly, securities of
Seller or any securities convertible into or exchangeable for any such
securities; (iv) issuance or sale of any stock, bond or other corporate
security; (v) discharge or satisfaction of any Lien, other than current
liabilities incurred since March 31, 1996, in the ordinary course of business;
(vi) declaration or making any payment or distribution to shareholders or
purchased or redeemed any share of its capital stock or other security; (vii)
sale, assignment or transfer any of its intangible assets except in the ordinary
course of business, or cancellation of any debt or claim; (viii) waiver of any
right of substantial value whether or not in the ordinary course of business;
(ix) material change in officer compensation except in the ordinary course of
business and consistent with past practices; or (x) other commitment (contingent
or otherwise) to do any of the foregoing.
(e) Any creation or assumption by Seller of any Lien on any asset or
any making of any loan, advance or capital contribution to or investment in any
person in an aggregate amount which exceeds $25,000 outstanding at any time;
(f) Any entry into, amendment of, relinquishment, termination or non-
renewal by Seller of any contract, license, lease, transaction, commitment or
other right or obligation, other than in the ordinary course of business;
(g) Any transfer or grant of a right with respect to the trademarks,
trade names, service marks, trade secrets, copyrights or other intellectual
property rights owned or licensed by the Seller; or
(h) To the best knowledge of Seller, any agreement or arrangement made
by Seller to take any action which, if taken prior to the date hereof, would
have made any representation or warranty set forth in this Section 3 untrue or
incorrect as of the date when made.
SECTION 3.10 NO UNDISCLOSED LIABILITIES. Except for liabilities and
--------------------------
obligations incurred in the ordinary course of business since March 31, 1996, as
of the date hereof, (i) the Seller does not have any liabilities or obligations
(absolute, accrued, contingent or otherwise) that would be required to be
reflected on the Financial Statements or in the notes thereto under generally
accepted accounting principles and (ii) to the Seller's knowledge, there has not
been any aspect of the prior or current conduct of the business of the Seller
which may form the basis for any claim by any third party which if asserted
could result in any such liabilities or obligations, which are not fully
reflected, reserved against or disclosed in the consolidated balance sheet of
the Seller as at March 31, 1996.
15
<PAGE>
SECTION 3.11 RECEIVABLES. The Seller's receivables arose in the
-----------
ordinary course of business and have been collected or to the best of Seller's
knowledge are collectible in the ordinary course of business in the book amounts
thereof, less an amount not in excess of any allowance for doubtful accounts.
The receivables of Seller arising after March 31, 1996 and prior to the Closing
Date arose or to the best of Seller's knowledge will arise in the ordinary
course of business and have been collected or are or to the best of Seller's
knowledge will be collectible in the book amounts thereof, consistent with the
past practice of Seller, less any allowance for doubtful accounts consistent
with past practices.
SECTION 3.12 BACKLOG. The Seller's backlog as of the date hereof
-------
is not less than $10 million. "Backlog" for purposes hereof means anticipated
service revenue from clinical trials and other services that have not been
completed. "Backlog" includes anticipated service revenue from projects
represented by contracts or letters of intent or projects as to which the Seller
has commenced significant effort based upon the client's approval of a written
budget. There can be no assurance that the Seller will be able to realize all
of its backlog as service revenue.
SECTION 3.13 TAXES.
-----
(a) All tax returns, statements, reports and forms (including
estimated tax returns and reports and information returns and reports) required
to be filed with any taxing authority with respect to any taxable period ending
on or before the Closing Date by or on behalf of Seller have been or will be
filed when due (including any permitted extensions of such due date); provided,
however, that the Seller shall not be in breach of this Section 3.13(a) in
respect of tax liabilities which Seller is contesting in good faith with the
relevant tax authorities, subject to Seller having made sufficient reserves of
funds in order to satisfy such tax liabilities in full.
(b) Seller has timely paid, withheld or made provision on its books
for all material taxes due and payable by Seller.
(c) There are no Liens for taxes upon the assets or properties of
Seller and, to the best knowledge of Seller, there are no such Liens threatened
or anticipated to be placed upon the assets or properties of Seller.
SECTION 3.14 INTERESTS OF OFFICERS, DIRECTORS AND OTHER AFFILIATES.
-----------------------------------------------------
Schedule 3.14 sets forth a description of any interest held, directly or
- -------------
indirectly, by any officer, director or other affiliate of Seller in any
property, real or personal, tangible or intangible, used in or pertaining to
Seller's business, including any interest in the Seller's Intellectual Property
(as defined in Section 3.15(b) hereof).
16
<PAGE>
SECTION 3.15 INTELLECTUAL PROPERTY.
---------------------
(a) Except as disclosed in Schedule 3.15, to the best of Seller's
-------------
knowledge, Seller's business as conducted or as currently proposed to be
conducted does not and will not cause Seller to infringe or violate any patents,
trademarks, service marks, trade names, copyrights, licenses, trade secrets or
other intellectual property rights of any other person or entity.
(b) Set forth on Schedule 3.15 are all the patents, trademarks, trade
-------------
names, service marks, trade secrets, copyrights or other intellectual property
owned or licensed by Seller or in which Seller has any interest (the
"Intellectual Property"). Except as disclosed in Schedule 3.15, the
-------------
Intellectual Property is free of any unresolved ownership disputes or threats
with respect to any third party.
(c) The Seller owns or possesses the right to use all of the
Intellectual Property and no claim is pending, or to the best knowledge of
Seller, threatened, to the effect that the operations of the Seller infringe
upon or conflict with the asserted rights of any other person and to the best
knowledge of Seller, there is no basis for any such claim.
(d) Seller has taken all measures it deems reasonable to maintain the
Intellectual Property in full force and effect.
(e) The Seller currently possesses all licenses and sublicenses
required to operate the business of the Seller.
(f) To the best of Seller's knowledge, there are no infringers of the
Intellectual Property and the Seller has not learned of or communicated with any
third party considered by the Seller actually or possibly infringing on any of
the Intellectual Property in any material respect.
SECTION 3.16 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no
-----------------------------------
agreement, judgment, injunction, order or decree binding upon Seller which has
or could reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of Seller, any acquisition of property by Seller
or the conduct of business by Seller as currently conducted or as currently
proposed to be conducted by Seller.
SECTION 3.17 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES;
-------------------------------------------------------
CONDITION OF EQUIPMENT. Schedule 3.17 sets forth a true and complete list of
- ---------------------- -------------
all real property and equipment owned or leased by Seller with a value exceeding
$25,000. Seller has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of such tangible
properties and assets, real, personal and mixed, used in its business, free and
clear of any Liens.
17
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SECTION 3.18 VENDORS AND CUSTOMERS. Seller has satisfactory
---------------------
relations and has engaged in no actions to jeopardize such satisfactory
relations with its customers and the corporations, partnerships, and individuals
whose products are offered for sale by Seller. To the best of Seller's
knowledge, no facts, circumstances or conditions exist which create a reasonable
basis for believing that the Seller's relationships with its vendors and/or
customers will be unable to continue on substantially the same terms and
conditions as currently exist.
SECTION 3.19 PREEMPTIVE RIGHTS. Except as set forth on Schedule
----------------- --------
3.19, none of the shareholders of the Seller possess any preemptive rights in
- ----
respect of the Shares to be sold and issued to the Purchaser pursuant to this
Agreement or the conversion of such Shares into Common Shares.
SECTION 3.20 INSURANCE. All of Seller's insurance policies are
---------
sufficient for compliance in all respects with all requirements of law and with
all agreements to which Seller is a party or otherwise bound and are, to the
Seller's best knowledge, valid, outstanding, collectible and enforceable
policies, and to the best knowledge of Seller, provide adequate insurance
coverage for Seller and its businesses, products, properties and assets and its
directors, officers, salespersons, agents or employees and will remain in full
force and effect.
SECTION 3.21 SUBSIDIARIES. Except as set forth on Schedule 3.21,
------------ -------------
the Seller has no subsidiaries.
SECTION 3.22 CAPITALIZATION. The authorized capital stock of the
--------------
Seller consists of (i) 75,005,256 shares of Common Stock, par value $.001 per
share, of which 4,086,400 shares are issued and outstanding and (ii) 5,256
shares of Preferred Stock, without par value, of which 3,500 shares will be
issued and outstanding upon the Closing contemplated hereby. No other shares of
capital stock have been authorized or issued. All shares of the Seller's
outstanding capital stock have been duly authorized, are validly issued and
outstanding, and are fully paid and nonassessable and the Shares, when issued
and paid for at the Closing, will be duly authorized, validly issued, fully paid
and nonassessable. The Seller has reserved (x) out of its authorized but
unissued shares of Common Stock, solely for issuance upon the conversion of the
Shares (including shares of Preferred Stock issued in respect of dividends on
the Shares), such number of shares of Common Stock as shall from time to time be
issuable upon conversion of all shares of Preferred Stock at the time
outstanding, and (y) out of its authorized but unissued shares of Preferred
Stock, solely for issuance in respect of the payment of dividends, a sufficient
number of shares of Preferred Stock to pay such dividends when, if and as
declared by the Board of Directors of the Seller. Upon the issuance of shares
of Common Stock upon conversion of the Preferred Stock, and upon the issuance of
shares of Preferred Stock in payment of dividends on the Preferred Stock, when,
if and as declared by the Board of Directors of the Seller, such shares of
Common Stock and Preferred Stock, as the case may be, shall be duly authorized,
validly issued, fully paid and nonassessable. The designations, powers,
preferences, rights, qualifications, limitations and restrictions in respect of
each class and series of authorized capital stock of the Company are as set
forth in the Certificate of Amendment to
18
<PAGE>
the Articles of Incorporation of the Seller, as copy of which is attached as
Exhibit "B", and all such designations, powers, preferences, rights,
qualifications, limitations and restrictions are valid, binding and enforceable
in accordance with all applicable laws.
SECTION 3.23 RIGHTS, WARRANTS, OPTIONS. Except as set forth on
-------------------------
Schedule 3.23, there are no outstanding (a) securities or instruments
- -------------
convertible into or exercisable for any of the capital stock or other equity
interests of the Seller; (b) options, warrants, subscriptions or other rights to
acquire capital stock or other equity interests of the Seller; or (c)
commitments, agreements or understandings of any kind, including employee
benefit arrangements, relating to the issuance or repurchase by the Seller of
any capital stock or other equity interests of the Seller, any such securities
or instruments convertible or exercisable for securities or any such options,
warrants or rights.
SECTION 3.24 REAL PROPERTY. Schedule 3.24A sets forth the street
------------- --------------
address of each parcel of real property owned by the Seller. The Seller owns,
and on the Closing Date will own, good and marketable title to the real property
set forth on Schedule 3.24A, free and clear of Liens of any kind (the "Owned
--------------
Property"). The Seller does not hold, nor is it a party to any option, right of
first refusal or other contractual right to purchase, acquire, sell or dispose
of any interest in real property set forth on Schedule 3.24A. Schedule 3.24B
-------------- --------------
sets forth the street address of each parcel of real property leased by the
Seller (the "Leased Property"). The Seller has previously delivered to
Purchaser a true and complete copy of all lease agreements, as amended to date
(the "Leases") relating to the Leased Property. The Seller enjoys peaceful and
undisturbed possession of the Leased Property. All improvements located on the
Leased Property are in a state of good maintenance and repair and in a condition
adequate and suitable for the effective conduct therein of the business
conducted and proposed to be conducted by the Seller.
The Leases are valid, binding and in full force and effect, all rent and
other sums and charges payable thereunder are current, no notice of default or
termination under any of the Leases is outstanding, no termination event or
condition or uncured default on the part of the Seller or, to the best of the
Seller's knowledge, on the part of the landlord, thereunder, exists under the
Leases, and no event has occurred and no condition exists which, with the giving
of notice or the lapse of time or both, would constitute such a default or
termination event or condition. There are no subleases, licenses or other
agreements granting to any person any right to the possession, use, occupancy or
enjoyment of the premises demised by the Leases or the Owned Property or any
portion thereof (the Owned Property and the Leased Property being collectively
referred to herein as the "Premises"). All of the Premises are used and useful
in the conduct of the Seller's business.
To the best of the Seller's knowledge, there are no liabilities associated
with any of the Leases including, without limitation, any liability under any
Environmental Law (as defined herein) or regulation, which is or which may
become payable by Purchaser.
19
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SECTION 3.25 LABOR RELATIONS. There is no strike, work stoppage or
---------------
slowdown or labor disturbance pending or, to the best of the Seller's knowledge,
threatened that involves any employees of the Seller. The Seller is not a party
to, otherwise bound by or threatened with any labor or collective bargaining
agreement and to the best of Seller's knowledge there have been no attempts to
organize a labor union or to seek recognition as a collective bargaining unit by
or with respect to any employees of the Seller during the past thirty-six (36)
months.
SECTION 3.26 EMPLOYEES, EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT
------------ -----------------------------------------------------
PLANS.
- -----
(A) EMPLOYMENT AGREEMENTS. Except as set forth in Schedule 3.26A,
--------------------- --------------
there are no employment, consulting, severance or indemnification arrangements,
agreements, or understandings between the Seller and any officer, director,
consultant or employee of the Seller (the "Employment Agreements"). The Seller
has previously delivered to Purchaser true and complete copies of all of the
Employment Agreements. Except as disclosed in Schedule 3.26A, no such
--------------
Employment Agreement provides for the acceleration or change in the award,
grant, vesting or determination of operations, warrants, rights, severance
payments, or other contingent obligations of any nature whatsoever of the Seller
in favor of any such parties in connection with the transactions contemplated by
this Agreement. Except for the agreements set forth in Schedule 3.26A, the
--------------
terms of employment or engagement of all directors, officers, employees, agents,
consultants and professional advisors of the Seller are such that their
employment or engagement may be terminated upon not more than two weeks notice
given at any time without liability for payment of compensation or damages and
the Seller has not entered into any agreement or arrangement for the management
of its business or any part thereof other than with its directors or employees.
(B) EMPLOYEE BENEFIT PLANS. Schedule 3.26B includes a correct and
---------------------- --------------
complete list of all pension, retirement, stock purchase, stock bonus, stock
ownership, stock option, profit sharing, savings, medical, disability,
hospitalization, or insurance plans, deferred compensation, bonus, or group
insurance contracts or plans or any other incentive, welfare or employee benefit
plan, policy, agreement commitment, arrangement or practice maintained by the
Seller for any of its directors, employees or former employees (the "Seller
Plans"). The Seller has previously delivered to Purchaser accurate and complete
copies of all of the Seller Plans (or, if oral, true and complete written
summaries thereof). Schedule 3.26B also identifies each Seller Plan which
--------------
constitutes an "employee pension benefit plan" or an "employee welfare benefit
plan", as such terms are defined in the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). Seller is not a contributing employer to any
"multiemployer plan," as such term is defined in ERISA, nor does Seller have any
multiemployer plan liability with respect to any such plans or any Seller Plan.
No event has occurred or condition exists with respect to any employee
benefit plan or arrangement (whether or not terminated) subject to ERISA which
is (or was) maintained, sponsored or contributed to by an entity under common
control with the Seller,
20
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determined under Section 414(b), (c), (m) or (o) of the Code, which could, on or
after the Closing, subject the Seller or Purchaser directly or indirectly
(through an indemnification agreement or otherwise) to any liability, including,
without limitation, liability under Section 412, 4971 or 4980B of the Code or
Title IV or ERISA.
(C) EMPLOYEES. (i) To the Seller's best knowledge, no employee,
---------
consultant or agent of the Seller is or will be, based upon the business and
activities taken or proposed to be taken by the Seller, in violation of any term
of any employment contract, confidentiality or non-disclosure agreement or any
other contract, agreement, commitment or understanding relating to the
relationship of such employee, consultant or agent with the Seller or any other
party.
(ii) Each significant employee or consultant of the Seller with
access to confidential or proprietary information of the Seller has executed an
agreement obligating such employee, consultant, contractor or agent to hold
confidential the Seller's proprietary information.
(iii) The Seller is not aware that any officer or key employee
intends to terminate employment with the Seller.
SECTION 3.27 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the
------------ -------------------------------------
Seller, nor any affiliate of the Seller, any agent of the Seller, any other
person acting on behalf of or associated with the Seller, or any individual
related to any of the foregoing persons, acting alone or together, has: (a)
received, directly or indirectly, any rebates, payments, commissions,
promotional allowances or any other economic benefits, regardless of their
nature or type, from any customer, supplier, trading company, shipping company,
governmental employee or other person with whom the Seller has done business
directly or indirectly; or (b) directly or indirectly, given or agreed to give
any gift or similar benefit to any customer, supplier, trading company, shipping
company, governmental employee or other person who is or may be in a position to
help or hinder the business of the Seller (or assist the Seller in connection
with any actual or proposed transaction) which (i) may subject the Seller to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, may have had an adverse effect on the
Seller or (iii) if not continued in the future, may adversely affect the assets,
business, operations or prospects of the Seller or subject the Seller to suit or
penalty in any private or governmental litigation or proceeding.
SECTION 3.28 SERVICES.
------------ --------
(a) To the Seller's best knowledge, there exists no set of facts (i)
which could furnish a basis for the withdrawal, suspension or cancellation of
any registration, license, permit or other governmental approval or consent of
any governmental or regulatory agency with respect to any service developed or
provided by the Seller (a "Service"), (ii) which could furnish a basis for the
withdrawal, suspension or cancellation by order of any state, federal or foreign
21
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court of law of any Service, or (iii) which could have a Material Adverse Effect
on the continued operation of any facility of the Seller or which could
otherwise cause the Seller to withdraw, suspend or cancel any such Service from
the market or to change the marketing classification of any such Service.
(b) Each Service provided by Seller has been provided in accordance
with the specifications under which such Service normally is and has been
provided and the provisions of all applicable laws or regulations including,
without limitation, those of the United States Food and Drug Administration.
(c) Copies of all material correspondence received or sent by or on
behalf of Seller from or to the Food and Drug Administration or any other
governmental regulatory agency, including, without limitation, any inspection
reports or notices, have been previously delivered to the Purchasers.
SECTION 3.29 ENVIRONMENTAL MATTERS. None of the Premises or any
------------ ---------------------
other property used by the Seller in the past has been used by the Seller or, to
the Seller's knowledge, any other person to manufacture, treat, store, or
dispose of any hazardous substance or any other regulated material, and, to the
best of Seller's knowledge, such property is free of all such substances and
materials. The Seller, and any other person for whose conduct it may be
responsible, are in compliance with all laws, regulations and other federal,
state or local governmental requirements, and all applicable judgments, orders,
writs, notices, decrees, permits, licenses, approvals, consents or injunctions
relating to the generation, management, handling, transportation, treatment,
disposal, storage, delivery, discharge, release or emission of any waste,
pollutant or toxic, hazardous or other regulated substance (including, without
limitation, asbestos, radioactive material and pesticides) or to any other
actions, omissions or conditions affecting the environment (the "Environmental
Laws"). Neither the Seller nor any other person for whose conduct it may be
responsible has received any complaint, notice, order, or citation of any
actual, threatened or alleged noncompliance with any of the Environmental Laws,
and there is no proceeding, suit or investigation pending or, to the Seller's
knowledge, threatened against the Seller or any such person with respect to any
violation or alleged violation of the Environmental Laws, and there is no basis
for the institution of any such proceeding, suit or investigation.
SECTION 3.30 LICENSES; COMPLIANCE WITH REGULATORY REQUIREMENTS. The
-------------------------------------------------
Seller holds licenses, franchises, ordinances, authorizations, permits,
certificates, variances, exemptions, orders and approvals, domestic or foreign
(collectively, the "Licenses") which are material to the operation of the
business of the Seller. The Seller is in compliance with, and has conducted its
business so as to comply with, the terms of their respective Licenses and with
all applicable laws, rules, regulations, ordinances and codes, domestic or
foreign, including laws, rules, regulations, ordinances and codes relating to
the protection of the environment. The Seller has not engaged in any activity
that would cause revocation or suspension of any such material licenses. No
action or proceeding looking to or contemplating the revocation or
22
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suspension of any of such material Licenses is pending, or, to the knowledge of
the Seller, threatened.
SECTION 3.31 BROKERS. No broker, finder or investment banker is
-------
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement, based upon any arrangement
made by or on behalf of Seller.
SECTION 3.32 ARM'S LENGTH TRANSACTIONS. Each of the agreements
-------------------------
entered into by the Seller have been entered into in good faith and represent
transactions that are no more favorable to the parties thereto than would be
available in an arm's length transaction between such parties. Except as set
forth on Schedule 3.32, there are no Related Person Transactions (as defined in
-------------
Section 5.2.2 hereof).
SECTION 3.33 DISCLOSURE. No representation or warranty made by
----------
Seller in this Agreement, nor in any document, written information, financial
statement, certificate, schedule or exhibit prepared and furnished or to be
prepared and furnished by Seller or the representatives of Seller pursuant
hereto or in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading in light of the circumstances under which they were
furnished. Except as disclosed in Schedule 3.33, there is no event, fact or
-------------
condition (other than general business or economic conditions which affect
businesses generally) that adversely affects the business of Seller, or, to the
best of Seller's knowledge, that reasonably could be expected to do so, that has
not been set forth in this Agreement or in the Schedules attached hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER
Each Purchaser, severally and not jointly, hereby represents and
warrants to Seller as follows:
SECTION 4.1 EXISTENCE AND POWER. Each Purchaser is duly organized,
-------------------
validly existing and in good standing under the laws of the jurisdiction of its
organization. Each Purchaser has all powers required to carry on its business
as now conducted.
SECTION 4.2 AUTHORIZATION. The execution, delivery and performance
-------------
by each Purchaser of this Agreement, and the consummation by each Purchaser of
the transactions contemplated hereby has been duly authorized and no additional
action is required for the approval of this Agreement. This Agreement
constitutes a valid and binding agreement of each Purchaser, enforceable against
it in accordance with its terms, except as may be limited by
23
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bankruptcy, reorganization, insolvency, moratorium and similar laws of general
application relating to or affecting the enforcement of rights of creditors and
except that enforceability of its obligations thereunder are subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
SECTION 4.3 GOVERNMENTAL AUTHORIZATION. The execution, delivery
--------------------------
and performance by each Purchaser of this Agreement, and the consummation of the
transactions contemplated hereby by each Purchaser require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority, which individually or in the aggregate, would have a Material Adverse
Effect on each such Purchaser.
SECTION 4.4 NON-CONTRAVENTION. The execution, delivery and
-----------------
performance by each Purchaser of this Agreement, and the consummation by each
Purchaser of the transactions contemplated hereby do not and will not: (a)
contravene or conflict with the Certificate of Limited Partnership or other
organizational document of such Purchaser; or (b) contravene or conflict with or
constitute a material violation of any material provision of any law,
regulation, judgment, injunction, order or decree binding upon or applicable to
such Purchaser, which contravention, conflict or violation would have a Material
Adverse Effect on such Purchaser.
SECTION 4.5 LITIGATION. There is no action, suit, proceeding,
----------
claim or investigation pending or to the best of each Purchaser's knowledge
threatened, which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated hereby.
SECTION 4.6 INVESTMENT. Each Purchaser is acquiring the Shares
----------
purchased by it hereunder for its own account for investment and until such
Shares are registered pursuant to the Registration, not with a view to, or for
sale in connection with, any distribution thereof, nor with the intention of
distribution or selling the same; provided, however, that each Purchaser may
transfer Shares among one or more of its affiliates. Each Purchaser is aware
the Shares have not been registered under the Securities Act or under applicable
state securities or blue sky laws and that until the Shares are registered
pursuant to the registration statement, the certificate representing the Shares
will bear the legend set forth in Section 2.4 hereof. Each Purchaser is an
"accredited investor" as such term is defined in Rule 501 of Regulation D, as
promulgated under the Securities Act. The principal place of business of the
Purchasers is New York.
ARTICLE V
COVENANTS OF THE SELLER
SECTION 5.1 ACTIONS REQUIRING PURCHASER'S CONSENT. The Seller
-------------------------------------
covenants and agrees that, so long as shares of Preferred Stock are outstanding,
none of the following actions will take place prior or subsequent to the
Closing, without the prior written consent of
24
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the Purchasers owning in the aggregate at least two-thirds of the outstanding
shares of Preferred Stock being first obtained (for purposes of this Section
5.1, Seller shall be deemed to include all Subsidiaries of Seller):
5.1.1 an authorization of any additional shares of capital stock of
any class or any other securities of the Seller;
5.1.2 the entering into of any bank or other non-trade indebtedness
for borrowed money, other than (i) a secured revolving credit
facility of up to $1,000,000 and (ii) borrowings made for the
purpose of redeeming the Preferred Stock pursuant to Section
2(B)(5) of Article VI of the Articles of Incorporation, as
amended;
5.1.3 the liquidation, dissolution or winding-up of the Seller or any
of its Subsidiaries or any merger or consolidation of the
Seller or any Subsidiary with or into another entity or the
sale of all or substantially all the assets of the Seller or
any Subsidiary;
5.1.4 the payment of any dividend by the Seller;
5.1.5 the repurchase by the Seller of any shares of the Seller's
capital stock;
5.1.6 any amendment to any of the Seller's charter documents which
relates to the Seller's capital structure;
5.1.7 any Related Person Transactions (as defined herein), unless the
same has been approved by a disinterested majority of the Board
of Directors of the Seller;
5.1.8 any material change in the compensation of the five (5) highest
compensated employees and/or officers of the Seller, unless the
same has been approved by a disinterested majority of the Board
of Directors of the Seller; and
5.1.9 otherwise take any action, directly or indirectly, which would
undermine the intent and purpose of this Agreement.
SECTION 5.2 ADDITIONAL COVENANTS.
--------------------
5.2.1 The Seller shall maintain insurance and cause each of its
Subsidiaries to maintain insurance as to their respective properties, products
and business, with financially sound and reputable insurers, against such
casualties and contingencies and of such types and
25
<PAGE>
in such amounts as is customary for companies similarly situated, which
insurance shall be reasonably deemed by the Seller's Board of Directors to be
sufficient.
5.2.2 Except for transactions approved by a majority of the
disinterested directors of the Board of Directors, neither the Seller nor any of
its Subsidiaries shall enter into any transaction with any director, officer,
employee or holder of more than 5% of the outstanding capital stock of any class
or series of capital stock of the Seller or any of its Subsidiaries, member of
the family of any such person, or any corporation, partnership, trust or other
entity in which any such person, or member of the family of any such person, is
a director, officer, trustee, partner or holder of more than 5% of the
outstanding capital stock thereof, with the exception of transactions which are
consummated upon terms that are no less favorable than would be available if
such transaction had been effected at arms-length, in the reasonable judgment of
the Board of Directors ("Related Person Transactions").
5.2.3 The Seller shall comply and cause each Subsidiary to comply
with all applicable laws, rules, regulations and orders.
5.2.4 The Seller shall keep, and cause each Subsidiary to keep,
adequate records and books of account in which accurate and correct entries will
be made in accordance with generally accepted accounting principles consistently
applied.
5.2.5 The Seller shall not make any material change in the nature of
its business.
SECTION 5.3 REPORTING OBLIGATIONS.
---------------------
So long as shares of Preferred Stock are outstanding, Seller shall
furnish to the Purchasers:
5.3.1 As soon as practicable after receipt thereof, copies of any
material written communications delivered to, and received by, the Seller which
relates to the viability and existence of the Seller;
5.3.2 Promptly following receipt by the Seller, each audit response
letter, accountant's management letter and other written report submitted to the
Seller by its independent certified public accountants in connection with an
annual or interim audit of the books of the Seller or any of its Subsidiaries;
5.3.3 Promptly after the commencement thereof, notice of all actions,
suits, claims, proceedings, investigations and inquiries that could materially
adversely affect the Seller or any of its Subsidiaries in any manner;
26
<PAGE>
5.3.4 Promptly upon sending, making available or filing the same, all
press releases, reports and financial statements that the Seller sends or makes
available to its stockholders or directors;
5.3.5 Promptly, from time to time, such other information regarding
the business, prospects, financial condition, operations, property or affairs of
the Seller and its Subsidiaries as the Purchasers reasonably may request; and
5.3.6 Representatives of the Purchasers shall be entitled to inspect
the properties, books and records of the Seller and its Subsidiaries and
interview the officers, directors and senior employees of the Seller and its
Subsidiaries, including Seller's accountants, attorneys and other advisors,
regarding the business of the Seller and its Subsidiaries during regular
business hours after reasonable notice to the Seller.
SECTION 5.4 CONFIDENTIALITY. Each party shall, and shall use its
---------------
reasonable efforts to cause its affiliates, directors, officers, agents,
advisors, employees and authorized representatives (collectively, "Agents") to,
(i) hold in confidence all confidential information obtained by it from the
disclosing party or such disclosing party's Agents pursuant to this Agreement
(unless such information (a) is or becomes generally available to the public or
the publishing industry other than as a result of wrongful acts of the non-
disclosing party, (b) is in the possession of the non-disclosing party or its
Agents prior to such disclosure (not by unlawful means), (c) is disclosed to the
non-disclosing party or its Agents on a non-confidential basis by a person other
than the disclosing party or its Agents that, to the non-disclosing party's
knowledge is not restricted from disclosing such information to the non-
disclosing party by any contractual, fiduciary or other legal obligation, or (d)
is developed by the non-disclosing party without the benefit of the confidential
information) and (ii) use all such data and information for the purpose of
consummating the transactions contemplated hereby, except, that the parties may
disclose such information (x) as required by law or securities market rule or
regulations or (y) in connection with legal proceedings relating to or arising
out of the transactions contemplated hereby. In the event a party is required
by clauses (x) and (y) of the preceding sentence to disclose any confidential
information of the disclosing party such non-disclosing party will (i) promptly
notify the disclosing party of the existence, terms and circumstances
surrounding such required disclosure, (ii) consult with the disclosing party on
the advisability of taking legally available steps to resist or narrow such
request, and (iii) if disclosure of such information is required, furnish only
such portion of the information as it is legally compelled to disclose and
exercise its reasonable best efforts to obtain, at the disclosing party's
expense, an order or other reliable assurance that confidential treatment will
be accorded to such portion of the disclosed information that the disclosing
party may designate. In the event this Agreement is terminated, each party
shall within three business days return or destroy (and certify to the other
party the destruction of), if so requested by the other party, all nonpublic
documents obtained from such other party in connection with the transactions
contemplated hereby and any copies thereof which may have been made by such
first party and shall use its reasonable efforts to cause its Agents
27
<PAGE>
to whom such documents were furnished promptly to return or destroy (and certify
to the other party the destruction of) such documents and any copies thereof any
of them may have had.
SECTION 5.5 PUBLIC ANNOUNCEMENTS. For so long as the shares of
--------------------
Preferred Stock are outstanding, neither the Purchasers nor the Seller shall
(and each such party shall use its reasonable efforts to cause its subsidiaries,
affiliates, directors, officers, employees and authorized representatives not
to), issue any press release, make any public announcement or furnish any
written statement to its employees or stockholders generally concerning the
transactions contemplated by this Agreement without the consent of the other
party (which consent shall not be unreasonably withheld), except to the extent
required by applicable law or the applicable requirements of applicable stock
exchange rules (including NASDAQ) (and in either such case such party shall, to
the extent consistent with timely compliance with such requirement, consult with
the other party prior to making the required release, announcement or
statement).
SECTION 5.6 EXCLUSIVITY. (a) The Seller agrees that unless this
-----------
Agreement has been terminated by the mutual agreement of the parties, neither
the Seller, nor its respective affiliates, representatives, employees or agents
(collectively, "Agents") will, commencing on the date of this Agreement and
continuing through July 15, 1996 (the "Exclusive Period"), directly or
indirectly, (i) solicit, encourage or negotiate any proposal (whether solicited
or unsolicited) for, or execute any agreement relating to, a sale of all or any
part of the Shares or the Seller's assets or a sale of any equity or debt
security of the Seller or any merger, consolidation, recapitalization or similar
transaction involving the Seller with any other party (any of the foregoing is
referred to as an "Acquisition Proposal"), (ii) provide any information
regarding the Seller or the Shares to any third party for the purpose of
soliciting, encouraging or negotiating an Acquisition Proposal (it being
understood that nothing contained in clauses (i) or (ii) above shall restrict
the Seller or any of its Agents from providing information as required by legal
process), or (iii) operate the business of the Seller other than in the ordinary
course of business.
(b) In the event that the Seller does not consummate the transaction
contemplated hereby as a result of the Seller's breach of Section 5.6(a) hereof,
the Seller shall be liable to the Purchasers for all costs and expenses actually
incurred by the Purchasers in pursuit of the transaction, together with the
payment of liquidated damages to the Purchaser in the agreed upon amount of
$250,000.
SECTION 5.7 BOARD REPRESENTATION; ADVISORY FEES. (a) So long as
-----------------------------------
shares of Preferred Stock are outstanding, the Purchasers shall be entitled to
nominate that number of directors to the Seller's board of directors as is
proportional to their percentage ownership of the Seller, assuming conversion of
all Shares of Preferred Stock. The Seller shall use its best efforts to
facilitate the exercise by the Purchasers of their right, pursuant to Section
2(b) of the Seller's Articles of Incorporation, to elect and remove that number
of directors to the Seller's board of directors as is proportional to their
percentage ownership of the Seller, assuming
28
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conversion of all Shares of Preferred Stock. The Seller shall have obtained a
commercially reasonable directors and officers liability insurance policy that
is reasonably satisfactory to the Purchasers.
(b) The Seller hereby grants to the Purchasers the first option to
provide and/or participate in any future financing that the Seller may require
for a period of two years from the Closing Date or, if sooner, the date of the
closing of the Seller's public offering. The Purchasers shall be entitled to
customary and appropriate advisory fees in the event that the Purchasers provide
acquisition, financing or other advisory services to the Seller.
SECTION 5.8 REGISTRATION STATEMENT UNDER EXCHANGE ACT. The Seller
-----------------------------------------
shall use its best efforts to file a registration statement under the Exchange
Act within thirty (30) days of the Closing. The Seller further covenants that it
will use its best efforts to cause such registration statement to become
effective within 90 days of the date of Closing.
ARTICLE VI
CONDITIONS TO THE CLOSING
SECTION 6.1 CONDITIONS TO OBLIGATIONS OF PURCHASERS. The
---------------------------------------
obligations of Purchasers hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing Date, of each of the following conditions
(any one or more of which may be waived by the Purchasers in their sole
discretion, but only in a writing signed by the Purchasers):
(A) OPINION. The Purchasers shall have received the
-------
opinion of Graves, Dougherty, Hearon & Moody, counsel to the Seller, which shall
be reasonably satisfactory to the Purchasers.
(B) SECRETARY'S CERTIFICATE. The Purchasers shall have
-----------------------
received a certificate of the Secretary of the Seller (in form and substance
satisfactory to the Purchasers) certifying (i) that attached thereto are true
and complete copies of the Articles and Bylaws of Seller, (ii) that attached
thereto are true and complete copies of the resolutions of the Board of
Directors of Seller authorizing the execution, delivery and performance of this
Agreement and any other documents, instruments and certificates required to be
executed by it in connection herewith and approving the consummation of the
transactions in the manner contemplated hereby including, but not limited to,
the authorization and issuance of the Shares and the filing of the Certificate
of Amendment to the Articles of Incorporation, (iii) the names and true
signatures of the officers of the Seller signing this Agreement and all other
documents to be delivered in connection with this Agreement, and (iv) such other
matters as the Purchasers may reasonably request.
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<PAGE>
(C) DUE DILIGENCE. Completion of due diligence by the Purchasers to
-------------
their entire satisfaction on or before the date of Closing.
(D) FILING OF CERTIFICATE OF AMENDMENT. The Certificate of Amendment
----------------------------------
to the Articles of Incorporation of Seller, in the form attached hereto as
Exhibit "B", shall have been filed with the Secretary of State of the State of
Nevada.
(E) PERFORMANCE; REPRESENTATION AND WARRANTIES. The Seller shall have
------------------------------------------
performed and complied in all respects with all agreements and conditions
contained in this Agreement which are required to be performed or complied with
by Seller prior to or at the Closing, the representation and warranties of the
Seller contained herein shall be true and correct on and as of the Closing Date
as though made on such date, and the Seller shall have delivered to the
Purchasers a certificate of a duly authorized officer of the Seller to such
effect.
(F) APPROVALS, ETC. Approval and consent of all appropriate
---------------
governmental regulatory agencies and the receipt of approval and/or consent from
all other appropriate parties, and all consents which may be required under any
of the Seller's agreements (or otherwise), including, but not limited to, all
landlord consents and waivers, with respect to the transactions contemplated
hereby shall have been obtained.
(G) NO MATERIAL ADVERSE EFFECT. There shall have occurred no event
--------------------------
which, in the Purchasers' sole discretion, could result in a Material Adverse
Effect on the Seller between the date hereof and the date of the Closing and the
Seller shall have operated its business in the ordinary course, consistent with
its past practices during such period.
(H) YEAR-END AUDIT. The Seller's audit for the fiscal year ended
--------------
December 31, 1995 shall have been completed and the Seller shall have received
an unqualified opinion from its independent public accountants respecting such
audited financial statements.
(I) EMPLOYMENT AGREEMENTS. Each of Robert Sammis and Thomas O'Donnell
---------------------
shall have entered into employment agreements with the Seller on terms that are
satisfactory to the Purchaser.
(J) All holders of options exercisable into shares of the Seller's
Common Stock shall have waived, on terms reasonably acceptable to the
Purchasers, any provisions of their respective options, or the plans pursuant to
which such options have been granted, which by their terms accelerate any
vesting period to which such options are subject based upon or due to the
consummation of the transactions contemplated by this Agreement.
(K) Russell Armstrong and Irawan Onggara shall have waived, on terms
reasonably acceptable to the Purchasers, their respective preemptive rights
relating to securities issued by the Seller.
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(L) The Seller's Application for Authority to transact
business in Texas shall have been amended to reflect the business currently
conducted by the Seller.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF THE SELLER. The
---------------------------------------
obligations of the Seller hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing Date, of the following condition (which
may be waived by the Seller, in its sole discretion, but only in a writing
signed by Seller):
(A) PERFORMANCE; REPRESENTATION AND WARRANTIES. The
------------------------------------------
Purchasers shall have performed and complied in all respects with all agreements
and conditions contained in this Agreement which are required to be performed or
complied with by the Purchasers prior to or at the Closing, the representation
and warranties of each Purchaser, severally and not jointly, contained herein
shall be true and correct on and as of the Closing Date as though made on such
date, and the Purchasers shall have delivered to the Seller a certificate of a
duly authorized officer of the Purchasers to such effect.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES: INDEMNITY.
-----------------------------------------------------
(A) SURVIVAL OF REPRESENTATIONS. Except as otherwise
---------------------------
provided herein, the representations, warranties, covenants and agreements of
Seller contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing Date for the longer of
(i) two years from the Closing Date, or (ii) so long as the Shares of Preferred
Stock are outstanding and shall in no way be affected by any investigation of
the subject matter thereof made by or on behalf of the Purchasers.
(B) INDEMNIFICATION. (A) The Seller agrees to indemnify and
---------------
hold harmless each Purchaser, its affiliates, and its respective successors and
assigns, from and against any losses, damages, or expenses which are caused by
or arise out of (i) any breach or default in the performance by the Seller of
any covenant or agreement made by the Seller in this Agreement; (ii) any breach
of warranty or representation made by the Seller in this Agreement; and (iii)
any and all actions, suits, proceedings, claims, demands, judgments, costs and
expenses (including reasonable legal fees and expenses) incident to any of the
foregoing. (B) Each Purchaser, severally and not jointly, agrees to indemnify
and hold harmless Seller, its affiliates, and its respective successors and
assigns, from and against any losses, damages, or expenses which are caused by
or arise out of (i) any breach or default in the performance by such Purchaser
of any covenant or agreement made by such Purchaser in this Agreement; (ii) any
breach of warranty or representation made by such Purchaser in this Agreement;
and (iii) any
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and all actions, suits, proceedings, claims, demands, judgments, costs and
expenses (including reasonable legal fees and expenses) incident to any of the
foregoing.
(C) INDEMNITY PROCEDURE. A party or parties hereto agreeing to be
-------------------
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
------------------
claiming indemnity is referred to as the "Indemnified Party".
-----------------
An Indemnified Party under this Agreement shall, with respect to
claims asserted against such party by any third party, give written notice to
the Indemnifying party of any liability which might give rise to a claim for
indemnity under this Agreement within sixty (60) business days of the receipt of
any written claim from any such third party, but not later than twenty (20) days
prior to the date any answer or responsive pleading is due, and with respect to
other matters for which the Indemnified Party may seek indemnification, give
prompt written notice to the Indemnifying party of any liability which might
give rise to a claim for indemnity; provided, however, that any failure to give
such notice will not waive any rights of the Indemnified Party except to the
extent the rights of the Indemnifying Party are materially prejudiced.
The Indemnifying Party shall have the right, at its election, to
take over the defense or settlement of such claim by giving written notice to
the Indemnified Party at least fifteen (15) days prior to the time when an
answer or other responsive pleading or notice with respect thereto is required.
If the Indemnifying Party makes such election, it may conduct the defense of
such claim through counsel of its choosing (subject to the Indemnified Party's
approval of such counsel, which approval shall not be unreasonably withheld),
shall be solely responsible for the expenses of such defense and shall be bound
by the results of its defense or settlement of the claim. The Indemnifying Party
shall not settle any such claim without prior notice to and consultation with
the Indemnified Party, and no such settlement involving any equitable relief or
which might have an adverse effect on the Indemnified Party may be agreed to
without the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld). So long as the Indemnifying Party is diligently
contesting any such claim in good faith, the Indemnified Party may pay or settle
such claim only at its own expense and the Indemnifying Party will not be
responsible for the fees of separate legal counsel to the Indemnified Party,
unless the named parties to any proceeding include both parties and
representation of both parties by the same counsel would be inappropriate. If
the Indemnifying Party does not make such election, or having made such election
does not, in the reasonable opinion of the Indemnified Party proceed diligently
to defend such claim, then the Indemnified Party may (after written notice to
the Indemnifying Party), at the expense of the Indemnifying Party, elect to take
over the defense of and proceed to handle such claim in its discretion and the
Indemnifying Party shall be bound by any defense or settlement that the
Indemnified Party may make in good faith with respect to such claim. In
connection therewith, the Indemnifying Party will fully cooperate with the
Indemnified Party should the Indemnified Party elect to take over the defense of
any such claim.
32
<PAGE>
The parties agree to cooperate in defending such third
party claims and the Indemnified Party shall provide such cooperation and such
access to its books, records and properties as the Indemnifying Party shall
reasonably request with respect to any matter for which indemnification is
sought hereunder; and the parties hereto agree to cooperate with each other in
order to ensure the proper and adequate defense thereof.
With regard to claims of third parties for which
indemnification is payable hereunder, such indemnification shall be paid by the
Indemnifying Party upon the earlier to occur of: (i) the entry of a judgment
against the Indemnified Party and the expiration of any applicable appeal
period, or if earlier, five (5) days prior to the date that the judgment
creditor has the right to execute the judgment; (ii) the entry of an
unappealable judgment or final appellate decision against the Indemnified Party;
or (iii) a settlement of the claim. Notwithstanding the foregoing, provided that
there is no dispute as to the applicability of indemnification, the reasonable
expenses of counsel to the Indemnified Party shall be reimbursed on a current
basis by the Indemnifying Party if such expenses are a liability of the
Indemnifying Party. With regard to other claims for which indemnification is
payable hereunder, such indemnification shall be paid promptly by the
Indemnifying Party upon demand by the Indemnified Party.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 FURTHER ASSURANCES. Each party agrees to cooperate
------------------
fully with the other parties and to execute such further instruments, documents
and agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
SECTION 8.2 FEES AND EXPENSES. The Seller shall be responsible for
-----------------
the payment of the Purchaser's legal fees relating to the transactions
contemplated by this Agreement, up to the maximum amount of $30,000. All such
legal fees will be payable by Seller at Closing. Notwithstanding anything to
the contrary contained herein, the expenses of the Registration shall be borne
entirely by the Seller and shall not be subject to the foregoing limitation.
SECTION 8.3 NOTICES. Whenever any party hereto desires or is
-------
required to give any notice, demand, or request with respect to this Agreement,
each such communication shall be in writing and shall be effective only if it is
delivered by personal service or mailed, United States registered or certified
mail, postage prepaid, return receipt requested (and shall be deemed to have
been received three(3) days after deposit into the United States mail), or sent
by prepaid overnight courier, facsimile or confirmed telecopier, addressed as
follows:
33
<PAGE>
If to the Purchasers:
c/o Oracle Partners, L.P.
712 Fifth Avenue, 45th Floor
New York, New York 10019
Attention: Larry Feinberg
Fax No.: (212) 459-0863
With a copy in each case to:
Kane Kessler, P.C.
1350 Avenue of the Americas
26th Floor
New York, New York 10019
Attention: Robert L. Lawrence, Esq.
Fax No.: (212) 245-3009
If to the Seller:
Clinicor, Inc.
307 Camp Craft Road, Suite 200
Austin, Texas 78746
Attention: Robert Sammis
Fax No.: (512) 327-8226
With a copy in each case to:
Graves, Dougherty, Hearon & Moody
515 Congress Avenue
Suite 2300
Austin, Texas 78701
Attention: Karen Bartoletti, Esq.
Fax No.: (512) 478-1976
Unless otherwise stated above, such communications shall be effective when they
are received by the addressee thereof in conformity with this Section. Any
party may change its address for such communications by giving notice thereof to
the other parties in conformity with this Section.
SECTION 8.4 GOVERNING LAW AND JURISDICTION.
------------------------------
8.4.1 This agreement shall be construed in all respects under the
laws of the State of New York, without reference to its conflicts of law
provisions.
34
<PAGE>
8.4.2 The Seller and the Purchasers hereby agree to submit to the
exclusive jurisdiction of the courts located in the State of New York and hereby
waive any objection based on venue or forum non conveniens with respect to any
----- --- ----------
action instituted therein, and agree that any dispute concerning the conduct of
any party in connection with this agreement or otherwise shall be heard only in
the federal courts described above.
8.4.3 Seller and the Purchasers each hereby waive personal service of
any and all process upon it and consent that all such service of process may be
made by hand delivery or mail to Seller and the Purchasers at the addresses set
forth in, and in accordance with, Section 8.3 of this Agreement. Each of Seller
and the Purchasers hereby consent to service of process as aforesaid.
SECTION 8.5 BINDING UPON SUCCESSORS AND ASSIGNS. This Agreement is
-----------------------------------
personal to each of the parties and may not be assigned without the written
consent of the other parties; provided, however, that the Purchasers shall be
permitted to assign their rights under this Agreement to any affiliate of the
Purchasers.
SECTION 8.6 SEVERABILITY. If any provision of this Agreement, or
------------
the application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall continue in full force and effect and in
no way be affected, impaired or invalidated.
SECTION 8.7 ENTIRE AGREEMENT. This Agreement and the other
----------------
agreements and instruments referenced herein constitute the entire understanding
and agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings.
SECTION 8.8 OTHER REMEDIES. Except as otherwise provided herein,
--------------
any and all remedies herein expressly conferred upon a party shall be deemed
cumulative with and not exclusive of any other remedy conferred hereby or by
law, or in equity on such party, and the exercise of any one remedy shall not
preclude the exercise of any other.
SECTION 8.9 AMENDMENT AND WAIVERS. Any term or provision of this
---------------------
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by all parties hereto. The waiver by
a party of any breach hereof or default in the performance hereof shall not be
deemed to constitute a waiver of any other default or any succeeding breach or
default. This Agreement may not be amended or supplemented by any party hereto
except pursuant to a written amendment executed by all parties.
SECTION 8.10 NO WAIVER. The failure of any party to enforce any of
---------
the provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
35
<PAGE>
SECTION 8.11 CONSTRUCTION OF AGREEMENT; KNOWLEDGE. For purposes
------------------------------------
of this Agreement, the term "knowledge," when used in reference to a corporation
means the actual knowledge of the executive officers of such corporation after
such officers shall have made inquiry that is customary and appropriate under
the circumstances to which reference is made, and when used in reference to an
individual means the actual knowledge of such individual after the individual
shall have made inquiry that is customary and appropriate under the
circumstances to which reference is made.
SECTION 8.12 COUNTERPARTS. This Agreement may be executed in any
------------
number of counterparts, each of which shall be an original as against any party
whose signature appears thereon and all of which together shall constitute one
and the same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.
SECTION 8.13 NO THIRD PARTY BENEFICIARY. Nothing expressed or
--------------------------
implied in this Agreement is intended, or shall be construed, to confer upon or
give any person other than the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ORACLE PARTNERS, L.P.
By: /s/ LARRY FEINBERG
-----------------------------------------------
Larry Feinberg
Managing General Partner
QUASAR INTERNATIONAL PARTNERS, C.V.
By: /s/ LARRY FEINBERG
-----------------------------------------------
Larry Feinberg, as President of
Oracle Management, Inc., Investment Advisor
ORACLE INSTITUTIONAL PARTNERS, L.P.
By: /s/ LARRY FEINBERG
-----------------------------------------------
Larry Feinberg
General Partner
36
<PAGE>
GSAM ORACLE FUND, INC.
By: /s/ LARRY FEINBERG
-----------------------------------------------
Larry Feinberg, as President of
Oracle Management, Inc., Investment Advisor
CLINICOR, INC.
By: /s/ THOMAS P. O'DONNELL
-----------------------------------------------
Name: Thomas P. O'Donnell
Title: President
By: /s/ ROBERT SAMMIS
-----------------------------------------------
Name: Robert Sammis
Title: Executive Vice President
37
<PAGE>
EXHIBIT A
---------
<TABLE>
<CAPTION>
Purchaser: Purchase Price: No. of Shares:
- --------- -------------- -------------
<S> <C> <C>
Oracle Partners, L.P. $1,660,000 1,660
Quasar International Partners, C.V. 350,000 350
Oracle Institutional Partners, L.P. 265,000 265
GSAM Oracle Fund, Inc. 1,225,000 1,225
Total: $3,500,000 3,500
========== =====
</TABLE>
<PAGE>
Other Exhibits and Schedules Omitted
<PAGE>
EXHIBIT 4(d)
TERMS OF WARRANTS
THIS EXHIBIT sets forth the terms of the Warrants (the "Warrants") to be
issued by CLINICOR, INC. (the "Company"), a Nevada corporation. Capitalized
terms used herein and not otherwise defined shall have the meaning set forth for
such terms in the Subscription Agreement to which this document is an exhibit.
These terms are incorporated in and made a part of the Subscription Agreement
documenting the Company's proposed issuance of Units (each a "Unit") consisting
of one share of the Company's Common Stock (the "Common Stock") and one Warrant
(evidenced by a "Warrant Certificate") in connection with and in addition to the
issuance of said share of Common Stock, (all such shares of Common Stock (and,
if appropriate after certain adjustments provided for herein, such other classes
of securities or property) to be purchased upon the exercise of the Warrants
being called the "Shares") in a private placement offering (the "Offering")
through use of the Memorandum. Set forth below are the terms and conditions of
the Warrants, and the rights of the Subscribers who will become the registered
holders of the Warrants, together with their respective successors and assigns
(collectively, the "Warrant Holders"), and provisions for the issuance, transfer
and exercise of the Warrants and other matters. These terms are incorporated
into the Subscription Agreement and made a part thereof and are binding upon the
Company and each Subscriber.
SECTION 1
---------
WARRANTS
(a) Subject to the terms and conditions hereof, each two Warrants shall
entitle the Warrant Holder upon exercising the Warrants to purchase from the
Company one fully-paid and nonassessable Share at a price of $4.00 per Share,
subject to adjustment hereunder (the "Exercise Price") at such time or times
specified in Section 5 (the "Window Period"), during the period terminating on
September 30, 1998 (unless said period is reduced or extended pursuant to the
terms of Section 5, Section 7 and/or Section 16 hereof) (the "Warrant Term").
The Warrants will expire at 5:00 p.m., Austin, Texas, local time, on the last
day of the Warrant Term or, if such day in Austin, Texas, shall be either a
holiday or a day on which banks are authorized or obligated by law to be closed,
then at 5:00 p.m., Austin, Texas, local time, on the next following day which in
Austin, Texas, shall not be either a holiday or a day on which banks are
authorized or obligated by law to be closed (the actual time of expiration of
the Warrants being called the "Warrant Expiration Date"). At the time of
expiration of the Warrants, any unexercised Warrants will become void and all
rights of the Warrant Holders under the terms of the Warrant Certificates, the
Subscription Agreement, these Terms of Warrants and otherwise shall cease.
(b) If the Company's service revenue for the fiscal year ending December
31, 1996, as shown on its audited financial statements for such period, is less
than $10 million, then the
<PAGE>
Exercise Price shall automatically be reduced to $3.00. Such reduced Exercise
Price shall be subject to further adjustment pursuant to Section 11 of these
Warrant Terms.
SECTION 2
---------
DETACHABILITY
Subject to applicable state and federal laws concerning the sale, issuance
and transfer of securities, a Warrant may be sold, assigned or otherwise
conveyed separately from Common Stock at any time following issuance until the
expiration of the Warrant Term. However, a Warrant Certificate may not be
presented for exercise except during a Window Period, as such term is defined in
Section 5 hereof. Subject to applicable state and federal laws concerning the
sale, issuance and transfer of securities and the terms and provisions hereof,
during a Window Period a Warrant may be presented for exercise, sold, assigned
or otherwise conveyed on the books of the Company either separate from or
together with shares of the Company's Common Stock.
Any transfer of the Warrant or shares of Common Stock which may be
purchased upon exercise of the Warrants are subject to certain restrictions upon
transfer as set forth in that certain Registration Rights Agreement entered into
between the Company and the Warrant Holders who were Subscribers in the
Offering, which restrictions shall be binding on all Warrant Holders.
SECTION 3
---------
WARRANT CERTIFICATES
The Warrant Certificates shall be in registered form only. The text of the
Warrant Certificates, including the forms of exercise and assignment to be
printed on the reverse side of the Warrant Certificates, shall be substantially
in the form set forth in Attachment 1 hereto. Warrant Certificates shall be
------------
signed by, or shall bear the facsimile signatures of, the President or a Vice
President of the Company and the Secretary or an Assistant Secretary of the
Company. If any person whose signature has been placed upon any Warrant
Certificates as the signature of an officer of the Company shall have ceased to
be such officer before such Warrant Certificate is issued and delivered, such
Warrant Certificate may be issued and delivered with the same effect as if such
person had not ceased to be such officer. Any Warrant Certificate may be signed
by, or may bear the facsimile signature of, any person who at the actual date of
the preparation of such Warrant Certificate shall be a proper officer of the
Company to sign such Warrant Certificate even though such person was not such an
officer upon the date of the Subscription Agreement.
2
<PAGE>
SECTION 4
---------
REGISTRATION OF TRANSFERS AND EXCHANGES
(a) The Company shall from time to time register the transfer of any
outstanding Warrants upon records to be maintained by the Company for such
purpose upon surrender of a Warrant Certificate to the Company to transfer,
accompanied by appropriate instruments of transfer in form satisfactory to the
Company and duly executed by the Warrant Holder or a duly authorized attorney.
Upon any such registration of transfer, new Warrant Certificates shall be issued
in the name of and delivered to the transferee, and the surrendered Warrant
Certificate shall be canceled.
(b) Any outstanding Warrant Certificate may be surrendered to the Company
in exchange for another Warrant Certificate of like tenor, subject to subsection
(f) of Section 11, and representing in the aggregate the same number of
Warrants, subject to any adjustment under Section 11. Warrant Certificates so
surrendered for exchange shall be canceled.
SECTION 5
---------
RIGHT TO EXERCISE WARRANT
(a) Warrants will be exercisable during the Warrant Term only within
specified periods as provided herein (each a "Window Period"). During a Window
Period the Company will use good faith efforts to maintain an exemption from the
registration requirements of the federal securities laws and the state "Blue
Sky" laws of the states where the Units were originally offered for sale. Window
Periods shall occur in the following manner:
(i) If, at the time of the distribution to the Warrant Holders of
the audited annual financial statements of the Company for each fiscal year
ending December 31, beginning December 31, 1996, the Board of Directors of the
Company determines that the fair market value of the Shares equals or exceeds
the Exercise Price then in effect, then the Company shall circulate to the
Warrant Holders of record a form of election to receive a disclosure statement
(the "Form of Election") required by the Securities Act of 1933, as amended (the
"Securities Act") and the "Blue Sky" laws of the states where the Units were
originally offered for sale (a "Disclosure Statement") for the purpose of
considering whether to exercise their Warrants during a Window Period.
In the event that, within twenty (20) days after the distribution of
the Form of Election the Company receives requests from Warrant Holders of
record of two-thirds of the Warrants to receive a Disclosure Statement and to
initiate a Window Period, the Company shall, within forty-five (45) days
thereafter, distribute a Disclosure Statement to all Warrant Holders of record,
which shall include a statement regarding the length of the Window Period, which
shall not be less than thirty (30) days, during which the Warrants are then
exercisable.
3
<PAGE>
Warrant Holders may elect to exercise their Warrants by delivering the
Form of Exercise appended hereto to the Company only during the Window Period.
-----------------------------
(ii) Upon the exercise of fifty percent (50%) of the Warrants issued
in the Offering, the Company may deliver to the remaining Warrant Holders of
record a Disclosure Statement and a notice stating that fifty percent (50%) of
the Warrants have been exercised and that the remaining Warrants shall be
exercisable for a period determined by the Company in good faith (the "Final
Exercise Period"), which period shall not be less than thirty (30) days. Upon
the conclusion of the Final Exercise Period the Warrants shall terminate and be
of no value whatsoever. Notwithstanding anything to the contrary herein, the
termination of any Final Exercise Period shall be hereby deemed to be the
Warrant Expiration Date and the termination of the Warrant Term.
(iii) Provided that there has been no earlier termination of the
Warrants, including, without limitation, pursuant to Section 5(a)(ii) hereof,
if, at January 1, 1998, the Company has not had in effect a current registration
statement covering the Common Stock issuable upon exercise of the Warrants for
sixty (60) consecutive days at any time during the two year period preceding
such date, then the Company shall use diligent efforts to deliver a Disclosure
Statement and to initiate a Window Period of no less than thirty (30) days;
provided, that if the Company, in its sole discretion, determines that due to
- --------
market or business conditions, such Window Period is not in the best interests
of the Company, then the Company may, in its sole discretion, extend the term of
the Warrants to a period not to exceed 270 days commencing at the end of the
stated term of the Warrant (the "Extension Period") by delivering a notice to
the Warrant Holders of record. Thereafter, within such 270 day period, the
Company shall deliver to the Warrant Holders of record, a Disclosure Statement
which shall include a statement regarding the Warrant Period during which the
Warrants are then exercisable, which period shall not be less than thirty (30)
days. Notwithstanding the expiration of the stated term of the Warrants, the
Warrant Term and the Warrant Expiration Date shall be extended and any
unexercised Warrants may be exercised during the Extension Period and,
thereafter, shall terminate and be of no value whatsoever.
(iv) Notwithstanding the foregoing, any period during which the
Company has in place an effective registration statement covering the Common
Stock issuable upon exercise of the Warrants (including, without limitation, a
registration statement prepared in connection with an exercise of any
registration rights of the Warrant Holders) shall be deemed to be a Window
Period, and shall be subject to the terms and conditions outlined herein.
(v) During any period in which the Warrants are called for
redemption under Section 7.
(vi) Unless otherwise terminated hereunder, the right to exercise
this Warrant shall expire, the Warrant Expiration Date shall be hereby deemed to
occur and the Warrant Term shall be deemed to terminate, upon the effective date
of a merger or consolidation of the Company with or into another corporation, or
the sale of all or substantially all of the
4
<PAGE>
Company's assets to another corporation or person, if, immediately after any
such merger, consolidation or sale of assets, at least fifty percent (50%) of
the voting power of the surviving corporation or such other person, as the case
may be, is owned by persons who are not shareholders of the Company immediately
prior to such merger, consolidation or sale of assets, provided that the Warrant
Holders receive notice of such merger, or consolidation or sale of assets at
least twenty (20) days prior to the effective date of such merger, or
consolidation or sale of assets and a Disclosure Statement providing for a
Window Period of at least fifteen (15) days in duration. Notwithstanding the
foregoing, the Warrants shall not terminate if the Warrants are assumed by or
exchanged with Warrants of the surviving corporation in the merger,
consolidation or sale of assets, in which case such assumption or exchange shall
be effective in accordance with Section 11 hereof.
SECTION 6
---------
EXERCISE OF WARRANTS
(a) During a Window Period, any number of the Warrants evidenced by any
Warrant Certificate which, upon exercise thereof, are entitled to receive a
whole number of Shares, may be exercised upon any single occasion on or before
the applicable Warrant Expiration Date. A Warrant shall be exercised by the
Warrant Holder by surrendering to the Company the Warrant Certificate, with the
exercise form on the reverse of such Warrant Certificate duly completed and
executed, together with payment in lawful money of the United States of America
in cash or by certified or cashier's check or bank draft payable to the order of
the Company, for the applicable aggregate Exercise Price for the total number of
Shares to be purchased.
(b) Subject to Section 6(d) and Section 11, within thirty (30) days of the
receipt of a Warrant Certificate with the exercise form thereon duly executed,
together with payment in full of the Exercise Price for the Shares for which
Warrants then are being exercised, the Company shall deliver certificates
evidencing the total number of whole Shares for which Warrant(s) are then being
exercised in such names and denominations as are required for delivery to, or in
accordance with the instructions of, the Warrant Holder, provided that if fewer
than all Warrants evidenced by a Warrant Certificate are exercised, the Company
(if so requested) shall issue a balance Warrant Certificate for the balance of
the Warrants. Certificates for the Shares shall be deemed to be issued, and the
person to whom such Shares are issued of record shall be deemed to have become a
holder of record of such Shares, as of the date of the surrender of such Warrant
Certificate and payment of the Exercise Price, whichever shall last occur,
provided that if the books of the Company with respect to the Shares shall be
closed as of such date, the certificates for such Shares shall be deemed to be
issued, and the person to whom such Shares are issued of record shall be deemed
to have become a record holder of such Shares, as of the date on which such
books shall next be open (whether before, on or after the applicable Warrant
Expiration Date) but at the Exercise Price and upon the other conditions in
effect upon the date of surrender of the Warrant Certificate and payment of the
Exercise Price, whichever shall have last occurred, to the Company.
5
<PAGE>
(c) All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled.
(d) Notwithstanding the foregoing, the Company, in its sole discretion,
may elect not to accept the exercise of a Warrant if such exercise would not
comply with federal or state laws governing the issuance and sale of securities.
In no event shall Shares be issued, and the Company shall have the authority to
suspend the exercise of any or all Warrants during any period, including a
Window Period, when neither a current registration statement under the
Securities Act with respect to such Shares or the Warrants is maintained nor an
applicable exemption from registration has been perfected by the Company.
Similarly, a Warrant Holder residing in a state where a required registration or
governmental approval of issuance of the Shares is not in effect at, or has not
been obtained within a reasonable time after, the surrender date of the Warrant
Certificate for exercise shall not be entitled to exercise Warrants unless, in
the opinion of counsel, such registration or approval in such state shall not be
required.
EXCEPT FOR ANY OBLIGATION THE COMPANY MAY HAVE UNDER THE REGISTRATION
RIGHTS AGREEMENT ENTERED INTO WITH THE ORIGINAL HOLDERS OF THE WARRANTS AND AS
SPECIFIED IN SECTIONS 5 AND 7 OF THESE WARRANT TERMS, THE COMPANY HAS NO
OBLIGATIONS TO REGISTER OR SEEK EXEMPTIONS FROM REGISTRATION OR QUALIFICATION
UNDER APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
SECTION 7
---------
REDEMPTION OF WARRANTS
(a) Subject to the registration obligations set forth below, the Company
will be entitled, at its discretion, to call all of the Warrants for redemption
at any time, until the Warrant Expiration Date at a price (the "Redemption
Price") of $0.05 per Warrant, provided that (i) the closing bona fide
representative bid price of the Common Stock exceeds the Warrant exercise price
by at least 25% during a period of at least twenty (20) of the thirty (30)
trading days immediately preceding the notice of redemption; (ii) the Company
either (a) has in effect a current registration statement covering the Common
Stock issuable upon exercise of the Warrants or (b) has available an exemption
from registration pursuant to the Securities Act, as defined herein, in the sole
determination of the Company and its counsel; and (iii) the expiration of the
forty-five (45) day notice period is within the Warrant Term (including any
extension thereof). On the redemption date, the Warrant Holders of record of
redeemed Warrants shall be entitled to payment of the Redemption Price upon
surrender of such redeemed Warrants to the Company at its principal executive
office.
Notwithstanding the foregoing, the Company's right to redeem the Warrants
may be exercised only if upon such notice of redemption and subsequent exercise
of the Warrants by the Warrant Holders thereof, the Company shall (if no
registration statement covering Shares issuable upon exercise of the Warrants is
then in effect) register the exercised Shares pursuant to the following
provisions. Specifically, the Company shall:
6
<PAGE>
(i) within one hundred eighty (180) days after the date set by the
Company for redemption, prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect to all
Shares acquired pursuant to exercise of Warrants and use its best efforts to
cause such registration statement to become and remain effective for a period of
ninety (90) days (the "Registration Period");
(ii) use its best efforts to prepare and file with the Commission
such amendments and supplements to such registration statement as may be
necessary to keep such registration statement effective for the Registration
Period and to comply with the provisions of the Securities Act and this Warrant;
(iii) use its best efforts to register or qualify the securities
covered by such registration statement under the securities or state "Blue Sky"
laws of such jurisdictions as may be reasonably agreed upon by the Warrant
Holders and the Company, provided that the Company shall not be required to
undertake such actions in any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act.
The Company shall be liable for all "Registration Expenses" in connection
with such registration. "Registration Expenses" shall mean all expenses incurred
by the Company in complying with this Section, including, without limitation,
all registration and filing fees; printing expenses; fees and disbursements of
counsel for the Company; Blue Sky fees and expenses; and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company which shall be paid in any
event by the Company and excluding any stock transfer taxes and any fees and
disbursements of counsel for any Warrant Holder). Any Warrants not exercised
within the forty-five (45) day notice period for redemption shall be redeemable
by the Company pursuant to the terms of this Section 7.
(b) Notice of redemption of any Warrant shall be given as provided in
Section 15 hereof at least forty-five (45) days prior to any redemption date, by
mailing a copy of such notice to all of the affected Warrant Holders of record
as of three days prior to the mailing date and such notice shall be effective
upon mailing.
(c) Notwithstanding any other provision hereof, from and after the
redemption date, all rights of the affected Warrant Holders with respect to the
Warrants (except the right to receive from the Company the Redemption Price)
shall terminate.
7
<PAGE>
SECTION 8
---------
PAYMENT OF TAXES
The Company will pay all taxes attributable to the initial issuance of
Shares upon exercise of Warrants (excluding any taxes based upon income payable
by the Warrant Holder as a result of such exercise). The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue of any Warrant Certificates or in the issue of
any certificates for Shares in a name other than that of the Warrant Holder upon
the exercise of any Warrant.
SECTION 9
---------
MUTILATED OR MISSING WARRANT CERTIFICATES
If any Warrant Certificate is mutilated, lost, stolen or destroyed, the
Company may, on such terms as to provide an indemnity or otherwise as it may in
its discretion impose (which shall, in the case of a mutilated Warrant
Certificate, include the surrender thereof), and upon receipt of evidence
satisfactory to the Company of such loss, theft or destruction, issue a
substitute Warrant Certificate of like denomination and tenor as the Warrant
Certificate so mutilated, lost, stolen or destroyed, subject to subsection (f)
of Section 11. Applicants for such substitute Warrant Certificate shall also
comply with such other reasonable regulations and pay any reasonable charges as
the Company may prescribe. If any Warrant Certificate is mutilated, lost,
stolen, or destroyed, and the Warrant Holder desires to exercise any Warrants
evidenced thereby, the Company may authorize such exercise upon receipt of such
evidence and indemnity in lieu of issuing any substitute Warrant Certificate to
evidence the Warrants so exercised.
SECTION 10
----------
RESERVATION OF SHARES
(a) The Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued shares of
Common Stock, for the purpose of enabling it to satisfy any obligation to issue
Shares upon exercise of Warrants, the full number of Shares issuable upon the
exercise of all outstanding Warrants.
(b) The Company covenants that all Shares which may be issued upon
exercise of Warrants will, upon issue, be fully paid and nonassessable by the
Company and free from all taxes, liens, charges and security interests with
respect to the issue thereof.
8
<PAGE>
SECTION 11
----------
ADJUSTMENT PROVISIONS
(a) Subdivision or Combinations. If the Company shall at any time during
---------------------------
the Warrant Term subdivide or combine its outstanding shares of Common Stock,
this Warrant shall, after that subdivision or combination, evidence the right to
purchase the number of shares of Common Stock that would have been issuable as a
result of that change with respect to the shares of Common Stock which were
purchasable under this Warrant immediately before that subdivision or
combination. If the Company shall at any time subdivide the outstanding shares
of Common Stock, the Exercise Price then in effect immediately before that
subdivision shall be proportionately decreased, and, if the Company shall at any
time combine the outstanding shares of Common Stock, the Exercise Price then in
effect immediately before that combination shall be proportionately increased.
Any adjustment under this section shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(b) Reclassification, Exchange and Substitution. If at any time during
-------------------------------------------
the Warrant Term the Common Stock issuable upon exercise of this Warrant shall
be changed into the same or a different number of shares of any other series or
class or classes of stock, whether by reclassification, recapitalization or
otherwise (other than a subdivision or combination of shares provided for
above), the Warrant Holder shall, on its exercise, be entitled to purchase, in
lieu of the Common Stock which the Warrant Holder would have become entitled to
purchase but for such change, a number of shares of such other series or class
or classes of stock equivalent to the number of shares of Common Stock that
would have been subject to purchase by the Warrant Holder on exercise of this
Warrant immediately before that change.
(c) Reorganizations, Mergers, Consolidations or Sale of Assets. Except as
----------------------------------------------------------
otherwise provided in Section 5(a)(vi), if at any time during the Warrant Term
there shall be a capital reorganization of the Company's Common Stock (other
than a combination, subdivision, reclassification or exchange of shares provided
for elsewhere in this Warrant) or merger or consolidation of the Company with or
into another corporation, or the sale of all or substantially all of the
Company's assets to another corporation or person (provided such event does not
result in the termination of this Warrant pursuant to Section 5) then, as a part
of such reorganization, merger, consolidation or sale, lawful provision shall be
made so that the Warrant Holder shall thereafter be entitled to receive upon
exercise of this Warrant, during the periods specified in this Warrant and upon
payment of the Exercise Price then in effect, the number of shares of stock or
other securities or property of the Company, or of the successor corporation
resulting from such reorganization, merger, consolidation or sale to which a
holder of the Common Stock deliverable upon exercise of this Warrant would have
been entitled in such reorganization, merger, consolidation or sale if this
Warrant had been exercised immediately before that reorganization, merger,
consolidation, or sale. In any such case, appropriate adjustment (as determined
by the Company's Board of Directors) shall be made in the application of the
provisions of this Agreement and the Warrants with respect to the rights and
interests of the Warrant Holders after such reorganization, merger,
consolidation, or sale to the end that the
9
<PAGE>
provisions of this Warrant (including adjustment of the Exercise Price then in
effect and number of shares purchasable upon exercise of this Warrant) shall be
applicable after that event, as near as reasonably may be, in relation to any
shares or other property deliverable after that event upon exercise of this
Warrant. The provisions of this Section 11(c) shall similarly apply to any such
successive reorganizations, mergers, consolidations or sales which satisfy the
conditions set forth above.
(d) Treatment of Fractional Shares. If any adjustment made pursuant to
------------------------------
subsections (a), (b), or (c), above, creates a fractional Share, such Share
shall be treated in accordance with Section 12 hereof.
(e) Notice of Adjustments. The Company shall give notice of each
---------------------
adjustment or readjustment of the Exercise Price or the number of Shares
issuable upon exercise of this Warrant to the Warrant Holder at that Warrant
Holder's address as shown on the Company's books and records.
(f) No Change Necessary. Neither this Agreement nor any Warrant
-------------------
Certificate need be changed because of any adjustment in the Exercise Price or
in the shares of Common Stock purchasable upon its exercise. A Warrant issued
after any adjustment upon any partial exercise or in replacement may continue to
express the same Exercise Price and the same number of Shares (appropriately
reduced in the case of partial exercise) as are stated on the face of this
Warrant as initially issued, and that Exercise Price and that number of Shares
shall be considered to have been so changed at the close of business on the date
of adjustment.
SECTION 12
----------
FRACTIONAL WARRANTS AND FRACTIONAL SHARES
(a) Notwithstanding any other provision of this Agreement or any Warrant
Certificate, the Company shall not be required to issue fractions of Warrants on
any distribution of Warrant Certificates or to distribute Warrant Certificates
which evidence fractional Warrants. In lieu of issuing any fraction of a Warrant
otherwise called for upon any adjustment pursuant to Section 11, the Company
shall pay to the Warrant Holder entitled thereto an amount in cash equal to such
fraction multiplied by the current market value of one such Warrant determined
as follows:
(i) If the Warrants are listed in the New York Stock Exchange, the
American Stock Exchange or such other national stock exchange specified by the
Board of Directors of the Company, or admitted to unlisted trading privilege on
any such exchange, or quoted on a system of the National Association of
Securities Dealers, Inc., the current market value shall be the last reported
sale price of the Warrants on such exchange or system on the last trading day
prior to the date of such adjustment pursuant to of Section 11, or, if no such
sale
10
<PAGE>
is made on such day or the last sale price is not reported, the average of the
closing bid and asked prices for such day, adjusted proportionately to give
effect to such adjustment; or
(ii) If subparagraph (i) is not applicable, the current market value
shall be the mean of the last reported bid and asked prices reported by the any
reporting service specified by the Board of Directors of the Company, in either
case on the last business day prior to the date of such adjustment pursuant to
Section 11, adjusted proportionately to give effect to such adjustment; or
(iii) If neither subparagraph (i) nor (ii) is applicable, the current
market value shall be an amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
(b) Notwithstanding any other provision of this Agreement or any Warrant
Certificate, the Company shall not be required to issue fractions of Shares upon
exercise of the Warrants or to distribute certificates which evidence fractions
of Shares. With respect to any fraction of a Share called for upon exercise of
any Warrant, the Company, in lieu of issuing such fractional Share shall pay to,
or in accordance with the instruction of, the Warrant Holder exercising such
Warrant an amount in cash equal to such fraction multiplied by the current
market value of one Share, determined as follows:
(i) If the Shares are listed in the New York Stock Exchange, the
American Stock Exchange or such other national stock exchange specified by the
Board of Directors of the Company, or admitted to unlisted trading privileges on
any such exchange, or quoted in a system of the National Association of
Securities Dealers, Inc., the current market value shall be the last reported
sale price of the shares on such exchange or system on the last trading day
prior to the date of exercise of such Warrant or, if no such sale is made on
such day or the last sale price is not reported, the average of the closing bid
and asked prices for such day on such exchange or such system; or
(ii) If subparagraph (i) is not applicable, the current market value
shall be the mean of the last reported bid and asked prices reported by any
reporting service specified by the Board of Directors of the Company, in either
case on the last business day prior to the date of exercise of such Warrant; or
(iii) If neither subparagraphs (i) nor (ii) is applicable, the
current market value shall be an amount, not less than book value, determined in
such reasonable manner as may be prescribed by the Board of Directors of the
Company.
11
<PAGE>
SECTION 13
----------
NOTICES TO WARRANT HOLDERS
(a) Upon any adjustment set forth in Section 11 hereof, the Company,
within twenty (20) days thereafter, shall cause to be mailed to each Warrant
Holder of record a certificate, signed by the President or a Vice President of
the Company and by its Chief Financial Officer, setting forth the Exercise Price
after such adjustment and the number of Shares (or portion thereof) purchasable
upon exercise of an affected Warrant after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based, which certificate shall be conclusive evidence of the
correctness of the matters set forth therein. Where appropriate, such notice may
be given in advance and included as a part of the notice required to be mailed
under the other provisions of this Section:
(b) Whenever the Company shall
(i) expect to effect any capital reclassification of the capital
stock of the Company; or
(ii) expect to be involved in any voluntary or involuntary
dissolution, liquidation or winding up of the Company; or
(iii) expect to consummate a merger or consolidation of the Company
into or with another corporation, or the sale of all or substantially all of the
Company's assets to another corporation or person if, immediately after any such
merger, consolidation or sale of assets, at least fifty percent (50%) of the
voting power of the surviving corporation or such other person, as the case may
be, is owned by persons who are not shareholders of the Company immediately
prior to such merger, consolidation or sale;
then in any such case the Company shall cause to be mailed to each Warrant
Holder, at the earliest practicable time (and in any event not less than twenty
(20) days before any record date or other date set for definitive action)
written notice of such event and of the date on which the books of the Company
shall close or the date when such reclassification, sale, consolidation, merger,
dissolution, liquidation or winding up shall take place, as the case may be.
Such notice shall also set forth such facts as shall indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the Exercise Price and the kind and amount of the shares of stock and other
securities and property deliverable upon exercise of the Warrants before and
after any adjustment for the occurrence of such event. Such notice shall also
specify the date as of which the holders of the shares of record shall be
entitled to exchange their shares for securities or other property deliverable
upon such reclassification, sale, merger, dissolution, liquidation or winding
up, as the case may be.
12
<PAGE>
(c) Without limiting the obligation of the Company hereunder to provide
notice to each Warrant Holder, it is agreed that failure of the Company to give
notice shall not invalidate corporate action taken by the Company.
SECTION 14
----------
RIGHTS OF WARRANT HOLDERS
(a) No Warrant Holder, as such, shall have any rights of a shareholder of
the Company, either at law or equity, and the rights of the Warrant Holders, as
such, are limited to those rights expressly provided in this Agreement or in the
Warrant Certificates.
(b) When any Warrant Certificate shall have been surrendered for exercise
accompanied by payment of the Exercise Price, as provided in this Agreement,
certificates for the Shares purchased upon such exercise shall be issuable and
any person designated to be the record holder of such Shares shall be deemed to
have become a holder of record of such Shares as of the date of such surrender
and payment, whichever last occurs; provided, that if at such date the transfer
books for the Shares shall be closed, the certificates for the Shares shall be
issuable on the date on which such books shall next be open (whether before, on
or after an Expiration Date) and until then the Company shall be under no duty
to deliver any certificate for such Shares; and further provided, that such
books, unless otherwise required by law, shall not be closed at any time for a
period longer than twenty (20) days.
(c) The Company may treat the registered Warrant Holder in respect of any
Warrant Certificate as the absolute owner thereof for all purposes
notwithstanding any notice to the contrary.
SECTION 15
----------
NOTICES
Any notice or demand authorized by this Agreement to be given or made by
any Warrant Holder to or on the Company shall be sufficiently given or made if
sent by mail, first-class or registered, postage prepaid, addressed (until
another address is changed in writing by the Company by notice to the Warrant
Holders of record) as follows.
Clinicor, Inc.
307 Camp Craft Road, Suite 200
Austin, Texas 78746
Attention: President
13
<PAGE>
Any distribution, notice or demand required or authorized by this Agreement to
be given or made by the Company to or on the Warrant Holders shall be
sufficiently given or made if sent by mail, first class, certified or
registered, postage prepaid, addressed to the Warrant Holders at their last
known address as they shall appear on the registration books for the Warrant
Certificates maintained by the Company or its Transfer Agent, if any.
SECTION 16
----------
SUPPLEMENTS AND AMENDMENTS
(a) The Company may from time to time supplement or amend the terms and
conditions set forth herein without the approval of any Warrant Holders in order
to cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with regard to matters or questions arising hereunder
which the Company may deem necessary or desirable and which shall not adversely
affect the interests of the Warrant Holders, including (but not limited to) any
extension of the Warrant Expiration Date for such period or periods as the Board
of Directors of the Company may determine, and any conditional or unconditional
reduction in an Exercise Price; provided that written notice of any such
extension of exercise or reduction in exercise price shall be given to the
Warrant Holders prior to the expiration date then in effect.
(b) With the consent of the Warrant Holders of at least fifty percent
(50%) of all remaining outstanding, unexercised Warrants issued in the Offering,
given as set forth in this subsection (b), the Company may make any other
amendment in this Agreement provided that no such change may shorten the time of
exercise of any Warrant or increase the Exercise Price of any Warrant without
the consent of all Warrant Holders. Consent of the Warrant Holders under this
subsection (b) shall be evidenced by either (i) a consent in writing to the
amendment, which consent need not set forth the specific form of amendment but
shall be sufficient if it agrees to the general substance thereof and which
shall be executed by the Warrant Holders and notarized or acknowledged (any
consent so given in respect of a particular Warrant shall be binding upon any
subsequent owner thereof) or (ii) by the affirmative vote of the requisite
Warrant Holders at a meeting of Warrant Holders called by the Company and held
at such time and place as may be specified in a written notice of the meeting to
be mailed to each Warrant Holder not less than ten (10) days nor more than fifty
(50) days prior to the date set for the meeting. The Company may establish a
record date for the determination of Warrant Holders entitled to vote at any
meeting of Warrant Holders, which record date shall be not more than fifty (50)
days prior to the date of mailing notice thereof. The Company may make
reasonable regulations for the conduct of such meeting and for the appointment
of a chairman and a secretary thereof and of inspectors of votes. Proxies may be
used at any such meeting in the same manner as is provided in the Company's
bylaws with respect to proxies for meetings of its stockholders.
14
<PAGE>
SECTION 17
----------
GOVERNING LAW
These terms and each Warrant Certificate issued hereunder shall be deemed
to be a contract under the laws of the State of Texas and for all purposes shall
be construed in accordance with the internal laws of said State, exclusive of
the principles of conflict law.
SECTION 18
----------
BENEFITS OF THIS AGREEMENT
Nothing herein shall be construed to give to any person or corporation
other than the Company and the Warrant Holders any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company and the Warrant Holders.
SECTION 19
----------
AGREEMENT AVAILABLE TO WARRANT HOLDERS
A copy of these terms shall be available at all reasonable times at the
office of the Company for inspection by any Warrant Holder. As a condition of
such inspection, the Company may require any Warrant Holder to submit a Warrant
Certificate held of record for inspection.
15
<PAGE>
SEE REVERSE SIDE FOR ADDITIONAL INFORMATION AND
RESTRICTIVE LEGENDS
ATTACHMENT 1
------------
[FORM OF WARRANT CERTIFICATE] [FACE]
The Warrants evidenced by this certificate were issued as part of a Unit
consisting of one share of Common Stock and one Warrant ("Warrant"). Two
Warrants entitle the Warrant Holder to purchase one share of Common Stock. The
shares of Common Stock and the Warrants may be detached immediately. The
Warrants may only be exercised during specified Window Periods and then only
when either (a) a current registration statement under the Securities Act of
1933, as amended, is effective or (b) an exemption from such registration is
available to the Company, in either case, without undue expense or hardship.
Additionally, Warrants are only exercisable when such exercise, and the issuance
of the underlying Common Stock, can be effected in compliance with any
applicable state Blue Sky laws and only during specified periods (each a "Window
Period" as defined in those certain Terms of Warrant appended to that certain
Subscription Agreement between the Company and the original holder hereof (the
"Warrant Terms") in accordance with the Warrant Terms. The Company will be under
no obligation whatsoever to take any steps in states other than the states in
which the Warrants were originally offered for sale to allow Warrants to be
exercised. The Warrants are subject to redemption and may not be exercised after
the redemption date.
W-_____ Warrants
WARRANT CERTIFICATE
CLINICOR, INC.
This Warrant Certificate certifies that ___________________ or registered
assigns (the "Warrant Holder"), is the registered owner of the above-indicated
number of Warrants ("Warrants") expiring at 5:00 pm., Austin, Texas, local time,
on September 30, 1998 (as extended or accelerated pursuant to the terms of the
Warrant Agreement, the "Expiration Date"). Two Warrants entitle the Warrant
Holder to purchase from Clinicor, Inc. (the "Company"), a Nevada corporation, at
any time during a Window Period and before the Expiration Date, one fully paid
and nonassessable share of Common Stock of the Company at a purchase price of
$4.00 per share (the "Exercise Price") in lawful money of the United States of
America for two Warrants represented hereby upon surrender of this Warrant
Certificate, with the exercise form hereon duly completed and executed, with
payment of the Exercise Price at the principal office of the Company, but only
subject to the conditions set forth herein and in the Warrant Terms.
1
<PAGE>
All unexercised Warrants may be redeemed by the Company upon 45 calendar days
prior written notice to registered Warrant Holders subject to certain conditions
set forth in the Warrant Terms. No Warrant may be exercised after such 45-day
period. The Exercise Price, the number of shares purchasable upon exercise of
each Warrant, the number of Warrants outstanding and the Expiration Date are
subject to adjustments upon the occurrence of certain events set forth in the
Warrant Terms. Reference is hereby made to the provisions on the reverse side of
this Warrant Certificate and the provisions of the Warrant Terms, all of which
are hereby incorporated by reference herein and made a part of this Warrant
Certificate and which shall for all purposes have the same effect as though
fully set forth at this place.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Company a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants, subject to any adjustments made in accordance with the Warrant Terms,
shall be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Terms and Registration Rights
Agreement entered into between the Company and the original holder of the
Warrant regarding restrictions on transfer, and, upon payment of the transfer
fee and any tax or other governmental charge imposed in connection with such
transfer.
The Warrant Holder of the Warrants evidenced by this Warrant Certificate
may exercise all or any whole number of such Warrants only during a Window
Period and in the manner stated hereon and in the Warrant Terms. The Exercise
Price shall be payable in lawful money of the United States of America in cash
or by certified or cashier's check or bank draft payable to the order of the
Company. Upon any exercise of any Warrants evidenced by this Warrant Certificate
in an amount less than the number of Warrants so evidenced, there shall be
issued to the Warrant Holder a new Warrant Certificate evidencing the number of
Warrants not so exercised. No adjustment shall be made for any dividends on any
shares issued upon exercise of this Warrant.
No warrant may be exercised after 5:00 pm., Austin, Texas, local time, on
the Warrant Expiration Date (as defined in the Warrant Terms) and any Warrant
not exercised by such time shall become void.
A COPY OF THE WARRANT TERMS AND REGISTRATION RIGHTS AGREEMENT, WHICH
DEFINES THE RIGHTS, RESPONSIBILITIES AND OBLIGATIONS OF THE COMPANY
AND THE WARRANT HOLDERS IS ON FILE WITH THE COMPANY. ANY WARRANT
HOLDER MAY OBTAIN A COPY OF THE WARRANT TERMS, FREE OF CHARGE, BY A
REQUEST TO THE PRINCIPAL OFFICES OF THE COMPANY, ATTENTION: SECRETARY.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
signed by its President and by its Secretary, each by a facsimile of said
officers' signatures, and to be countersigned by the Company's transfer agent.
Dated: _____________________________ CLINICOR, INC., a Nevada corporation
By: _____________________________ By: ______________________________
COUNTERSIGNED:
PACIFIC STOCK TRANSFER COMPANY
P.O. Box 83365
Las Vegas, NV 89193
By:_____________________________
authorized signature
3
<PAGE>
FORM OF WARRANT CERTIFICATE [REVERSE]
This Warrant Certificate, when surrendered to the Company at its principal
office by the Warrant Holder, in person or by attorney duly authorized in
writing, may be exchanged, in the manner and subject to the limitations provided
in the Warrant Terms, without payment of a charge, except for any tax or other
governmental charge imposed in connection with such exchange, for another
Warrant Certificate or Warrant Certificates of like tenor and evidencing a like
number of Warrants, subject to any adjustments made in accordance with the
Warrant Terms.
The Company may deem and treat the registered holder hereof as the absolute
owner of this Warrant Certificate (notwithstanding any notation of ownership or
other writing hereon made by anyone) for all purposes and the Company shall not
be affected by any notice to the contrary. No Warrant Holder, as such, shall
have any rights of a shareholder of the Company, either at law or in equity, and
the rights of the Warrant Holder, as such, are limited to those rights expressly
provided in the Warrant Terms and in the Warrant Certificates.
The Company shall not be required to issue fractions of Warrants upon any
such adjustment or to issue fractions of shares upon the exercise of any
Warrants after any such adjustment, but the Company, in lieu of issuing any such
fractional interest, shall pay an amount in cash equal to such fraction times
the current market value of one Warrant or one share, as the case may be,
determined in accordance with the Warrant Terms.
Unless an amendment is able to be effected by the Board of Directors of the
Company without the approval of Warrant Holders as specified in the Warrant
Terms, the Company may amend the Warrant Terms only upon the approval of holders
of at least one-half of the outstanding Warrants as a group, except that no such
amendment shall accelerate the Warrant Expiration Date or increase the Exercise
Price without the approval of all the holders of all outstanding Warrants. A
copy of the Warrant Terms will be available at all reasonable times at the
office of the Company for inspection by any Warrant Holder. As a condition of
such inspection, the Company may require any Warrant Holder to submit his
Warrant Certificate for inspection.
IMPORTANT: The Warrants represented by this Certificate may not be
---------
exercised by a Warrant Holder unless at the time of exercise the underlying
shares of Common Stock are qualified for sale, by registration or otherwise, in
the state where the Warrant Holder resides or unless the issuance of the shares
of Common Stock would be exempt under the applicable state securities laws.
Further, a registration statement under the Securities Act of 1933, as amended,
covering the exercise of the Warrants must be in effect and current at the time
of exercise unless the issuance of shares of Common Stock upon any exercise is
exempt from the registration requirements of the Securities Act of 1933, as
amended. Notwithstanding the provisions hereof, unless such registration
statement and qualification are in effect and current
1
<PAGE>
at the time of exercise, or unless exemptions are available, the Company may
decline to permit the exercise of the Warrants and the holder hereof would then
only have the choice of either attempting to sell the Warrants, if a market
existed therefor and provided there was compliance with the provisions of the
Registration Rights Agreement regarding restrictions on transfer, or letting the
Warrants expire. Except as set forth in the Registration Rights Agreement
entered into with the original holders of the Warrants and as specified in the
Warrant Terms, the Company has no obligation to register or seek exemptions from
registration or qualification under applicable federal or state securities laws.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION ON AN EXEMPTION THEREFROM UNDER SAID ACT AND LAWS. COPIES
OF THE AGREEMENT COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL
EXECUTIVE OFFICE.
[any applicable state securities legend]
2
<PAGE>
ASSIGNMENT
----------
(Form of Assignment to be Executed if the
Warrant Holder Desires to Transfer Warrants Evidenced Hereby)
FOR VALUE RECEIVED, _______________________________________________________
hereby sells, assigns and transfers to _________________________________________
_______________________________________________________________________________.
(Please print name and address including zip code.)
Please insert social security, federal tax I.D.
number or other identifying number
_______________________________________________
_______________________________________________________________________ Warrants
represented by this Warrant Certificate and does hereby irrevocably constitute
and appoint ____________________________________________________________________
Attorney, to transfer said Warrants on the books of the Company with full power
of substitution.
Dated: _____________________________ _______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Warrant Certificate)
SIGNATURE GUARANTEED:
____________________________________
NOTE: Any transfer or assignment of this Warrant Certificate is subject to
- ----
compliance with the restrictions on transfer imposed under the Warrant Terms and
Registration Rights Agreement.
3
<PAGE>
EXERCISE
--------
(Form of Exercise to be Executed if the
Warrant Holder Desires to Exercise Warrants Evidenced Hereby)
TO THE COMPANY:
The undersigned hereby irrevocably elects to exercise _____________________
Warrants represented by this Warrant Certificate and to purchase thereunder the
full number of shares of Common Stock issuable upon exercise of said Warrants
and encloses $________________ as the purchase price therefor, and requests that
certificates for such shares shall be issued in the name of, and cash for any
fractional shares shall be paid to,
Please insert Social Security Number or other
identifying number
_____________________________________________
________________________________________________________________________________
(Please print Name and Address, including Zip Code)
and, if said number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the unexercised number
of Warrants may be assigned under the form of Assignment appearing hereon.
Dated: _____________________________ _______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Warrant Certificate)
SIGNATURE GUARANTEED:
____________________________________
IMPORTANT: Signature guarantee must be made by a participant of STAMP or
another signature guarantee program acceptable to the Securities and Exchange
Commission, the Securities Transfer Association and the Transfer Agent of the
Issuer of the securities, if any, or the Issuer.
4
<PAGE>
EXHIBIT 4(e)
________________________________________________________________________________
REGISTRATION RIGHTS AGREEMENT
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C> <C>
SECTION 1 CERTAIN DEFINITIONS............................................ 1
1.1 "Affiliate".................................................... 1
1.2 "Agreement".................................................... 1
1.3 "Common Stock"................................................. 1
1.4 "Company"...................................................... 2
1.5 "Commission"................................................... 2
1.6 "Exchange Act"................................................. 2
1.7 "Holder" or "Holders".......................................... 2
1.8 "Investor(s)".................................................. 2
1.9 "Redeemable Warrants".......................................... 2
1.10 "Restricted Securities"........................................ 2
1.11 "Registrable Securities"....................................... 2
1.12 The terms "Register," "Registered" and "Registration".......... 2
1.13 "Registration Expenses"........................................ 2
1.14 "Sales Agent Agreement"........................................ 3
1.15 "Sales Agent Warrant".......................................... 3
1.16 "Securities Act"............................................... 3
1.17 "Subscription Agreement"....................................... 3
1.18 "Selling Expenses"............................................. 3
1.19 "Unit"......................................................... 3
1.20 "Warrantholders"............................................... 3
1.21 "Warrants"..................................................... 3
SECTION 2 RESTRICTIONS ON TRANSFERABILITY
OF SECURITIES; COMPLIANCE WITH SECURITIES ACT.................. 3
2.1 Restrictions on Transferability................................ 3
2.2 Restrictive Legend............................................. 3
2.3 Notice of Proposed Transfers................................... 4
2.4 Grant of "Piggyback" Registration Rights....................... 4
2.5 Expenses of Registration....................................... 6
2.6 Registration Procedures........................................ 6
2.7 Indemnification................................................ 6
2.8 Information by Holder.......................................... 8
2.9 Rule 144 Reporting............................................. 8
2.10 Assignment of Registration Rights.............................. 9
2.11 Termination of Registration Rights............................. 9
2.12 "Market Stand-Off" Agreement................................... 9
2.13 Exercise of Warrants........................................... 10
SECTION 3 MISCELLANEOUS.................................................. 10
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
3.1 Governing Law.................................................. 10
3.2 Survival....................................................... 10
3.3 Successors and Assigns......................................... 10
3.4 Entire Agreement; Amendment.................................... 10
3.5 Notices, etc. ................................................. 10
3.6 Delay or Omissions............................................. 11
3.7 Expenses....................................................... 11
3.8 Counterparts................................................... 11
3.9 Severability................................................... 11
3.10 Titles and Subtitles........................................... 11
</TABLE>
EXHIBITS:
- --------
Exhibit A - Investors
---------
ii
<PAGE>
CLINICOR, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made effective as of December 1,
1995, by and among Clinicor, Inc., a Nevada corporation (the "Company"), and
each of the individuals and entities listed on Exhibit A to this Agreement (the
---------
"Investors").
RECITALS
--------
A. The Company desires for those certain Investors who are, or will be,
listed on Exhibit A (other than SJ Capital, Inc.) to purchase shares of the
---------
Company's Units pursuant to the Subscription Agreement (each as defined herein).
B. Pursuant to the Subscription Agreement each Investor will receive a
Unit consisting of one share of Common Stock and one Redeemable Common Stock
Purchase Warrant. Two Warrants are required to purchase one share of the
Company's Common Stock.
C. Pursuant to that certain Sales Agent Agreement dated as of September
15, 1995, between SJ Capital, Inc. and the Company ("Sales Agent Agreement"), SJ
Capital, Inc. is acting as Sales Agent for the Company in the offering of the
Units.
In consideration of the foregoing and the promises and covenants contained
herein, the parties agree as follows:
SECTION 1
---------
CERTAIN DEFINITIONS
As used in this Agreement the following terms shall have the following
respective meanings:
1.1 "Affiliate" shall mean any person that directly, or indirectly
---------
through one or more intermediaries, controls or is controlled by, or is under
common control with a specified person.
1.2 "Agreement" shall mean this Registration Rights Agreement as amended
---------
from time to time.
1.3 "Common Stock" shall mean the Common Stock of the Company issued as a
------------
portion of a Unit or issued upon exercise of the Warrants.
1
<PAGE>
1.4 "Company" shall have the meaning ascribed to that term in the first
-------
paragraph hereof.
1.5 "Commission" shall mean the Securities and Exchange Commission or any
----------
other federal agency at the time administering the Securities Act.
1.6 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
1.7 "Holder" or "Holders" shall mean any Investor owning or having the
-------------------
right to acquire Registrable Securities or any permitted transferee thereof in
accordance with Section 2.10 hereof.
1.8 "Investor(s)" shall have the meaning ascribed to that term in the
-----------
first paragraph hereof.
1.9 "Redeemable Warrants" shall mean the Redeemable Warrants to purchase
-------------------
one-half of one share of Common Stock, which were, or will be, issued as a
portion of a Unit.
1.10 "Restricted Securities" shall mean the securities of the Company
---------------------
required to bear the legend set forth in Section 2.2 hereof (or any similar
legend).
1.11 "Registrable Securities" shall mean (i) Common Stock, (ii)
----------------------
unexercised Warrants, and (iii) any Common Stock issued in respect of, in
exchange for or in replacement of the Common Stock or Warrants upon any stock
split, stock combination, stock dividend, recapitalization, consolidation or
similar event. Securities previously sold to the public pursuant to a registered
public offering or Rule 144 of the Securities Act shall cease to be Registrable
Securities. For the purpose of determining the number of Registrable Securities
held by any Investor, Holder or permitted transferee, or any combination
thereof, the Warrants shall be counted on the basis of the number of shares of
Common Stock issuable upon exercise thereof.
1.12 The terms "Register," "Registered" and "Registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
1.13 "Registration Expenses" shall mean all expenses incurred in complying
---------------------
with registrations, filings or qualifications under Sections 2.4 hereof,
including, without limitation, all registration, qualification and filing fees,
accounting fees, printing expenses, escrow fees, fees and disbursements of
counsel for the Company, blue sky fees and expenses, the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company and Selling Expenses).
2
<PAGE>
1.14 "Sales Agent Agreement" shall have the meaning ascribed to that term
---------------------
in Recital B hereof.
1.15 "Sales Agent Warrant" shall mean the Warrant to purchase Common Stock
-------------------
issued to SJ Capital, Inc. pursuant to the Sales Agent Agreement.
1.16 "Securities Act" shall mean the Securities Act of 1933, as amended,
--------------
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
1.17 "Subscription Agreement" shall mean those certain Subscription
----------------------
Agreements between the Company and the Investors listed in EXHIBIT A thereto
with respect to the offering of the Units.
1.18 "Selling Expenses" shall mean all underwriting discounts, selling
----------------
commissions and stock transfer taxes applicable to a sale by a Holder and all
fees and disbursements of counsel for any Holder.
1.19 "Unit" shall have the meaning ascribed to that term in the
----
Subscription Agreement.
1.20 "Warrantholders" shall mean the holders of record of the Warrants.
--------------
1.21 "Warrants" shall mean the Sales Agent Warrants and the Redeemable
--------
Warrants.
SECTION 2
---------
RESTRICTIONS ON TRANSFERABILITY
OF SECURITIES; COMPLIANCE WITH SECURITIES ACT
2.1 Restrictions on Transferability. The Common Stock and Warrants shall
-------------------------------
not be transferable except upon the conditions specified in this Section 2. The
Investor will cause any proposed transferee of the Common Stock and Warrants
held by the Investor to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Section 2 (including the
"market stand-off' provisions of Section 2.12).
2.2 Restrictive Legend. Each certificate representing (i) Common Stock,
------------------
(ii) Warrants and (iii) any other securities issued in respect of the Common
Stock or Warrants upon any stock split, stock combination, stock dividend,
recapitalization, consolidation or similar event, shall (unless otherwise
permitted by the provisions of Section 2.3 below) be stamped or otherwise
imprinted with a legend in substantially the following form (in addition to any
legend required under applicable state laws):
3
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT AND LAWS. COPIES OF THE AGREEMENT
COVERING THE PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICE.
2.3 Notice of Proposed Transfers. The holder of each certificate
----------------------------
representing Restricted Securities agrees to comply in all respects with the
provisions of this Section 2.3. Prior to any proposed transfer of any Restricted
Securities (unless there is in effect a registration statement under the
Securities Act covering the proposed transfer), the holder thereof shall give
written notice to the Company of such holder's intention to effect such
transfer. Each such notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail, and (except in transactions in
compliance with Rule 144) shall be accompanied by either (i) a written opinion
of legal counsel who shall be reasonably satisfactory to the Company addressed
to the Company and reasonably satisfactory in form and substance to the
Company's counsel, to the effect that the proposed transfer of the Restricted
Securities may be effected without registration under the Securities Act, or
(ii) a "no action" letter from the Commission to the effect that the transfer of
such securities without registration will not result in a recommendation by the
staff of the Commission that action be taken with respect thereto, whereupon the
holder of such Restricted Securities shall be entitled to transfer such
Restricted Securities in accordance with the terms of the notice delivered by
the holder to the Company. Each certificate evidencing the Restricted Securities
transferred pursuant to the above shall bear the legend set forth in Section 2.2
above, except that such certificate shall not bear such restrictive legend if,
in the opinion of counsel for the Company, such legend is not required in order
to establish compliance with any provisions of the Securities Act.
2.4 Grant of "Piggyback" Registration Rights.
----------------------------------------
(a) Registration. If at any time or from time to time, the Company
------------
shall determine to register any securities, either for its own account or the
account of one or more of the Company's security holders other than (i) a
registration on Form S-8 (or a similar or successor form) relating solely to
employee stock option, stock purchase or other benefit plans, or (ii) a
registration on Form S-4 (or similar or successor form) relating solely to a
transaction pursuant to Rule 145, as promulgated by the Commission, the Company
will:
(i) promptly give to each Holder written notice thereof; and
4
<PAGE>
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance),
and in any underwriting involved therein, all the
Registrable Securities specified in a written request or
requests, made within thirty (30) days after mailing of
written notice by the Company, by any Holder or Holders,
except as set forth in Section 2.4(b) below; provided
that, at any time prior to the effective date of any
registration statement filed in connection with such
registration, the Company may, in its sole discretion
determine not to complete such registration.
(b) Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 2.4(a)(i). In such event the right of any Holder to
registration pursuant to Section 2.4 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their securities through
such underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the Underwriter's Representative
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 2.4, if the Underwriter's Representative determines
that marketing factors require a limitation of the number of shares to be
underwritten, the Underwriter's Representative may limit the number of
Registrable Securities to be included in the registration and underwriting (but
not the number of securities to be sold by the Company unless the Company has
otherwise agreed), on a pro rata basis based on the total number of securities
(including, without limitation, Registrable Securities) proposed to be included
in the registration by participating Holders or other shareholders having
"piggyback" registration rights. The number of securities includable by any
Holder or other person may, in the discretion of the Underwriter's
Representative, be rounded to the nearest one hundred (100) shares. No
securities excluded from the underwriting by reason of the Underwriter's
Representative's marketing limitation shall be included in such registration.
If any Holder disapproves of the terms of any such underwriting,
he may elect to withdraw therefrom by written notice to the Company and the
Underwriter's Representative. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
If the Underwriter's Representative has not limited the number
of shares to be underwritten for the Company's account and the account of the
Holders, the Company may include securities for the account of employees,
officers, directors, consultants and other shareholders who are not Holders or
do not otherwise hold registration rights.
5
<PAGE>
(c) Incidental Rights Only. The "piggyback" registration rights
----------------------
granted by the Section 2 are incidental only, and nothing in this Agreement
shall be deemed to require the Company to take any action, including without
limitation, the registration of any of its securities, that may give rise to
such incidental registration rights.
2.5 Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration, qualification or compliance pursuant to
Section 2.4 shall be borne by the Company and all Selling Expenses relating to
securities registered by the Holders shall be borne by the Holders of such
securities pro rata on the basis of the number of securities so registered.
2.6 Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Section 2,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will exercise good faith efforts to:
(a) Keep such registration, qualification or compliance effective
for a period of ninety (90) days or until the Holder or Holders have completed
the distribution described in the registration statement relating thereto,
whichever first occurs; and
(b) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request.
2.7 Indemnification.
---------------
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder with respect to which a registration, qualification or
compliance has been effected pursuant to this Section 2, each of such Holder's
officers, directors and partners, each person controlling such Holder within the
meaning of Section 15 of the Securities Act, and each underwriter, if any, and
each person who controls any underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof to which they may become subject), including
settlement of any litigation, commenced or threatened, to which they may become
subject under the Securities Act, the Exchange Act, or other federal or state
law, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document or amendments thereto, or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, or any violation by
the Company of the Securities Act, the Exchange Act, any state securities laws
or any rule or regulation promulgated under the Securities Act, the Exchange Act
or state securities laws, and will reimburse each such Holder, each of its
officers, directors and partners, and each person controlling such Holder, each
such underwriter and each person who controls any such underwriter, for any
legal or any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, provided
6
<PAGE>
that the Company will not be liable in any such case under this Section 2.7 to
the extent that any such claim, loss, damage, liability or expense arises out of
or is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by any such Holder or underwriter expressly for use in
such registration, prospectus, offering circular or other documents or
amendments thereto; and provided further that the Company shall not be liable
for any amount paid by any Holder or underwriter or other indemnified person in
settlement of any such loss, liability, claim, damage or expense unless such
settlement is consented to by the Company, such consent not to be unreasonably
withheld.
(b) To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify and hold
harmless the Company, each of its directors and officers, agents and employees,
each underwriter, if any, of the Company's securities covered by any
registration statement filed in connection therewith, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers, directors and
partners and each person controlling such Holder within the meaning of Section
15 of the Securities Act, against all expenses, claims, losses, damages and
liabilities (or actions in respect thereof to which they may become subject),
including settlement of any litigation under the Securities Act, the Exchange
Act, or other federal or state law arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or
amendments thereto, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
or any violation by the Holder of the Securities Act, the Exchange Act, any
state securities laws or any rule or regulation promulgated under the Securities
Act, the Exchange Act or state securities laws, and will reimburse the Company,
such other Holders, such directors, officers, persons, underwriters or control
persons of the Company, such other Holders or the underwriters, for any legal or
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, in
each case (other than a violation of law, rule or regulation) to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder for
use in such registration statement, prospectus, or any amendments or supplements
thereto. Notwithstanding the foregoing, the obligations of such Holders
hereunder shall be limited to an amount equal to the proceeds to each such
Holder of Registrable Securities from the sale of such Registrable Securities as
contemplated herein.
(c) Each party entitled to indemnification under this Section 2.7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
deliver written notice to the Indemnifying Party of commencement thereof. The
Indemnifying Party, at its sole option, may participate in or
7
<PAGE>
assume the defense of any such claim or any litigation resulting therefrom with
counsel reasonably satisfactory to the Indemnified Party and the Indemnified
Party may participate in such defense at such party's expense. The failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 2.7 except to the
extent that such failure to give notice shall materially adversely affect the
Indemnifying Party in the defense of any such litigation. No Indemnifying Party,
in the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term a release from all
liability in respect to such claim or litigation by the claimant or plaintiff to
such Indemnified Party.
2.8 Information by Holder. Each Holder of Registrable Securities
---------------------
included in any registration shall furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Section 2.
2.9 Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission which may at any time permit the
sale of shares of Common Stock which are Restricted Securities to the public
without registration, the Company agrees:
(a) To register its Common Stock under Section 12(g) of the Exchange
Act not later than ninety (90) days after the close of the Company's first
fiscal year following the effective date of the first registration statement
filed by the Company, relating to a public offering other than to employees of
the Company under an employee option plan or employee stock purchase plan;
(b) To make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date of the first registration under the Securities Act
filed by the Company for an offering of its securities to the general public;
(c) To use its diligent efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(d) To furnish to each Holder, so long as such Holder owns any
Restricted Securities, written notice of the Company's qualification as a
registrant, as soon as practicable after such qualification.
The Company further shall furnish forthwith upon request a written
statement as to its compliance with the reporting requirements of said Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of its compliance with the Securities Act and
8
<PAGE>
the Securities Exchange Act (at any time after it has become subject to such
reporting requirements); the Company shall provide forthwith upon written
request a copy of the most recent annual or quarterly report of the Company, and
such other reports and documents of the Company as Purchaser may reasonably
request in availing itself of any rule or regulation of the Commission allowing
Purchaser to sell any such securities without registration.
2.10 Assignment of Registration Rights. The rights granted each Investor
---------------------------------
under this Section 2 may not be assigned except: (i) to a purchaser of more than
Seven Thousand Five Hundred (7,500) Registrable Securities (as appropriately
adjusted for stock dividends, stock splits, stock combinations,
recapitalizations, consolidations and the like) purchased by an Investor, (ii)
to a successor entity to an Investor pursuant to a reorganization or
recapitalization of an Investor, (iii) to an Affiliate or (iv) to the partners
of an Investor or to the estate or heirs of such a partner or to a trust for the
benefit of such a partner, his or her spouse or descendants (provided that such
holder owns at least Seven Thousand Five Hundred (7,500) Registrable Securities
(as appropriately adjusted for stock dividends, stock splits, stock
combinations, recapitalizations, consolidations and the like); provided, that
--------
the Company receives notice prior to any such assignment and any transfer of
Registrable Securities otherwise conforms with this Agreement.
2.11 Termination of Registration Rights. The obligations of the Company
----------------------------------
under Section 2 shall terminate as to each Investor (and permitted transferee
under Section 2.10 above) upon the occurrence of any of the following:
(i) At such time as all Restricted Securities held by such
Investor or permitted transferee can be sold within a given
three (3) month period without compliance with the
registration requirements of the Securities Act pursuant to
Rule 144 (or its successor provision);
(ii) At such time as all Restricted Securities held by such Holder
can be sold under Rule 144(k) (or its successor provision); or
(iii) Three (3) years from the date of the Company's first
registered offering to the public.
2.12 "Market Stand-Off" Agreement. Any Holder of the Warrants or Common
---------------------------
Stock of the Company, if required by the Company and an underwriter of the
Warrants or Common Stock (or other securities) of the Company, shall agree not
to sell or otherwise to transfer or dispose of, or contract to sell or otherwise
transfer or dispose of, any Warrants or Common Stock (or other securities) of
the Company held by such Holder during the period not to exceed one hundred and
eighty (180) days as requested by the managing underwriter following the
effective date of the first registration statement of the Company filed under
the Securities Act (other than any such securities included in such registration
statement), without prior written consent of the Company or such underwriter,
provided that all officers, directors of the Company enter into similar
agreements. Such agreement shall be in writing in a form
9
<PAGE>
satisfactory to the Company and such underwriter. The Company may impose a
stop-transfer instruction with respect to the shares (or other securities)
subject to the foregoing restriction until the end of such period.
2.13 Exercise of Warrants. Notwithstanding any statement or implication
--------------------
herein to the contrary, the Company shall have no obligation to register any
security other than Common Stock of the Company, whether issued as part of a
Unit or to be issued upon exercise of a Warrant or other right. Holders
participating in a registration pursuant to Section 2.4 with respect to shares
of Common Stock that they have a right to acquire upon exercise of Warrants
shall be required to exercise such Warrants and receive such shares of Common
Stock no later than the effective date of the registration statement pursuant to
which such shares of Common Stock are registered.
SECTION 3
---------
MISCELLANEOUS
3.1 Governing Law. This Agreement shall be governed by the laws of the
-------------
State of Texas; provided, however, with respect to the internal affairs of the
Company, the laws of the State of Nevada will apply.
3.2 Survival. The representations, warranties, covenants and agreements
--------
made herein shall survive any investigation made by any Investor and the closing
of the transactions contemplated hereby.
3.3 Successors and Assigns. Except as otherwise provided herein and
----------------------
subject to compliance with the provisions herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto.
3.4 Entire Agreement; Amendment. This Agreement and the other documents
---------------------------
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
This Agreement may only be amended or waived by a writing signed by all parties
to this Agreement; provided, however, that Holders of a majority of the
-------- -------
Registrable Securities then held by the Holders or any permitted transferee
thereof, acting together, may waive or amend (either generally or in a
particular instance and either retroactively or prospectively), on behalf of all
Investors, Holders and permitted transferees, any provisions hereof affecting
Investors, Holders and permitted transferees so long as the effect thereof will
be that all such Investors, Holders and permitted transferees will be treated
equally.
3.5 Notices, etc. All notices and other communications required or
-------------
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid,
10
<PAGE>
or otherwise delivered by hand or by messenger, or by cable, telex or telegram
addressed (a) if to an Investor, at such Investor's address set forth on Exhibit
-------
A, or at such other address as Investor shall have furnished to the Company in
- -
writing, or (b) if to any other holder of any Registerable or Restricted
Securities, at such address as such holder shall have furnished the Company in
writing, or, until any such holder so furnishes an address to the Company, then
to and at the address of the last holder of such Registerable or Restricted
Securities who has so furnished an address to the Company, or (c) if to the
Company, one copy should be sent to its address set forth on the signature page
of this Agreement and addressed to the attention of the President, or at such
other address as the Company shall have furnished to the Investors. If notice is
provided by mail, notice shall be deemed to be given upon proper deposit in the
mail (and if outside the United States, sent by airmail).
3.6 Delay or Omissions. No delay or omission to exercise any right,
------------------
power or remedy accruing to any holder of any Registerable or Restricted
Securities upon any breach or default of the Company under this Agreement, shall
impair any such right, power or remedy of such holder nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Agreement, or any waiver on the part of any holder of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing or as
provided in Section 3.4 of this Agreement. All remedies, either under this
Agreement, or by law or otherwise afforded to the Company or to any holder, may
be exercised from time to time and as often as may be deemed expedient, by the
Company or such holder, as the case may be.
3.7 Expenses. Except as provided in Section 2, the Company and each
--------
Investor shall bear its own expenses and legal fees incurred on its behalf with
respect to this Agreement and the transactions contemplated hereby.
3.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which together shall constitute one instrument, and each of
which may be executed by less than all of the parties to this Agreement.
3.9 Severability. In the event that any provision of this Agreement
------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided, that no such severability shall be effective
--------
if it materially changes the economic benefit of this Agreement to any party.
3.10 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11
<PAGE>
The foregoing agreement is hereby executed as of the date first above
written.
COMPANY: INVESTORS:
- ------- ---------
CLINICOR, INC.
307 Camp Craft Road, Suite 200
Austin, Texas 78746
By: /s/ Robert Sammis /s/
------------------------------ ----------------------------------------
Executed by each person or entity listed
on the attached Exhibit A
12
<PAGE>
EXHIBIT A
---------
INVESTORS
A. SALES AGENT WARRANT
-------------------
INVESTOR.
--------
Name and Address Number of Sales Agent Warrants
------------------------------ ------------------------------
SJ Capital, Inc. 114,680
580 California Street, Suite 2040
San Francisco, California 94104
B. UNIT INVESTORS.
--------------
<TABLE>
<CAPTION>
Name and Address Number of Units
------------------------------ ------------------------------
<S> <C>
Andrew Kelly & Genevieve D. Kelly, Trustees 20,000
of the Kelly Family 1992 Trust Dated
October 27, 1992
2470 Pioneer Drive
Reno, NV 89509
Nancy Kelly LaForge 10,000
320 Kilborne Avenue
Reno, NV 89509
Laura J. Kelly 10,000
2470 Pioneer Drive
Reno, NV 89509
Genevieve D. Kelly, Trustee of the Kelly Family Trust 30,000
for Mark Kelly, Dated December 8, 1992
2470 Pioneer Drive
Reno, NV 89509
Lambert C. Thom 40,000
106 Lyford Drive
Tiburon, CA 94920
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
Michael J. Thompson 20,000
3755 Esperanza Drive
Sacramento, CA 95864
Charles A. Ballweg & Edith A. Klecker 24,000
355 Love Lane
Danville, CA 94526
Charles Ballweg Profit Sharing Plan 10,000
Dated June 1, 1989
c/o Paine Webber, ACT KW2011879
1990 N. California Blvd 618
Walnut Creek, CA 94596
James O. Hillsman, Smith Barney Inc., IRA Custodian 30,000
Three James Center
1051 East Cary Street, Suite 200
Richmond, VA 23219
Robert K. Williams, Jr. 10,000
5812 West Club Lane
Richmond, VA 23226
Blanton E. Tate, Jr. 12,000
2807 Skipwith Road
Richmond, VA 23294
Dawes Investment Partners, L.P. 20,000
350 Santa Rita Avenue
Palo Alto, CA 94301
Bruce L. Lance 20,000
1409 Pinetree Drive
Alamo, CA 94507
J. Paul Burns 10,000
419 Wells Lane
Ripon, CA 95366
Frank Wesser 12,000
1075 Brown Avenue
Lafayette, CA 94549
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
Alice B. Miller 10,000
183 Silver Pine Lane
Danville, CA 94506
Southwest Securities, Inc. FBO 40,000
Adrienne Campbell IRA AC 72820334
1201 Elm Street, Suite 4300
Dallas, TX 75270
The Tennant Company Profit Sharing 10,000
Plan FBO Warren W. Hall
17 Briar Hollow, Suite 304
Houston, TX 77027
Charles Schwab & Co., Inc. FBO Richard E. Treff 10,000
4722 N. 24th Street, Suite 400
Phoenix, AZ 85016
Eleanor Lennon 20,000
3806 Village Oak Drive
Kingwood, TX 77339
A. H. Rogers 10,000
3018 W. Hickory Park Circle
Sugarland, TX 77479
National Securities Crop. 10,000
C/F John R. Martin IRA
1001 Fourth Avenue, Suite 2200
Seattle, WA 98154
Dean A. & Mary Ann Wagerman Trustees 10,000
Dean A. & Mary Ann Wagerman Trust UA 110488
13 Mills Oaks
Pleasanton, CA 94588
Thomas W. Cady 20,000
111 Gresham Pl
Falls Church, VA 22046
The Tenant Company Profit Sharing Plan 20,000
FBO A. H. Rogers
17 Briar Hollow, Suite 304
Houston, TX 77027
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Thomas Carson & Kathryn Copeland TEN COM 10,000
117 Wawona St.
San Francisco, CA 94127
Guarantee and Trust Co. FBO Robert K. Williams III 109,400
Sep/IRA
P. O. Box 8963
Wilmington, DE 19899
Donaldson, Lufkin & Jenrette Securities Corporation 16,000
F/B/O Linda Lee Miller
A/C SL6902695-1
One Pershing Plaza
Jersey, City, NJ 07399
</TABLE>
4
<PAGE>
EXHIBIT 4(f)
SALES AGENT
WARRANT TO PURCHASE UNITS
OF
CLINICOR, INC.
Warrant to Purchase 114,680 Units
(subject to adjustment as set forth herein)
Exercise Price $2.50 Per Unit
(subject to adjustment as set forth herein)
VOID AFTER 5:00 P.M., AUSTIN, TEXAS, TIME, SEPTEMBER 30, 2000
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR REGISTERED OR QUALIFIED UNDER ANY OTHER
APPLICABLE FEDERAL OR STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR QUALIFICATION FILED IN ACCORDANCE WITH THE ACT AND
SUCH LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH
LAWS.
Clinicor, Inc., 307 Camp Craft Road, Suite 200, Austin, Texas 78746 (the
"Company"), hereby certifies that, for value received, SJ Capital, Inc., 580
California Street, Suite 2040, San Francisco, California 94104, or any other
Holder as defined below, is entitled, subject to the terms and conditions set
forth below, to purchase from the Company at any time or after September 15,
1995 but before 5:00 p.m., Austin, Texas time, on September 30, 2000, 114,680
Units of the Company's securities (the "Units") at a purchase price of $2.50 per
Unit (the "Exercise Price"), each Unit consisting of one share of common stock
and one common Stock Purchase Warrant (hereinafter referred to as the "Units").
The number and character of the securities purchasable upon exercise of
this Warrant and the Exercise Price are subject to adjustment as provided below.
The term "Warrant" as used herein shall include this Warrant and any Warrants
issued in substitution for or replacement of this Warrant, or any Warrants into
which this Warrant may be divided or exchanged. The securities purchasable upon
the exercise of this Warrant are hereinafter referred to as "Warrant
Securities." Except as otherwise provided herein, the Warrant Securities shall
be as described in the Company's Private Offering Memorandum dated September 15,
1995 ("Effective Date"). The Warrants included in the Warrant Securities will
be exercisable for a three-year period from the date of exercise of this
Warrant, unless such period is extended or terminated in accordance
<PAGE>
with the "Terms of Warrants," which is attached as Exhibit A to the Subscription
Agreement for the Units for the private offering. Other dates set forth in the
Warrant included in the Warrant Securities shall be appropriately adjusted (in
the reasonable discretion of the Company and its counsel) in light of the
Warrant Expiration Date of such Warrant. Two such Warrants will entitle the
holder to purchase one share of Common Stock at an exercise price of $1.00 per
share, subject to adjustment.
This Warrant may be assigned, transferred, sold, offered for sale, or
exercised by the Holder only upon compliance with all the pertinent provisions
hereof and only upon the written consent of the Company, which consent may be
withheld for any reason including, without limitation, compliance with the
various state and federal securities laws.
1. Exercise of Warrant.
-------------------
(a) Subject to the other terms and conditions of this Warrant, the
purchase rights evidenced by this Warrant may be exercised in whole or in part
at any time, and from time to time, on or after September 15, 1995, but before
5:00 p.m., Austin Texas, time, on September 30, 2000 (the "Warrant Expiration
Date"), by the Holder's presentation and surrender of this Warrant to the
Company at its principal office or at the office of the Company's stock transfer
agent, if any, accompanied by a duly executed Notice of Exercise, in the form
attached to and by this reference incorporated in this Warrant as Exhibit A, and
by payment of the aggregate Exercise Price, in certified funds or a bank
cashier's check, for the number of Units specified in the Notice of Exercise. In
the event this Warrant is exercised in part only, as soon as is practicable
after the presentation and surrender of this Warrant to the Company for
exercise, the Company shall execute and deliver to the Holder a new Warrant,
containing the same terms and conditions as this Warrant, evidencing the right
of the Holder to purchase the number of Units as to which this Warrant has not
been exercised.
(b) The certificate evidencing the Warrant Securities shall be deemed to
be issued, and the person to whom such Warrant Securities are issued of record
shall be deemed to have become a holder of record of such Warrant Securities, as
of the date of the surrender of such Warrant and payment of the aggregate
Exercise Price, whichever shall last occur, provided that if the books of the
Company with respect to the Warrant Securities shall be closed as of such date,
the certificates for such Warrant Securities shall be deemed to be issued, and
the person to whom such Warrant Securities are issued of record shall be deemed
to have become a record holder of such Warrant Securities, as of the date on
which such books shall next be open (whether before, on or after the applicable
Warrant Expiration Date), but at the Exercise Price and upon the other
conditions in effect upon the date of surrender of the Warrant and payment of
the Exercise Price, whichever shall have last occurred, to the Company.
2
<PAGE>
(c) The Company agrees not to merge, reorganize or take any action that
would terminate this Warrant unless written notice is given to the holders of
this Warrant in accordance with Section 3 hereof.
2. Exchange, Assignment or Loss of Warrant. This Warrant is
---------------------------------------
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
Holder thereof to purchase (under the same terms and conditions as provided by
this Warrant) in the aggregate the same number of Units purchasable hereunder.
This Warrant may not be sold, transferred, assigned, or hypothecated except in
compliance with the Securities Act of 1933, as amended, and any applicable state
securities laws. To the extent allowable pursuant to applicable state and
federal securities laws and upon delivery of an opinion of counsel acceptable in
form and substance to the Company, this Warrant may be assigned in whole or in
part to officers or representatives of SJ Capital, Inc. and to any successor to
the business of SJ Capital, Inc. Any assignment shall be made by surrender of
this Warrant to the Company or at the office of its stock transfer agent, if
any, with the Assignment Form annexed hereto duly executed and with funds
sufficient to pay any transfer tax; whereupon the Company shall, without charge,
execute and deliver a new Warrant in the name of the assignee named in such
instrument of assignment and this Warrant shall promptly be canceled. This
Warrant may be divided or combined with other Warrants which carry the same
rights upon presentation hereof at the office of the Company or at the office of
its stock transfer agent, if any, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder hereof. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification as the
Company, in its discretion, may impose, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date.
3. Adjustments: Stock Dividends, Reclassification, Reorganization,
-----------------------------------------------------------------
Merger and Anti-Dilution Provisions.
- -----------------------------------
(a) If the Company shall at any time before the Warrant Expiration Date
subdivide or combine its outstanding shares of Common Stock, this Warrant shall,
after that subdivision or combination, evidence the right to purchase the number
of shares of Common Stock that would have been issuable as a result of that
change with respect to the shares of Common Stock which were purchasable under
this Warrant immediately before that subdivision or combination. If the Company
shall at any time subdivide the outstanding shares of Common Stock, the Exercise
Price then in effect immediately before that subdivision shall be
proportionately decreased, and, if the Company shall at any time combine the
outstanding shares of common Stock, the Exercise Price then in effect
immediately before that combination shall be
3
<PAGE>
proportionately increased. Any adjustment under this section shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(b) If at any time before the Warrant Expiration Date the Common Stock
constituting a portion of the Units issuable upon exercise of this Warrant shall
be changed into the same or a different number of shares of any other series or
class or classes of stock whether by reclassification, recapitalization or
otherwise (other than a subdivision or combination of shares provided for
above), the Holder shall, on its exercise, be entitled to purchase, in lieu of
the Warrant Securities which the Warrant Holder would have become entitled to
purchase but for such change, a number of shares of such other series or class
or classes of stock equivalent to the number of Warrant Securities that would
have been subject to purchase by the Holder on exercise of this Warrant
immediately before that change.
(c) Except as otherwise provided in Section 13, if at any time before the
Warrant Exercise Date there shall be a capital reorganization of the Company's
Common Stock (other than a combination, subdivision, reclassification or
exchange of shares provided for elsewhere in this Warrant) or merger or
consolidation of the Company with or into another corporation or person
(provided such event does not result in the termination of this Warrant pursuant
to Section 13) then, as a part of such reorganization, merger, consolidation or
sale, lawful provision shall be made so that the Holder shall thereafter be
entitled to receive upon exercise of this Warrant, during the periods specified
in this Warrant and upon payment of the Exercise Price then in effect, the
number of shares of stock or other securities or property of the Company, or of
the successor corporation resulting from such reorganization, merger,
consolidation or sale to which a holder of the Common Stock deliverable upon
exercise of this Warrant would have been entitled in such reorganization,
merger, consolidation or sale if this Warrant had been exercised immediately
before that reorganization, merger, consolidation or sale. In any such case,
appropriate adjustment (as determined by the Company's Board of Directors) shall
be made in the application of the provisions of this Agreement and the Warrant
with respect to the rights and interests of the Holders after such
reorganization, merger, consolidation or sale to the end that the provisions of
this Warrant (including adjustment of the Exercise Price then in effect and
number of shares purchasable upon exercise of this Warrant) shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this Warrant. The
provisions of this Section 3(c) shall similarly apply to any such successive
reorganizations, mergers, consolidations or sales which satisfy the conditions
set forth above.
(d) If any adjustment made pursuant to subsections (a), (b) or (c), above,
creates a fractional Share, such Share shall be treated in accordance with
Section 7 hereof.
4
<PAGE>
(e) The Company shall give notice of each adjustment or readjustment of
the Exercise Price or the number of Shares issuable upon exercise of this
Warrant to the Holder at that Holder's address as shown on the Company's books
and records.
(f) The Warrant need not be changed because of any adjustment in the
Exercise Price or in the Units, shares of common Stock or other Warrant
Securities purchasable upon its exercise. A Warrant issued after any adjustment
upon any partial exercise or in replacement may continue to express the same
Exercise Price and the same number of Units or other Warrant Securities
(appropriately reduced in the case of partial exercise) as are stated on the
face of the Warrant as initially issued, and that Exercise Price and that number
of Units or other Warrant Securities shall be considered to have been so changed
at the close of business on the date of adjustment.
4. Notice to Holders. If, prior to the expiration of this Warrant
-----------------
either by its terms or by its exercise in full, any of the following
shall occur:
(i) the Company shall declare a dividend or authorize any other
distribution on its Common Stock; or
(ii) the Company shall authorize the granting to the shareholders of its
Common Stock of rights to subscribe for or purchase any securities
or any other similar rights; or
(iii) any reclassification, reorganization or similar change of the Common
Stock, or any consolidation or merger to which the Company is a
party, or the sale, lease, or exchange of any significant portion of
the assets of the Company; or
(iv) the voluntary or involuntary dissolution, liquidation or winding up
of the company; or
(v) any purchase, retirement or redemption by the Company of its Common
Stock;
then, and in any such case, the Company shall deliver to the Holder or Holders
written notice thereof at least 30 days prior to the earliest applicable date
specified below with respect to which notice is to be given, which notice shall
state the following:
(i) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights, or, if a record is not to be
taken, the date as of which the shareholders of Common Stock of
record to be entitled to such dividend, distribution or rights are
to be determined;
5
<PAGE>
(ii) the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation,
winding up or purchase, retirement or redemption is expected to
become effective, and the date, if any, as of which the Company's
shareholders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property deliverable upon
such reclassification, reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up or purchase,
retirement or redemption; and
(iii) if any matters referred to in the foregoing clauses (i) and (ii) are
to be voted upon by shareholders of Common Stock, the date as of
which those shareholders to be entitled to vote are to be
determined.
5. Officers' Certificate. Whenever the Exercise Price or the aggregate
---------------------
number of Warrant Securities purchasable pursuant to this Warrant shall be
adjusted as required by the provisions of Section 3 above, the Company shall
promptly file with its Secretary or an Assistant Secretary at its principal
office, and with its transfer agent, if any, an officers' certificate executed
by the Company's President and Secretary or Assistant Secretary, describing the
adjustment and setting forth, in reasonable detail, the facts requiring such
adjustment and the basis for and calculation of such adjustment in accordance
with the provisions of this Warrant. Each such officers' certificate shall be
made available to the Holder or Holders of this Warrant for inspection at all
reasonable times, and the Company, after each such adjustment, shall promptly
deliver a copy of the officers' certificate relating to that adjustment to the
Holder or Holders of this Warrant. The officers' certificate described in this
Section 5 shall be deemed to be conclusive as to the correctness of the
adjustment reflected therein if, and only if, no Holder of this Warrant delivers
written notice to the Company of an objection to the adjustment within 30 days
after the officers' certificate is delivered to the Holder or Holders of this
Warrant. The Company will use diligent efforts to make its books and records
reasonably available for inspection and copying during normal business hours by
the Holder so as to permit a determination as to the correctness of the
adjustment. If written notice of an objection is delivered by a Holder to the
Company and the parties cannot reconcile the dispute, the Holder and the Company
shall submit the dispute to arbitration pursuant to the provisions of Section 15
below. Failure to prepare or provide the officers' certificate shall not modify
the parties' rights thereunder.
6. Reservation of Warrant Securities. The Company hereby agrees that at
---------------------------------
all times prior to September 30, 2000, it will have authorized and will reserve
and keep available for issuance and delivery to the Holder that number of shares
of its Common Stock that may be required from time to time for issuance and
delivery upon the exercise of the then unexercised portion of this Warrant and
all other similar Warrants then outstanding and unexercised.
6
<PAGE>
7. Fractional Shares. No fractional shares or scrip representing
-----------------
fractional shares shall be issued upon the exercise of all or any part of this
Warrant. With respect to any fraction of a share of any security called for
upon any exercise of this Warrant, the Company shall pay to the Holder an amount
in money equal to that fraction multiplied by the current market value of that
share. The current market value shall be determined as follows:
(i) if the security at issue is listed on a national securities exchange
or admitted to unlisted trading privileges on such an exchange, the
current value shall be the last reported sale price of that security
on such exchange on the last business day prior to the date of the
applicable exercise of this Warrant or, if no such sale is made on
such day, the average of the highest closing bid and the lowest
asked price for such day on such exchange; or
(ii) if the security at issue is not so listed or admitted to unlisted
trading privileges, the current market value shall be the average of
the last reported highest bid and lowest asked prices quoted on the
National Association of Securities Dealers Automated Quotation
System or, if not so quoted, then by the National Quotation Bureau,
Inc. on the last business day prior to the day of the applicable
exercise of this Warrant; or
(iii) if the security at issue in not so listed or admitted to unlisted
trading privileges and bid and asked prices are not reported, the
current market value shall be determined in such reasonable manner
as may be prescribed from time to time by the Board of Directors of
the Company.
8. Rights of the Holder. The Holder shall not be entitled to any
--------------------
rights as a shareholder in the Company by reason of this Warrant, either at law
or equity, except as specifically provided for herein. The Company covenants,
however, that for so long as this Warrant is at least partially unexercised, it
will furnish any Holder of this Warrant with copies of all reports and
communications furnished to the shareholders of the Company.
9. Warrant Securities to be Fully Paid. The Company covenants that all
-----------------------------------
Warrant Securities that may be issued and delivered to a Holder of this Warrant
upon the exercise of this Warrant and payment of the Exercise Price will be,
upon such delivery, validly and duly issued, fully paid and nonassessable.
10. Notices. All notices, certificates, requests, or other similar
-------
items provided for in this Warrant shall be in writing and shall be personally
delivered or deposited in the United States mail, postage prepaid, addressed to
the respective party as indicated in the portions of this Warrant preceding
Section 1. All notices shall be deemed to be delivered upon personal delivery or
upon the expiration of three (3) business days following deposit in the United
States mail,
7
<PAGE>
postage prepaid. The addresses of the parties may be changed, and addresses of
other Holders and holders of Warrant Securities may be specified, by written
notice delivered pursuant to this Section 10. The Company's principal office
shall be deemed to be the address provided pursuant to this Section for the
delivery of notices to the Company.
11. Applicable Law. This Warrant shall be governed by and construed in
--------------
accordance with the laws of the State of Texas, and courts located in Texas
shall have exclusive jurisdiction over all disputes arising hereunder.
12. Arbitration. The Company and the Holder, and by receipt of this
-----------
Warrant or any Warrant Securities, all subsequent Holders or holders of Warrant
Securities, agree to submit all controversies, claims, disputes and matters of
difference with respect to this Warrant, including, without limitation, the
application of this Section 12 to arbitration in Austin, Texas, according to the
rules and practices of the American Arbitration Association from time to time in
force. This agreement to arbitrate shall be specifically enforceable.
Arbitration may proceed in the absence of any party if notice of the proceeding
has been given to that party. The parties agree to abide by all awards rendered
in any such proceeding. These awards shall be final and binding on all parties
to the extent and in the manner provided by the rules of civil procedure enacted
in Texas. All awards may be filed, as a basis of judgment and of the issuance
of execution for its collection, with the clerk of one or more courts, state or
federal, having jurisdiction over either the party against whom that award is
rendered or its property. No party shall be considered in default hereunder
during the pendency of arbitration proceedings relating to that default.
13. Termination. Unless otherwise terminated hereunder, the right to
-----------
exercise this Warrant shall expire and the Warrant Expiration Date shall be
hereby deemed to occur upon the effective date of a merger or consolidation of
the Company with or into another corporation, or the sale of all or
substantially all of the Company's assets to another corporation or person, if,
immediately after any such merger, consolidation or sale of assets, at least
fifty percent (50%) of the voting power of the surviving corporation or such
other person, as the case may be, is owned by persons who are not shareholders
of the Company immediately prior to such merger, consolidation or sale of
assets, provided that the Holders receive notice of such merger or consolidation
or sale of assets at least twenty (20) days prior to the effective date of such
merger, or consolidation or sale of assets. Notwithstanding the foregoing, the
Warrants shall not terminate if the Warrants are assumed by or exchanged with
Warrants of the surviving corporation in the merger, consolidation or sale of
assets, in which case such assumption or exchange shall be effective in
accordance with Section 3 hereof.
8
<PAGE>
14. Miscellaneous Provisions.
------------------------
(a) Subject to the terms and conditions contained herein, this Warrant
shall be binding on the Company and its successors and shall inure to the
benefit of the original Holder, its successors and assigns and all holders of
Warrant Securities.
(b) In the event of any litigation or arbitration between the parties
hereto, the prevailing party in such litigation or arbitration shall be entitled
reimbursement by the other party for all costs and expenses resulting from such
litigation or arbitration, including, but not limited to, all reasonable
attorney's fees and disbursements.
(c) This Warrant cannot be changed or terminated or any performance or
condition waived in whole or in part except by an agreement in writing signed by
the party against whom enforcement of the change, termination or waiver is
sought.
(d) If any provision of this Warrant shall be held to be invalid, illegal
or unenforceable, such provision shall be severed, enforced to the extent
possible, or modified in such a way as to make it enforceable, and the
invalidity, illegality or unenforceability shall not affect the remainder of
this Warrant.
(e) The Company agrees to execute such further agreements, conveyances,
certificates and other documents as may be reasonably requested by the Holder to
effectuate the intent and provisions of this Warrant.
(f) Paragraph headings used in this Warrant are for convenience only and
shall not be taken or construed to define or limit any of the terms or
provisions of this Warrant. Unless otherwise provided, or unless the context
shall otherwise require, the use of the singular shall include the plural and
the use of any gender shall include all genders.
ATTEST: CLINICOR, INC.
By: /s/ Robert S. Sammis By: /s/ Thomas P. O'Donnell
-------------------- --------------------------
Date: May 20, 1996
9
<PAGE>
EXHIBIT A
---------
NOTICE OF EXERCISE
------------------
The undersigned Holder of a Warrant hereby:
(a) irrevocably elects to exercise the Warrant to the extent of purchasing
______ Units;
(b) makes payment in full of the aggregate Exercise Price for those Units
in the amount of $___________ by the delivery of certified funds or a bank
cashier's check in the amount of $______________;
(c) requests that a certificate for such Units be issued in the name of
the undersigned, or, if the name and address of some other person is specified
below, in the name of such other person:
_________________________________________________
_________________________________________________
_________________________________________________
(Name and address of person other than the undersigned
-----
in whose name Units are to be registered)
(d) requests, if the number of Units purchased or transferred are not all
the Units purchasable pursuant to the unexercised portion of the Warrant, that a
new Warrant of like tenor for the remaining Units purchasable pursuant to the
Warrant be issued and delivered to the undersigned at the address stated below.
Dated: ________________________ _____________________________________
Signature
(This signature must conform in
all respects to the name of the
Holder as specified on the face
of the Warrant.)
________________________________
Printed Name
Social Security Number or
Employer ID Number: ____________________________________
Address: ____________________________________
<PAGE>
ASSIGNMENT
----------
(Form of Assignment to be Executed if the
Warrant Holder Desires to Transfer Warrants Evidenced Hereby)
FOR VALUE RECEIVED, _____________________________________________________
hereby sells, assigns and transfers to _______________________________________
______________________________________________________________________________.
(Please print name and address including zip code.)
Please insert social security, federal tax I.D.
number or other identifying number
_______________________________________________________________________ Warrants
represented by this Warrant Certificate and does hereby irrevocably constitute
and appoint __________________________________________________________ Attorney,
to transfer said Warrants on the books of the Company with full power of
substitution.
Dated: _______________________ _______________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Warrant Certificate)
SIGNATURE GUARANTEED: ______________________________________________
NOTE: Any transfer or assignment of this Warrant Certificate is subject to
- ----
compliance with the restrictions on transfer imposed under the Warrant.
<PAGE>
EXHIBIT 4(g)
CLINICOR, INC.
PREEMPTIVE RIGHTS AGREEMENT
THIS PREEMPTIVE RIGHTS AGREEMENT is entered into effective as of February
27, 1995 by and among CLINICOR, INC., Nevada corporation, formerly PEGASUS TAX
AND FINANCIAL PLANNING SERVICES, INC., a Nevada corporation (the "Corporation")
on the one hand, and those shareholders of the Corporation whose signatures are
set forth on Schedule 1 attached hereto and incorporated herein by reference on
the other (collectively the "Shareholders" and individually a "Shareholder").
R E C I T A L S :
- - - - - - - -
A. On even date herewith the Corporation merged with a Texas health care
research services company known as Clinicor, Inc. (the "Merger").
B. As a material consideration for the Shareholders providing additional
capital to the Corporation and facilitating the Merger, the Corporation has
agreed to provide certain preemptive rights to the Shareholders on the terms and
conditions hereinafter set forth.
A G R E E M E N T :
- - - - - - - - -
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties hereby
agree as follows:
1. RIGHT OF FIRST REFUSAL. The Corporation hereby grants to each
----------------------
Shareholder, the right of first refusal to purchase that portion of all new
----------
securities issued by the Corporation (the "New Securities" as defined below)
- ------------------------------------
within three years after the date hereof (the date hereof referred to as the
"Closing") as the number of shares held by such Shareholder on the date that it
receives the "Offer" (as defined below) bears to the total number of shares of
the Corporation issued and outstanding on the date of the Offer on the following
terms and conditions (the "Preemptive Rights"):
A. DEFINITION. "New Securities" shall mean any capital stock of the
----------
Corporation issued after the Closing, whether now authorized or not, and rights,
options, or warrants to purchase said capital stock, and securities of any type
whatsoever that are, or may become, convertible into said common stock or
preferred stock of the Corporation issued after the Closing; provided, however,
that "New Securities" shall not include (i) the 50,000 options or the shares
issuable thereunder to purchase Common Stock issued in the aggregate to Frank
Ofner and Arthur Haag pursuant to the Merger; (ii) up to 400,000 new options and
the shares issuable thereunder to employees and consultants of the Corporation
under any employee benefit plan at exercise prices no less than fair market
value on date of grant, inclusive
<PAGE>
of no more than up to 300,000 new options or the shares issuable thereunder to
Messrs. Robert Sammis or Thomas O'Donnell and/or their affiliates and inclusive
of an additional 30,000 options issued to three certain medical directors
pursuant to the Merger; (iii) after the first anniversary date of the Closing,
up to 500,000 stock options (inclusive of any of the 400,000 options referenced
above) at exercise prices no less than fair market value on date of grant issued
under any employee benefit plans to employees or consultants other than to
Messrs. Sammis or O'Donnell and/or their affiliates; (iv) after the second
anniversary date following the Closing, any additional securities issued at
exercise prices no less than fair market value on date of grant under any
employee benefit plans to employees or consultants other than to Messrs. Sammis
or O'Donnell and/or their affiliates; (v) shares of the Corporation's common
stock issued in connection with any stock split, stock dividend, or
recapitalization of the Corporation; or (vi) any shares issued by the
Corporation in connection with a Form S-1 or Form S-3 (or any successor in
interest form) public registration of such shares, whereby in connection with
such registration the Corporation is included on the NASDAQ National Market
System or a national stock exchange and which is declared effective by the
Securities and Exchange Commission.
B. EXERCISE OF RIGHT. If the Corporation intends to issue New
-----------------
Securities after the Closing, it shall give each Shareholder written notice of
its intention, describing the type of New Securities, the price, and the terms
upon which the Corporation proposes to issue the same (the "Offer"). With
respect to any New Securities proposed to be issued for assets or property other
than cash, the price set forth in the notice shall be based upon the fair market
value of such assets or property as determined by the Board of Directors of the
Corporation in its reasonable good faith judgment. Such determination shall be
final and binding on all parties. Each Shareholder shall have thirty (30) days
from the effective date of such notice to agree to purchase its portion of the
New Securities for the cash equivalent price and upon the other general terms
specified in the Offer by giving written notice to the Corporation and stating
therein the quantity of New Securities to be purchased, accompanied by the cash
equivalent purchase price as set forth in the Offer. Each Shareholder entitled
to such a notice shall have a right of overallotment such that by giving written
notice to the Corporation within such thirty (30) day period it may purchase
that number of securities for which Preemptive Rights are not exercised, pro
rata based upon the number of shares held by all of the Shareholders seeking to
exercise their overallotment rights.
C. FAILURE TO EXERCISE. If a Shareholder fails to notify the
-------------------
Corporation during such thirty (30) day notice period of its election to
exercise its Preemptive Rights, its right to participate in such Offer will
terminate. If the Corporation fails to sell the New Securities on the terms set
forth in the Offer within ninety (90) days after the termination of such thirty
(30) day notice period, it must once again comply with the Preemptive Rights.
-2-
<PAGE>
2. MISCELLANEOUS.
-------------
A. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
B. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
----------------
understanding and agreement between and among the parties with regard to the
subjects hereof and thereof.
C. NOTICES. All notices, requests, demands, instructions or other
-------
communications required or permitted to be given under this Agreement shall be
in writing and (i) shall be deemed to have been duly given upon delivery, if
delivered personally or by one-day courier, or by facsimile transmission where
receipt is acknowledged by the receiving machine or if given by prepaid
telegram, or (ii) if mailed first-class, postage prepaid, registered or
certified mail, return receipt requested, shall be deemed to have been delivered
three (3) business days after deposit in the United States mails, to the
applicable party's address set forth on the signature page. Either party hereto
may change the address to which such communications are to be directed by giving
written notice to the other parties hereto of such change in the manner provided
above.
D. DELAYS OR OMISSIONS. No delay or omission to exercise any right,
-------------------
power or remedy accruing to each Shareholder upon any breach or default of the
Corporation under this Agreement shall impair any such right, power or remedy of
each Shareholder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or in any similar breach or default
thereafter occurring, nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any Shareholder of any breach or default under this Agreement, or
any waiver on the part of any Shareholder of any provisions or conditions of
this Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to the Shareholders, shall be
cumulative and not alternative.
E. TITLES AND SUBTITLES. The titles of the paragraphs and
--------------------
subparagraphs of this Agreement are for the convenience of reference only and
are not to be considered in construing this Agreement.
-3-
<PAGE>
F. COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
G. ATTORNEYS' FEES, COSTS. In the event a party breaches this
----------------------
Agreement, the prevailing party shall pay all costs and attorney's fees incurred
by any other party in connection with such breach, whether or not any litigation
is commenced.
H. APPLICABLE LAW. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year hereinabove first written.
CLINICOR, INC., FORMERLY
PEGASUS TAX AND FINANCIAL SERVICES, INC.
307 Camp Craft Road, Suite 200
Austin, TX 78746
by /s/ ROBERT S. SAMMIS
------------------------------
(Signature)
Robert S. Sammis, Vice President
- --------------------------------
(Print Name & Title)
SCHEDULE 1
/s/ RANDOLPH HAAG /s/ IRAWAN ONGGARA
- ------------------------------ ------------------------------
RANDOLPH HAAG IRAWAN ONGGARA
[TEXT ILLEGIBLE]
- ------------------------------ ------------------------------
- ------------------------------ ------------------------------
(Address) (Address)
/s/ RUSSELL ARMSTRONG
- ------------------------------
RUSSELL ARMSTRONG
9454 Wilshire Blvd., 6th Floor
- ------------------------------
Beverly Hills, CA 90212
- ------------------------------
(Address)
-4-
<PAGE>
EXHIBIT 4(h)
SETTLEMENT AGREEMENT
This Settlement Agreement is entered into between Russell Armstrong
("Armstrong"), Irawan Onggara ("Onggara"), Century Financial Partners, Inc.
("CFP") and Clinicor, Inc., a Nevada corporation. Armstrong and Onggara are
referred to herein individually as a "Shareholder" and collectively as the
"Shareholders."
W I T N E S S E T H:
WHEREAS, the Shareholders and the Company are parties to that certain
Preemptive Rights Agreement effective as of February 27, 1995; and
WHEREAS, the Shareholders are willing to release the Company from all
obligations that the Company may have to the shareholders, whether pursuant to
such Preemptive Rights Agreement or otherwise, in return for the consideration
herein set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. Payment to Shareholders. At the Closing provided for below, the
-----------------------
Company shall pay to the Shareholders or to such person or entity as the
Shareholders may designate the aggregate amount of One Hundred Thousand and
No/100 Dollars ($100,000.00) in cash (the "Settlement Amount"). Such amount
will be in full and final satisfaction of all of the Company's obligations to
the Shareholders and CFP, whether pursuant to the Preemptive Rights Agreement or
otherwise, as more fully set forth herein. At the request of the Shareholders,
such amount shall be paid in a single lump sum, to be divided among the
Shareholders and CFP as they see
<PAGE>
fit. Each of the Shareholders and CFP agrees to indemnify and hold the Company
harmless from any claims related to or resulting from a dispute between or among
the Shareholders and CFP as to the allocation of the Settlement Amount between
themselves.
2. Waiver of Preemptive Rights and Termination of Agreement. As of the
--------------------------------------------------------
Closing, the Preemptive Rights Agreement shall terminate. Thereafter, such
agreement shall be of no force or effect whatsoever, and any and all rights of
the Shareholders pursuant to such agreement, whether accrued or unaccrued, shall
terminate. Without limiting the foregoing, each of the Shareholders hereby
waives, effective as of the Closing, any and all preferential purchase rights of
any kind with respect to (i) the proposed issuance by the Company to Oracle
Partners, L.P. and/or its affiliates of $3.5 million face amount of Convertible
Preferred Stock, (ii) the future issuance of additional shares of Convertible
Preferred Stock in satisfaction of dividends payable with respect thereto and
(iii) the issuance of Common Stock of the Company in connection with the
conversion of any shares of Convertible Preferred Stock.
3. Release. In consideration of the payment referred to above, and
-------
without in any way limiting any of the foregoing waivers, releases, and
terminations, each of the Shareholders and CFP does hereby release, acquit and
forever discharge the Company and its officers, directors, legal
representatives, employees, successors and assigns (the "Clinicor Parties") from
any and all
-2-
<PAGE>
claims, rights, demands, actions or causes of actions of whatever kind,
character and description, whether in contract, tort, pursuant to statute or
otherwise, accrued or unaccrued, that either or both of the Shareholders or CFP
or any other entity affiliated with the Shareholders may have that arise out of
or relate to (i) the Preemptive Rights Agreement, (ii) any entitlement of the
Shareholders or either of them or CFP or any other entity affiliated with the
Shareholders to commissions, either with respect to the pending transaction
between the Company and Oracle Partners, L.P. or otherwise or (iii) any other
matter; provided, however, nothing herein shall be deemed to waive or release
(i) any fiduciary, voting or other shareholder rights that Armstrong and Onggara
have as shareholders of the Company (to the extent such rights arise from and
after the date of Closing), (ii) any rights of the Shareholders pursuant to the
Agreement and Plan of Merger dated February 27, 1995 by and among the
Shareholders, the Company and others, (iii) any rights of the Shareholders
pursuant to the Stock Purchase Agreements dated February 27, 1995 between each
of the Shareholders and the Company, (iv) this Agreement and (v) any future
agreements between the Company and any of the parties hereto. The release
herein contained shall be effective from and after the Closing and is intended
to be self effecting, so that no other documentation need be signed by either of
the Shareholders or CFP to make this release fully effective. Each of the
Shareholders and CFP represents and warrants that none of such parties has
-3-
<PAGE>
assigned any of the rights purported to be waived or released herein.
4. Closing. The Closing of the transaction herein contemplated (the
-------
"Closing") shall occur simultaneously with the issuance of Convertible Preferred
Stock pursuant to the Stock Purchase Agreement to be entered into by and between
the Company and Oracle Partners, L.P. and certain affiliates of Oracle Partners,
L.P. It is presently anticipated that such Closing shall occur on or about
July 9, 1996. If such Closing does not occur on or before July 19, 1996, this
Settlement Agreement shall become null and void.
5. Parties Fully Informed. Each of the Shareholders represents that he
----------------------
has had an opportunity to ask questions and receive information regarding the
pending transaction between the Company and Oracle Partners, L.P. Each of the
Shareholders is aware of the Company's business plan and financial condition and
has sufficient information about the Company to have reached a fully informed
and knowledgeable decision regarding release of his preemptive rights hereunder
and the other matters set forth herein.
6. Survival. The representations, warranties, covenants and agreements
--------
made herein shall survive the closing of the transactions contemplated hereby.
7. Successors and Assigns. Except as otherwise expressly provided herein,
----------------------
the provisions hereof shall inure to the benefit
-4-
<PAGE>
of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
8. Entire Agreement. This Agreement constitutes the entire agreement
----------------
among the parties. There are no oral agreements among the parties hereto.
9. Title and Subtitles. The titles of the Sections and subsections of
-------------------
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
11. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Texas.
12. Funding Instructions. Attached hereto as Exhibit A are wire transfer
--------------------
or other instructions with respect to funding of the Settlement Amount.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
July 8, 1996.
-5-
<PAGE>
/s/ RUSSELL ARMSTRONG
------------------------------
Russell Armstrong
/s/ IRAWAN ONGGARA
------------------------------
Irawan Onggara
CENTURY FINANCIAL PARTNERS, INC.
By /s/ RUSSELL ARMSTRONG
---------------------------
Its President
-------------------------
CLINICOR, INC.
By /s/ THOMAS P. O'DONNELL
---------------------------
Its President
-------------------------
-6-
<PAGE>
Exhibit A
---------
WIRE TRANSFER INSTRUCTIONS
Russell L. Armstrong
Account No. 156331639
First Interstate Bank of California No. 156
9601 Wilshire Boulevard
Beverly Hills, California 90212
ABA No. 122000218
$50,000.00
Citibank NYC/PBID Asset Support Services
Bank ABA No. 0210-000-89
Account No. 3733-6288
For Credit to the Account of Irawan Onggara
Account No. 558612
$50,000.00
<PAGE>
EXHIBIT 10(a)
VOTING AND PRE-MERGER AGREEMENT
This Voting and Pre-Merger Agreement (the "Agreement") is executed on
February 14, 1995 and is entered into by and among Clinicor, Inc., a Texas
corporation ("Clinicor"), Thomas P. O'Donnell ("O'Donnell"), Robert S. Sammis
("Sammis") and Steven J. Dell, M.D. (the "Participating Shareholder").
W I T N E S S E T H:
WHEREAS, the Participating Shareholder owns One Thousand Two Hundred Fifty
(1,250) shares of the common stock of Clinicor (the "Shares"); and
WHEREAS, it is anticipated that Clinicor shall enter into a merger
agreement with Pegasus Tax and Financial Planning Services, Inc., a Nevada
corporation ("Pegasus"), pursuant to which Clinicor shall be merged with and
into Pegasus (such transaction herein referred to as the "Merger"), with Pegasus
to be renamed "Clinicor, Inc." and to continue as the surviving corporation; and
WHEREAS, O'Donnell and Sammis are required, as a condition to the Merger,
to enter into non-competition agreements with the surviving entity and to
personally guarantee certain representations and warranties of Clinicor to be
contained in the merger documentation; and
WHEREAS, the Participating Shareholder, in consideration of such matters,
is willing to grant to Sammis and O'Donnell certain voting rights with respect
to the Shares; and
WHEREAS, the parties also wish to evidence their understanding and
agreement as to certain stock transfer restrictions that presently exist and
will terminate upon the occurrence of the Merger;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Certain Definitions. For purposes hereof, "Clinicor" refers both to
-------------------
the presently existing corporation and to the post-merger surviving corporation,
and "Shares" refers both to the shares of Clinicor common stock currently owned
by the Participating Shareholder and to the shares of common stock of the
surviving corporation to be received in the Merger in exchange therefor.
2. Voting of Shares. Throughout the term of this Agreement, at any
----------------
regular or special meeting of the shareholders of Clinicor,
<PAGE>
or in connection with any written consent pursuant to which resolutions are
adopted by the shareholders of Clinicor, the Participating Shareholder agrees to
vote all of the Shares in such manner as may be determined by Sammis and
O'Donnell and communicated to the Participating Shareholder in writing.
3. Stock Certificates. The Participating Shareholder agrees that each
------------------
certificate representing the Shares shall bear an endorsement set forth
conspicuously on the face of each certificate in substantially the following
form:
SEE REVERSE HEREOF FOR CERTAIN LEGENDED INFORMATION
The reverse side of each such certificate shall bear an endorsement in
substantially the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS SET FORTH IN A VOTING AGREEMENT BETWEEN CERTAIN
SHAREHOLDERS AND THE CORPORATION. COPIES OF THIS AGREEMENT AND
ANY AND ALL AMENDMENTS THERETO HAVE BEEN DEPOSITED WITH THE
CORPORATION AT ITS PRINCIPAL OFFICE AND ARE AVAILABLE WITHOUT
CHARGE UPON REQUEST TO THE CORPORATION.
4. Termination. This Agreement shall terminate upon the closing of an
-----------
underwritten public offering of the Clinicor common stock registered under the
Securities Act of 1933, as amended, which results in aggregate net proceeds to
Clinicor of at least $5,000,000.
5. Agreement Binding Upon. This Agreement shall be binding on the
----------------------
Participating Shareholder and his respective heirs, successors and assigns.
6. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Texas, except with respect to conflict
of law principles, and except as to internal corporate matters relating to the
post-merger surviving corporation, as to which the laws of the State of Nevada
shall apply. This Agreement is performable in Travis County, Texas.
7. Invalid Provision. If any provision of this Agreement should be held
-----------------
to be invalid, illegal or unenforceable, the parties intend the remaining
provisions of this Agreement to be construed as if such invalid, illegal or
unenforceable provisions had never been contained herein.
-2-
<PAGE>
8. Termination of Prior Agreements. This Agreement is intended to be the
-------------------------------
sole agreement of the parties as it relates to the subject matter hereof and
supersedes all other agreements of the parties relating to the subject matter
hereof.
9. Termination of Buy-Sell Provisions. The Participating Shareholder has
----------------------------------
been advised that, pursuant to Article XVI of the Buy-Sell Agreement by and
among Clinicor and its shareholders (the "Buy-Sell Agreement"), the Buy-Sell
Agreement has been amended to provide that it will in all respects terminate
upon the occurrence of the Merger. The Participating Shareholder further
acknowledges and agrees that the Merger and such termination shall have the
effect of deleting any and all option or purchase or sale rights with respect to
the Shares that may be set forth in any Non-Competition and Confidentiality
Agreement, Medical Director Employment Agreement or any other agreement between
the Participating Shareholder and Clinicor. The Participating Shareholder agrees
that any such provisions shall hereafter be of no further force or effect
whatsoever.
10. Effectiveness. This Agreement is wholly contingent upon the
-------------
occurrence of the Merger and shall be effective as of the effective date of the
Merger.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first written above.
CLINICOR, INC.
By /s/ Thomas P. O'Donnell
---------------------------------
Thomas P. O'Donnell, President
/s/ Thomas P. O'Donnell
-----------------------------------
THOMAS P. O'DONNELL
/s/ Robert S. Sammis
-----------------------------------
ROBERT S. SAMMIS
/s/ Steven. J. Dell
-----------------------------------
STEVEN J. DELL, M.D.
-3-
<PAGE>
EXHIBIT 10(b)
VOTING AND PRE-MERGER AGREEMENT
This Voting and Pre-Merger Agreement (the "Agreement") is executed on
February 14, 1995 and is entered into by and among Clinicor, Inc., a Texas
corporation ("Clinicor"), Thomas P. O'Donnell ("O'Donnell"), Robert S. Sammis
("Sammis") and William M. Ramsdell, M.D. (the "Participating Shareholder").
W I T N E S S E T H:
WHEREAS, the Participating Shareholder owns Two Hundred Fifty (250) shares
of the common stock of Clinicor (the "Shares"); and
WHEREAS, it is anticipated that Clinicor shall enter into a merger
agreement with Pegasus Tax and Financial Planning Services, Inc., a Nevada
corporation ("Pegasus"), pursuant to which Clinicor shall be merged with and
into Pegasus (such transaction herein referred to as the "Merger"), with Pegasus
to be renamed "Clinicor, Inc." and to continue as the surviving corporation; and
WHEREAS, O'Donnell and Sammis are required, as a condition to the Merger,
to enter into non-competition agreements with the surviving entity and to
personally guarantee certain representations and warranties of Clinicor to be
contained in the merger documentation; and
WHEREAS, the Participating Shareholder, in consideration of such matters,
is willing to grant to Sammis and O'Donnell certain voting rights with respect
to the Shares; and
WHEREAS, the parties also wish to evidence their understanding and
agreement as to certain stock transfer restrictions that presently exist and
will terminate upon the occurrence of the Merger;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Certain Definitions. For purposes hereof, "Clinicor" refers both to
-------------------
the presently existing corporation and to the post-merger surviving corporation,
and "Shares" refers both to the shares of Clinicor common stock currently owned
by the Participating Shareholder and to the shares of common stock of the
surviving corporation to be received in the Merger in exchange therefor.
2. Voting of Shares. Throughout the term of this Agreement, at any
----------------
regular or special meeting of the shareholders of Clinicor, or in connection
with any written consent pursuant to which
<PAGE>
resolutions are adopted by the shareholders of Clinicor, the Participating
Shareholder agrees to vote all of the Shares in such manner as may be determined
by Sammis and O'Donnell and communicated to the Participating Shareholder in
writing.
3. Stock Certificates. The Participating Shareholder agrees that each
------------------
certificate representing the Shares shall bear an endorsement set forth
conspicuously on the face of each certificate in substantially the following
form:
SEE REVERSE HEREOF FOR CERTAIN LEGENDED INFORMATION
The reverse side of each such certificate shall bear an endorsement in
substantially the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
SET FORTH IN A VOTING AGREEMENT BETWEEN CERTAIN SHAREHOLDERS AND THE
CORPORATION. COPIES OF THIS AGREEMENT AND ANY AND ALL AMENDMENTS
THERETO HAVE BEEN DEPOSITED WITH THE CORPORATION AT ITS PRINCIPAL
OFFICE AND ARE AVAILABLE WITHOUT CHARGE UPON REQUEST TO THE
CORPORATION.
4. Termination. This Agreement shall terminate upon the closing of an
-----------
underwritten public offering of the Clinicor common stock registered under the
Securities Act of 1933, as amended, which results in aggregate net proceeds to
Clinicor of at least $5,000,000.
5. Agreement Binding Upon. This Agreement shall be binding on the
----------------------
Participating Shareholder and his respective heirs, successors and assigns.
6. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Texas, except with respect to conflict
of law principles, and except as to internal corporate matters relating to the
post-merger surviving corporation, as to which the laws of the State of Nevada
shall apply. This Agreement is performable in Travis County, Texas.
7. Invalid Provision. If any provision of this Agreement should be held
-----------------
to be invalid, illegal or unenforceable, the parties intend the remaining
provisions of this Agreement to be construed as if such invalid, illegal or
unenforceable provisions had never been contained herein.
8. Termination of Prior Agreements. This Agreement is intended to be the
-------------------------------
sole agreement of the parties as it relates to
-2-
<PAGE>
the subject matter hereof and supersedes all other agreements of the parties
relating to the subject matter hereof.
9. Termination of Buy-Sell Provisions. The Participating Shareholder has
----------------------------------
been advised that, pursuant to Article XVI of the Buy-Sell Agreement by and
among Clinicor and its shareholders (the "Buy-Sell Agreement"), the Buy-Sell
Agreement has been amended to provide that it will in all respects terminate
upon the occurrence of the Merger. The Participating Shareholder further
acknowledges and agrees that the Merger and such termination shall have the
effect of deleting any and all option or purchase or sale rights with respect to
the Shares that may be set forth in any Non-Competition and Confidentiality
Agreement, Medical Director Employment Agreement or any other agreement between
the Participating Shareholder and Clinicor. The Participating Shareholder agrees
that any such provisions shall hereafter be of no further force or effect
whatsoever.
10. Effectiveness. This Agreement is wholly contingent upon the
-------------
occurrence of the Merger and shall be effective as of the effective date of the
Merger.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first written above.
CLINICOR, INC.
By/s/ THOMAS P. O'DONNELL
---------------------------------
Thomas P. O'Donnell, President
/s/ THOMAS P. O'DONNELL
---------------------------------
THOMAS P. O'DONNELL
/s/ ROBERT S. SAMMIS
---------------------------------
ROBERT S. SAMMIS
/s/ WILLIAM M. RAMSDELL
---------------------------------
WILLIAM M. RAMSDELL, M.D.
-3-
<PAGE>
EXHIBIT 10(c)
VOTING AND PRE-MERGER AGREEMENT
This Voting and Pre-Merger Agreement (the "Agreement") is executed on
February 14, 1995 and is entered into by and among Clinicor, Inc., a Texas
corporation ("Clinicor"), Thomas P. O'Donnell ("O'Donnell"), Robert S. Sammis
("Sammis") and David Shulman, M.D. (the "Participating Shareholder").
W I T N E S S E T H:
WHEREAS, the Participating Shareholder owns Three Hundred Twelve and One-
Half (312.5) shares of the common stock of Clinicor (the "Shares"); and
WHEREAS, it is anticipated that Clinicor shall enter into a merger
agreement with Pegasus Tax and Financial Planning Services, Inc., a Nevada
corporation ("Pegasus"), pursuant to which Clinicor shall be merged with and
into Pegasus (such transaction herein referred to as the "Merger"), with Pegasus
to be renamed "Clinicor, Inc." and to continue as the surviving corporation; and
WHEREAS, O'Donnell and Sammis are required, as a condition to the Merger,
to enter into non-competition agreements with the surviving entity and to
personally guarantee certain representations and warranties of Clinicor to be
contained in the merger documentation; and
WHEREAS, the Participating Shareholder, in consideration of such matters,
is willing to grant to Sammis and O'Donnell certain voting rights with respect
to the Shares; and
WHEREAS, the parties also wish to evidence their understanding and
agreement as to certain stock transfer restrictions that presently exist and
will terminate upon the occurrence of the Merger;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Certain Definitions. For purposes hereof, "Clinicor" refers both to
-------------------
the presently existing corporation and to the post-merger surviving corporation,
and "Shares" refers both to the shares of Clinicor common stock currently owned
by the Participating Shareholder and to the shares of common stock of the
surviving corporation to be received in the Merger in exchange therefor.
2. Voting of Shares. Throughout the term of this Agreement, at any
----------------
regular or special meeting of the shareholders of Clinicor,
<PAGE>
or in connection with any written consent pursuant to which resolutions are
adopted by the shareholders of Clinicor, the Participating Shareholder agrees to
vote all of the Shares in such manner as may be determined by Sammis and
O'Donnell and communicated to the Participating Shareholder in writing.
3. Stock Certificates. The Participating Shareholder agrees that each
------------------
certificate representing the Shares shall bear an endorsement set forth
conspicuously on the face of each certificate in substantially the following
form:
SEE REVERSE HEREOF FOR CERTAIN LEGENDED INFORMATION
The reverse side of each such certificate shall bear an endorsement in
substantially the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS SET FORTH IN A VOTING AGREEMENT BETWEEN CERTAIN
SHAREHOLDERS AND THE CORPORATION. COPIES OF THIS AGREEMENT AND
ANY AND ALL AMENDMENTS THERETO HAVE BEEN DEPOSITED WITH THE
CORPORATION AT ITS PRINCIPAL OFFICE AND ARE AVAILABLE WITHOUT
CHARGE UPON REQUEST TO THE CORPORATION.
4. Termination. This Agreement shall terminate upon the closing of an
-----------
underwritten public offering of the Clinicor common stock registered under the
Securities Act of 1933, as amended, which results in aggregate net proceeds to
Clinicor of at least $5,000,000.
5. Agreement Binding Upon. This Agreement shall be binding on the
----------------------
Participating Shareholder and his respective heirs, successors and assigns.
6. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Texas, except with respect to conflict
of law principles, and except as to internal corporate matters relating to the
post-merger surviving corporation, as to which the laws of the State of Nevada
shall apply. This Agreement is performable in Travis County, Texas.
7. Invalid Provision. If any provision of this Agreement should be held
-----------------
to be invalid, illegal or unenforceable, the parties intend the remaining
provisions of this Agreement to be construed as if such invalid, illegal or
unenforceable provisions had never been contained herein.
-2-
<PAGE>
8. Termination of Prior Agreements. This Agreement is intended to be the
-------------------------------
sole agreement of the parties as it relates to the subject matter hereof and
supersedes all other agreements of the parties relating to the subject matter
hereof.
9. Termination of Buy-Sell Provisions. The Participating Shareholder has
----------------------------------
been advised that, pursuant to Article XVI of the Buy-Sell Agreement by and
among Clinicor and its shareholders (the "Buy-Sell Agreement"), the Buy-Sell
Agreement has been amended to provide that it will in all respects terminate
upon the occurrence of the Merger. The Participating Shareholder further
acknowledges and agrees that the Merger and such termination shall have the
effect of deleting any and all option or purchase or sale rights with respect to
the Shares that may be set forth in any Non-Competition and Confidentiality
Agreement, Medical Director Employment Agreement or any other agreement between
the Participating Shareholder and Clinicor. The Participating Shareholder agrees
that any such provisions shall hereafter be of no further force or effect
whatsoever.
10. Effectiveness. This Agreement is wholly contingent upon the
-------------
occurrence of the Merger and shall be effective as of the effective date of the
Merger.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first written above.
CLINICOR, INC.
By /s/ Thomas P. O'Donnell
---------------------------------
Thomas P. O'Donnell, President
/s/ Thomas P. O'Donnell
-----------------------------------
THOMAS P. O'DONNELL
/s/ Robert S. Sammis
-----------------------------------
ROBERT S. SAMMIS
/s/ David Shulman
-----------------------------------
DAVID SHULMAN, M.D.
-3-
<PAGE>
EXHIBIT 10(d)
CLINICOR, INC.
SALES AGENT AGREEMENT
THIS SALES AGENT AGREEMENT (this "Agreement") is made effective as of
September 15, 1995, by and between Clinicor, Inc. (the "Company") and SJ Capital
Inc. (the "Sales Agent").
RECITALS
--------
A. Sales Agent is a registered broker-dealer and member of the National
Association of Securities Dealers, Inc. (the "NASD"), a part of whose business
consists of the sale of securities.
B. The Company is offering Units, each "Unit" consisting of one share of
Common Stock and one redeemable Common Stock Purchase Warrant ("Warrant"), to
"Accredited Investors" (as that term is defined in Rule 501 of Regulation D
under the Securities Act of 1933) and certain other qualified investors upon the
terms and conditions set forth in a Confidential Private Placement Memorandum
dated September 15, 1995 (the "Memorandum"). Two Warrants entitle the holder
thereof to purchase during the warrant exercise periods described in the
Memorandum one share of Common Stock at a price of $4.00 per share, subject to
adjustment. The Units are being offered for a subscription price of $2.50 per
Unit with a minimum subscription of 200,000 Units and a maximum subscription of
1,400,000 Units. The Company will use the proceeds raised in the offering
described in the Memorandum (the "Offering") for working capital and other
purposes as described in the Offering.
C. The Units have not been and will not be registered under the Securities
Act of 1933, as amended (the "Securities Act"), or under state securities laws,
and will be offered and sold in reliance upon one or more exemptions from
registration provided by the Securities Act and Regulation D promulgated
thereunder and by such state securities laws. Consequently, it is extremely
important that the rules governing private offerings and applicable state rules
be adhered to in connection with the sale and offering of the Units.
D. Sales Agent desires to participate in the Offering of the Units on a
"best efforts -- all or nothing" 200,000 Unit minimum basis and (assuming the
minimum is achieved) a "best efforts" 1,400,000 Unit maximum basis by privately
soliciting, through Sales Agent's authorized personnel ("Sales
Representatives"), subscriptions for the purchase of the Units in accordance
with the terms of the Offering set forth in the Memorandum and in this
Agreement. The Company desires to authorize Sales Agent to obtain such
subscriptions, and it is the purpose of this Agreement to set forth the
agreement of the parties relative to such authorization.
<PAGE>
AGREEMENT
---------
1. Solicitation of Subscriptions and Offering Materials
----------------------------------------------------
Sales Agent agrees to use its best efforts to solicit purchasers for the
Units as contemplated by this Agreement and in accordance with the Memorandum.
Copies of the Memorandum will be furnished to Sales Agent in reasonable
quantities upon specific request. All copies of the Memorandum and any other
printed or written materials furnished to Sales Agent in connection with the
Offering shall remain the property of the Company and shall be treated and cared
for as set out in this Agreement, and any copies of such materials in the
possession of Sales Agent or its personnel shall be returned to the Company upon
request. Sales Agent shall maintain a written record reflecting the
distribution and location of all materials furnished to the Sales Agent in
connection with the Offering and the identity of all persons to whom such
materials are distributed. In addition, Sales Agent shall use its best efforts
to: (i) assure that the materials furnished are treated as confidential and not
reproduced or redistributed and (ii) secure the return of all materials
furnished to persons who do not subscribe for the purchase of the Units.
Neither Sales Agent nor any officer, agent, employee, or other representative of
Sales Agent is authorized to use or to display to any person, in connection with
the solicitation of subscriptions for the Units, any instruments, writings or
material other than the Memorandum and such other instruments as may be actually
furnished by the Company to Sales Agent in connection with the offering. A
minimum purchase of 10,000 units ($25,000) per investor is required, as set
forth in the Memorandum.
2. Terms of the Offering and Subscription Proceeds
-----------------------------------------------
The Offering of Units will terminate on the "Offer Expiration Date" which
shall be the earlier of (i) that date on which subscriptions for 1,400,000 Units
($3,500,000.00) have been received or (ii) December 31, 1995, which date may be
extended to March 31, 1996. The Company, in its sole discretion, may withdraw,
terminate, cancel, or modify the Offering without notice.
Each prospective purchaser desiring to subscribe for Units will be required
to complete and execute a Subscription Agreement, a Registration Rights
Agreement, an Information Form, a Purchaser Questionnaire and an IRS Form W-9
(the "Subscription Documents"). All Subscription Documents and subscription
checks received by the Sales Agent will be forwarded by the end of the next
business day following receipt thereof to the Company. The Company will
determine whether it wishes to reject the subscription, and if the Company
determines to reject a subscription solicited by Sales Agent, the Company shall
notify Sales Agent within thirty business days of its receipt of the
Subscription Documents and shall return or cause to be returned said
Subscription Documents to Sales Agent. All proceeds received with respect to
subscriptions accepted by the Company shall be deposited by the Company in a
non-interest bearing escrow account.
2
<PAGE>
3. Compensation and Expenses.
-------------------------
a. Upon each "Closing" of the Offering (as defined in the Memorandum),
subject to subsection 3e below, Sales Agent will be entitled to receive a sales
commission of 6% of the aggregate gross purchase price of the Units accepted by
the Company in such Closing. Except as set forth below, the Company shall not
have any liability or obligation to Sales Agent or any other person or party for
any amount other than the sales commission provided for in this Section 3a, and
such sales commission shall be payable only if, as and when a Closing actually
occurs and the proceeds of the Offering are distributed to the Company.
b. Upon the conclusion of the Offering, the Company will sell to the
Sales Agent a Warrant (the "Sales Agent Warrant") for the total price of
$100.00. The Sales Agent Warrant will entitle the Sales Agent to purchase one
Unit for each five Units sold during the Offering, will be exercisable for a
period of five years following the date of the Offering and will be in the form
of Exhibit A attached hereto. The purchase price of the Units underlying the
---------
Sales Agent Warrant will be $2.50 per Unit.
c. The Company will employ the Sales Agent as a consultant during a one
year period following the Offering, or such other time period as the parties may
mutually determine, to provide consulting services to the Company, including
advising the Company in connection with business and financial planning,
corporate organization and structure, private and public debt and equity
financing and financial matters in connection with the operation of the business
of the Company. As compensation for such services, if total sales accepted by
the Company exceed 200,000 Units, the Sales Agent will be entitled to receive a
consultant fee in an amount equal to 2% of the total gross proceeds raised in
the Offering payable in twelve equal monthly installments during the period in
which the Sales Agent provides such consulting services. The Sales Agent hereby
waives such consulting fee in the event that only the minimum subscription of
200,000 units is achieved.
d. Each party will bear its own expenses in connection with the
performance of its obligations with respect to the Offering.
e. Notwithstanding the foregoing provisions, Sales Agent will receive no
sales commission or fees or other cash or non-cash compensation with respect to
sales to residents of, or solicitations in, any state where Sales Agent is not
validly registered as a broker-dealer at the time of the offer and sale of Units
unless (in the reasonable determination of the Company and its counsel) such
registration is not required by such state.
4. Representations, Warranties, and Undertakings of the Company
------------------------------------------------------------
The Company represents and warrants to Sales Agent and agrees as follows:
a. The Units have not been and will not be registered under the
Securities Act and have not and will not be registered under applicable state
securities laws, and the Company will
3
<PAGE>
take all actions within its control as may be reasonably necessary to insure
that the Units will be offered and sold in compliance with the requirements
imposed on it by Section 3(b) and/or 4(2) of the Securities Act and Regulation
D, Rules 505 and 506, promulgated thereunder, and certain limited or private
offering exemptions of the securities laws of each state in which the Units may
be offered or sold; provided that the Company makes no representation or
warranty with respect to solicitation of potential investors by the Sales Agent
or with respect to other factors affecting compliance with federal or state
securities laws that are within the control of the Sales Agent.
b. The Memorandum will not as of its date include any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading; provided that the
Company makes no representation or warranty with respect to any material untrue
statement or omission based on information that the Sales Agent provides or has
provided in writing.
c. The Company shall provide to Sales Agent and to each offeree any such
information, documents, and instruments as may be reasonably requested pursuant
to Regulation D, Rules 505 and 506.
5. Representations and Warranties of Sales Agent
---------------------------------------------
Sales Agent represents and warrants to the Company and agrees as follows:
a. The consummation of the transactions contemplated herein and those
contemplated by the Memorandum will not result in any breach of the terms or
conditions of or constitute a default under any indenture, agreement, or other
instrument to which Sales Agent is a party, or violate any order directed to
Sales Agent by any court or any federal or state regulatory body or
administrative agency having jurisdiction over Sales Agent or over its property.
b. Sales Agent is duly registered pursuant to the provisions of the
Securities Exchange Act of 1934 (the "Exchange Act") as a broker-dealer, is a
member in good standing of the NASD, and is duly registered as a broker-dealer
in such states as it is required to be so registered in order to carry out the
Offering contemplated by the Memorandum or will obtain such registration prior
to engaging in any sales efforts in such states. All offers made by or through
Sales Agent will be made only by individuals licensed as required by all
applicable federal and state securities laws.
c. Sales Agent has conducted its own due diligence regarding the Offering
and the Company, and has not relied on any representations from the Company,
other than those contained in this Agreement, in deciding to participate in this
Offering.
4
<PAGE>
d. Neither the Sales Agent's nor any Sales Representative's participation
in the Offering will cause any disqualification under Rule 505(b)(iii) of
Regulation D or any comparable provision of any applicable state securities
laws.
e. Sales Agent will:
i. not solicit subscriptions (i) prior to the commencement of the
offering period, (ii) by means of any solicitation or general
advertising in any manner prohibited by Regulation D or any
state securities laws, or (iii) before any filing required
pursuant to state securities laws has been made;
ii. insofar as is under its control, conduct the offering and sale
of the Units in accordance with the applicable provisions of
federal and state securities laws and preserve for the Company
the exemptions provided by Regulation D promulgated under the
Securities Act and Rules 505 and 506 thereunder and applicable
state securities law exemptions;
iii. limit the offering of the Units to investors who are Accredited
Investors and meet applicable requirements under state
securities laws or otherwise meet certain suitability and
sophistication standards, and each of whom meets the other
offeree standards set forth in the Memorandum; prior to any
offer of the Units to any such person, have reasonable grounds
to believe, and in fact believe, that such person is a
qualified investor; and prepare and maintain for the benefit of
the Company memoranda and other appropriate records
substantiating the foregoing;
iv. reasonably believe that each prospective subscriber from whom
it solicits a subscription for the Units has, either alone or
with such subscriber's duly purchaser representative, such
knowledge and experience in financial and business matters that
such subscriber is capable of evaluating the merits and risks
of the prospective investment in the Units; and allow the
Company access to such file memoranda and other records that
substantiate such belief of Sales Agent;
v. prior to the acceptance of any subscription, receive a fully
completed and executed Purchaser Questionnaire wherein the
prospective purchaser represents that he is an Accredited
Investor or other qualified investor and meets any other
suitability standards, and prepare and maintain for the benefit
of the Company memoranda or other records substantiating the
foregoing;
vi. limit the offering to the non-public solicitations of
subscriptions and provide each offeree, prior to the execution
of a Subscription Agreement,
5
<PAGE>
with a complete copy of the Memorandum and exhibits thereto,
and any supplements or amendments thereto provided to the Sales
Agent at the time of the initial Offering and during the course
of the Offering;
vii. afford each such offeree the opportunity to ask questions of
and receive answers from the Company concerning the terms and
conditions of the Offering and to obtain any additional
information, to the extent possessed by the Company or
obtainable by it without unreasonable effort;
viii. not forward a set of Subscription Documents to the Company if
it has a reason to believe that any information contained in or
any representation or warranty made in those documents by the
prospective purchaser is inaccurate or untrue in a material
respect, and cooperate with the Company in obtaining additional
evidence and information to verify the representations and
warranties contained in those documents;
ix. refrain from making any representations or providing any other
information or from utilizing any sales materials in connection
with the Offering other than the Memorandum and any amendments
or supplements thereto, unless provided by the Company and
approved by the Company in writing and then only if such
materials are accompanied or preceded by the Memorandum; and
refrain from engaging in any form of general solicitation or
general advertising, including, but not limited to, any
advertisement, article, notice, or other communication
published in any newspaper, magazine or similar media or
broadcast over television or radio and any seminar or meeting
whose attendees have been invited by general solicitation or
advertising; and
x. obtain and forward to the Company the Subscription Documents
and subscription check and all related documentation required
by the Company.
6. Indemnification
---------------
a. Indemnification by the Company. To the extent permitted by applicable
------------------------------
law, the Company agrees to indemnify and hold harmless Sales Agent
(and any agent, director or officer thereof) and any person who
controls Sales Agent within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any
and all losses, claims, damages or liabilities to which such
indemnified parties or any of them may become subject under the
Securities Act, the Exchange Act or other federal or state statute,
law or regulation, at common law or otherwise, and the Company agrees
to reimburse Sales Agent and each such controlling person for any
legal or other expenses (including, except as otherwise hereinafter
provided, settlement expenses and reasonable fees and
6
<PAGE>
disbursements of counsel) incurred by the respective indemnified
parties in connection with defending against any such losses, claims,
damages or liabilities or in connection with any investigation or
inquiry of, or other proceeding that may be brought against the
respective indemnified parties, in each case insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon, in whole or in part, (i) any breach of any
representation, warranty or covenant of the Company in this Agreement
or (ii) any untrue statement or alleged untrue statement of a material
fact contained in the Memorandum or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that (i) the
indemnity agreements of the Company do not apply to information
furnished in writing to the Company by Sales Agent specifically for
use in the Memorandum or any amendment thereof or supplement thereto
and (ii) the indemnity agreement contained in this Section 6(a) with
respect to the Memorandum shall not inure to the benefit of Sales
Agent (or to the benefit of any person controlling the Sales Agent) if
the person asserting any such losses, claims, damages, liabilities or
expenses purchased the Units that are the subject thereof from Sales
Agent and the untrue statement or omission of a material fact
contained in such original Memorandum was corrected in the amendment
thereof or supplement thereto, unless the failure is the result of the
Company not providing Sales Agent with such amendment or supplement
prior to the sale of the Units.
b. Indemnification by Sales Agent. To the extent permitted by applicable
------------------------------
law, Sales Agent agrees to indemnify and hold harmless the Company,
each of its officers, each of its directors and each person (including
each partner or officer thereof) who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages,
liabilities, joint or several, to which such indemnified parties or
any of them may become subject under the Securities Act, Exchange Act,
or other federal or state statute, law, or regulation, at common law
or otherwise and Sales Agent agrees to reimburse the Company and each
such other person for any legal or other expenses (including, except
as hereinafter provided, settlement expenses and reasonable fees and
disbursements of counsel) incurred by the respective indemnified
parties in connection with defending against any such losses, claims,
damages, liabilities, or in connection with any investigation or
inquiry of, or other proceeding that may be brought against, the
respective indemnified parties, in each case arising out of or based
upon, in whole or in part (i) any breach of any representation,
warranty or covenant of Sales Agent in this agreement or (ii) any
untrue statement or alleged untrue statement of a material fact
contained in the Memorandum or amendment thereof or supplement thereto
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances
7
<PAGE>
under which they were made, not misleading, to the extent that such
statement or omission was made in reliance on information furnished in
writing to the Company by the Sales Agent for use in the preparation
of the Memorandum or any amendment or supplement thereto, or (iii) any
untrue statement of a material fact made by Sales Agent or the
omission or alleged omission to state therein a material fact
necessary in order to make the statements made by the Sales Agent in
the light of the circumstances under which they were made, not
misleading.
c. Claim for Indemnification. Each party indemnified under the
-------------------------
provisions of Sections 6(a) and 6(b) above agrees that upon the
service of a summons or other initial legal process upon it in any
action or suit instituted against it or upon its receipt of written
notification of the commencement of any investigation, inquiry or
proceeding against it, in respect of which indemnity may be sought on
account of any indemnity agreement contained in such Section, it will,
if a claim in respect thereunder is to be made against the
indemnifying party or parties under this Section 6 promptly given
written notice (the "Notice") of such service or notification to the
party or parties from whom indemnification may be sought hereunder.
No indemnification provided for in Sections 6(a) or 6(b) above shall
be available to any party who shall fail so to give the Notice if the
party to whom such Notice was not given was unaware of the action,
suit, investigation, inquiry or proceeding to which the Notice would
have related and was materially prejudiced by the failure to receive
the Notice, but the omission so to notify such indemnifying party or
parties of any such service or notification shall not relieve such
indemnifying party or parties from any liability which it or they may
have to the indemnified party for contribution or otherwise than on
account of such indemnity agreement. Any indemnifying party shall be
entitled at its own expense to participate in the defense of any
action, suit, or proceeding against, or investigation or inquiry of,
an indemnified party. Any indemnifying party shall be entitled, if it
so elects within a reasonable time after receipt of the Notice by
giving written notice (the "Notice of Defense") to the indemnified
party, to assume (alone or in conjunction with any other indemnifying
party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding in which event such defense shall
be conducted at the expense of the indemnifying party or parties by
counsel chosen by such indemnifying party or parties and reasonably
satisfactory to the indemnified party or parties; provided, however,
that (i) if the indemnified party or parties reasonably determine
that there may be a conflict between the positions of the indemnifying
party or parties and of the indemnified party or parties in conducting
the defense of such action, suit, investigation, inquiry or proceeding
or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to
the indemnifying party or parties, then counsel for the indemnified
party or parties shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to
protect the interests of the indemnified party or parties and (ii) in
any event, the indemnified party or parties shall be entitled to
8
<PAGE>
have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. If, within a reasonable time after
receipt of the Notice, an indemnifying party gives a Notice of
Defense, the indemnifying party and the counsel chosen by the
indemnifying party or parties will not be liable under Section 6(a) or
6(b) above for any legal or other expenses subsequently incurred by
the indemnified party or parties in connection with the defense of the
action, suit, investigation, inquiry or proceeding, except that (A)
the indemnifying party of parties shall bear and pay the legal and
other expenses incurred in connection with the conduct of the defense
as referred to in clause (i) of the proviso to the preceding sentence
and (B) the indemnifying party or parties shall bear and pay such
other expenses as it or they have authorized to be incurred by the
indemnified party or parties. If, within a reasonable time after
receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or
other expenses incurred by the indemnified party or parties in
connection with the defense of the action, suit, investigation,
inquiry, or proceeding.
d. Contribution. In order to provide for just and equitable contribution
------------
in any action in which a claim for indemnification is made pursuant to
this Section 6, but it is judicially determined (by the entry of a
final judgment or decree by a court or competent jurisdiction and the
expiration of time to appeal or the denial of the last right to
appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 6 provides for
indemnification in such case, each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of
the losses, claims, damages, or liabilities referred to in Sectors
6(a) or 6(b) above, (i) in such proportion as is appropriate to
reflect the relative benefits received by each indemnifying party from
the offering of the Units or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of each indemnifying
party in connection with the statements or omissions that resulted in
such losses, claims, damages, or liabilities, or actions in respect
thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company, on the one hand, and the
Sales Agent, on the other, shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of
the Units received by the Company and the total underwriting discount
and commissions received by the Sales Agent bear to one another.
Relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by each indemnifying party, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
9
<PAGE>
The parties agree that it would not be just and equitable if
contribution to this Section 6(d) were to be determined by pro rata
allocation or by any other method of allocation which does not take
into account the equitable considerations referred to in the first
sentence of this Section 6(d). The amount paid by an indemnified
party as a result of the losses, claims, damages, or liabilities, or
actions in respect thereof, referred to in the first sentence of this
Section 6(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or
claim which is the subject of this Section 6(d). No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(1) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process on it in any action instituted
against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties
from whom contribution may be sought, but the omission so to notify
such party or parties of any service shall not relieve the party from
whom contribution may be sought from any obligation it may have
hereunder or otherwise, except as specifically provided in this
Section.
e. Settlement. The indemnified party will not, without prior written
----------
consent of the indemnifying party, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not the indemnifying party or any person who
controls the indemnifying party within the meaning of the Securities
Act or Exchange Act is a party to such claim, action, suit, or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of the indemnifying party and each such
controlling person from all liability arising out of such claim,
action, suit or proceeding.
7. Representations and Agreements to Survive Delivery
--------------------------------------------------
All representation, warranties, and agreements made herein or in
certificates and instruments delivered pursuant hereto, and the indemnity
agreement contained in Section 6 hereof, shall remain in full force and effect
regardless of any investigation made by or on behalf of Sales Agent and its
controlling persons or the Company or any of its officers, directors, or agents,
and shall survive delivery of the Units to be offered hereunder.
8. Notice
------
All notices hereunder shall be in writing and shall be sent by registered
or certified mail, postage prepaid, or otherwise delivered by hand or messenger,
or sent by cable, telex or telegram to the addresses shown below, or such
addresses as may be so designated in the future.
10
<PAGE>
9. Time
----
Time is of the essence with respect to this agreement.
10. Termination
-----------
This Agreement (other than those portions which survive) may be terminated
by either party at any time by written notice to the other party.
11. Counterparts
------------
This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which together shall constitute one and
the same instrument.
12. Titles and Subtitles
--------------------
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
13. Amendment
---------
This Agreement may be amended only by a writing signed by each party
hereto.
14. Governing Law
-------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA EXCLUSIVE OF PRINCIPLES OF CONFLICT
LAW.
11
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement this 6th
day of October, 1995.
THE COMPANY SALES AGENT
Clinicor, Inc. SJ Capital, Inc.
By:/s/ Thomas P. O'Donnell By:/s/ Steve Jizmagian
----------------------- --------------------------------
Thomas P. O'Donnell, Steve Jizmagian,
President President
ADDRESS: ADDRESS:
307 Camp Craft Road, Suite 200 580 California Street, Suite 2040
Austin, Texas 78746 San Francisco, California 94104
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EXHIBIT A
SALES AGENT
WARRANT TO PURCHASE UNITS
OF
CLINICOR, INC.
Warrant to Purchase _______ Units
(subject to adjustment as set forth herein)
Exercise Price $2.50 Per Unit
(subject to adjustment as set forth herein)
VOID AFTER 5:00 P.M., AUSTIN, TEXAS, TIME, SEPTEMBER 30, 2000
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR REGISTERED OR QUALIFIED UNDER ANY OTHER
APPLICABLE FEDERAL OR STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR QUALIFICATION FILED IN ACCORDANCE WITH THE ACT AND
SUCH LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH
LAWS.
Clinicor, Inc., 307 Camp Craft Road, Suite 200, Austin, Texas 78746 (the
"Company"), hereby certifies that, for value received, SJ Capital, Inc., 580
California Street, Suite 2040, San Francisco, California 94104, or any other
Holder as defined below, is entitled, subject to the terms and conditions set
forth below, to purchase from the Company at any time or after September 15,
1995 but before 5:00 p.m., Austin, Texas time, on September 30, 2000, _________
Units of the Company's securities (the "Units") at a purchase price of $2.50 per
Unit (the "Exercise Price"), each Unit consisting of one share of common stock
and one common Stock Purchase Warrant (hereinafter referred to as the "Units").
The number and character of the securities purchasable upon exercise of
this Warrant and the Exercise Price are subject to adjustment as provided below.
The term "Warrant" as used herein shall include this Warrant and any Warrants
issued in substitution for or replacement of this Warrant, or any Warrants into
which this Warrant may be divided or exchanged. The securities purchasable upon
the exercise of this Warrant are hereinafter referred to as "Warrant
Securities." Except as otherwise provided herein, the Warrant Securities shall
be as described in the Company's Private Offering Memorandum dated September 15,
1995 ("Effective Date"). The Warrants included in the Warrant Securities will
be exercisable for a three-year period from the date of exercise of this
Warrant, unless such period is extended or terminated in accordance
<PAGE>
with the "Terms of Warrants," which is attached as Exhibit A to the Subscription
Agreement for the Units for the private offering. Other dates set forth in the
Warrant included in the Warrant Securities shall be appropriately adjusted (in
the reasonable discretion of the Company and its counsel) in light of the
Warrant Expiration Date of such Warrant. Two such Warrants will entitle the
holder to purchase one share of Common Stock at an exercise price of $1.00 per
share, subject to adjustment.
This Warrant may be assigned, transferred, sold, offered for sale, or
exercised by the Holder only upon compliance with all the pertinent provisions
hereof and only upon the written consent of the Company, which consent may be
withheld for any reason including, without limitation, compliance with the
various state and federal securities laws.
1. Exercise of Warrant.
-------------------
(a) Subject to the other terms and conditions of this Warrant, the
purchase rights evidenced by this Warrant may be exercised in whole or in part
at any time, and from time to time, on or after September 15, 1995, but before
5:00 p.m., Austin Texas, time, on September 30, 2000 (the "Warrant Expiration
Date"), by the Holder's presentation and surrender of this Warrant to the
Company at its principal office or at the office of the Company's stock transfer
agent, if any, accompanied by a duly executed Notice of Exercise, in the form
attached to and by this reference incorporated in this Warrant as Exhibit A, and
by payment of the aggregate Exercise Price, in certified funds or a bank
cashier's check, for the number of Units specified in the Notice of Exercise. In
the event this Warrant is exercised in part only, as soon as is practicable
after the presentation and surrender of this Warrant to the Company for
exercise, the Company shall execute and deliver to the Holder a new Warrant,
containing the same terms and conditions as this Warrant, evidencing the right
of the Holder to purchase the number of Units as to which this Warrant has not
been exercised.
(b) The certificate evidencing the Warrant Securities shall be deemed to
be issued, and the person to whom such Warrant Securities are issued of record
shall be deemed to have become a holder of record of such Warrant Securities, as
of the date of the surrender of such Warrant and payment of the aggregate
Exercise Price, whichever shall last occur, provided that if the books of the
Company with respect to the Warrant Securities shall be closed as of such date,
the certificates for such Warrant Securities shall be deemed to be issued, and
the person to whom such Warrant Securities are issued of record shall be deemed
to have become a record holder of such Warrant Securities, as of the date on
which such books shall next be open (whether before, on or after the applicable
Warrant Expiration Date), but at the Exercise Price
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and upon the other conditions in effect upon the date of surrender of the
Warrant and payment of the Exercise Price, whichever shall have last occurred,
to the Company.
(c) The Company agrees not to merge, reorganize or take any action that
would terminate this Warrant unless written notice is given to the holders of
this Warrant in accordance with Section 3 hereof.
2. Exchange, Assignment or Loss of Warrant. This Warrant is
---------------------------------------
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
Holder thereof to purchase (under the same terms and conditions as provided by
this Warrant) in the aggregate the same number of Units purchasable hereunder.
This Warrant may not be sold, transferred, assigned, or hypothecated except in
compliance with the Securities Act of 1933, as amended, and any applicable state
securities laws. To the extent allowable pursuant to applicable state and
federal securities laws and upon delivery of an opinion of counsel acceptable in
form and substance to the Company, this Warrant may be assigned in whole or in
part to officers or representatives of SJ Capital, Inc. and to any successor to
the business of SJ Capital, Inc. Any assignment shall be made by surrender of
this Warrant to the Company or at the office of its stock transfer agent, if
any, with the Assignment Form annexed hereto duly executed and with funds
sufficient to pay any transfer tax; whereupon the Company shall, without charge,
execute and deliver a new Warrant in the name of the assignee named in such
instrument of assignment and this Warrant shall promptly be canceled. This
Warrant may be divided or combined with other Warrants which carry the same
rights upon presentation hereof at the office of the Company or at the office of
its stock transfer agent, if any, together with a written notice specifying the
names and denominations in which new Warrants are to be issued and signed by the
Holder hereof. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification as the
Company, in its discretion, may impose, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date.
3. Adjustments: Stock Dividends, Reclassification, Reorganization, Merger
----------------------------------------------------------------------
and Anti-Dilution Provisions.
- ----------------------------
(a) If the Company shall at any time before the Warrant Expiration Date
subdivide or combine its outstanding shares of Common Stock, this Warrant shall,
after that subdivision or combination, evidence the right to purchase the number
of shares of Common Stock that would have been issuable as a result of that
change with respect to the shares of Common Stock which were purchasable under
this Warrant immediately before that subdivision or combination. If the Company
shall at any time subdivide the outstanding shares of Common Stock, the Exercise
Price then in effect immediately before that subdivision shall be
proportionately
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<PAGE>
decreased, and, if the Company shall at any time combine the outstanding shares
of common Stock, the Exercise Price then in effect immediately before that
combination shall be proportionately increased. Any adjustment under this
section shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(b) If at any time before the Warrant Expiration Date the Common Stock
constituting a portion of the Units issuable upon exercise of this Warrant shall
be changed into the same or a different number of shares of any other series or
class or classes of stock whether by reclassification, recapitalization or
otherwise (other than a subdivision or combination of shares provided for
above), the Holder shall, on its exercise, be entitled to purchase, in lieu of
the Warrant Securities which the Warrant Holder would have become entitled to
purchase but for such change, a number of shares of such other series or class
or classes of stock equivalent to the number of Warrant Securities that would
have been subject to purchase by the Holder on exercise of this Warrant
immediately before that change.
(c) Except as otherwise provided in Section 13, if at any time before the
Warrant Exercise Date there shall be a capital reorganization of the Company's
Common Stock (other than a combination, subdivision, reclassification or
exchange of shares provided for elsewhere in this Warrant) or merger or
consolidation of the Company with or into another corporation or person
(provided such event does not result in the termination of this Warrant pursuant
to Section 13) then, as a part of such reorganization, merger, consolidation or
sale, lawful provision shall be made so that the Holder shall thereafter be
entitled to receive upon exercise of this Warrant, during the periods specified
in this Warrant and upon payment of the Exercise Price then in effect, the
number of shares of stock or other securities or property of the Company, or of
the successor corporation resulting from such reorganization, merger,
consolidation or sale to which a holder of the Common Stock deliverable upon
exercise of this Warrant would have been entitled in such reorganization,
merger, consolidation or sale if this Warrant had been exercised immediately
before that reorganization, merger, consolidation or sale. In any such case,
appropriate adjustment (as determined by the Company's Board of Directors) shall
be made in the application of the provisions of this Agreement and the Warrant
with respect to the rights and interests of the Holders after such
reorganization, merger, consolidation or sale to the end that the provisions of
this Warrant (including adjustment of the Exercise Price then in effect and
number of shares purchasable upon exercise of this Warrant) shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this Warrant. The
provisions of this Section 3(c) shall similarly apply to any such successive
reorganizations, mergers, consolidations or sales which satisfy the conditions
set forth above.
(d) If any adjustment made pursuant to subsections (a), (b) or (c), above,
creates a fractional Share, such Share shall be treated in accordance with
Section 7 hereof.
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(e) The Company shall give notice of each adjustment or readjustment of the
Exercise Price or the number of Shares issuable upon exercise of this Warrant to
the Holder at that Holder's address as shown on the Company's books and records.
(f) The Warrant need not be changed because of any adjustment in the
Exercise Price or in the Units, shares of common Stock or other Warrant
Securities purchasable upon its exercise. A Warrant issued after any adjustment
upon any partial exercise or in replacement may continue to express the same
Exercise Price and the same number of Units or other Warrant Securities
(appropriately reduced in the case of partial exercise) as are stated on the
face of the Warrant as initially issued, and that Exercise Price and that number
of Units or other Warrant Securities shall be considered to have been so changed
at the close of business on the date of adjustment.
4. Notice to Holders. If, prior to the expiration of this Warrant either
-----------------
by its terms or by its exercise in full, any of the following shall occur:
(i) the Company shall declare a dividend or authorize any other
distribution on its Common Stock; or
(ii) the Company shall authorize the granting to the shareholders of its
Common Stock of rights to subscribe for or purchase any securities
or any other similar rights; or
(iii) any reclassification, reorganization or similar change of the Common
Stock, or any consolidation or merger to which the Company is a
party, or the sale, lease, or exchange of any significant portion of
the assets of the Company; or
(iv) the voluntary or involuntary dissolution, liquidation or winding up
of the company; or
(v) any purchase, retirement or redemption by the Company of its Common
Stock;
then, and in any such case, the Company shall deliver to the Holder or Holders
written notice thereof at least 30 days prior to the earliest applicable date
specified below with respect to which notice is to be given, which notice shall
state the following:
(i) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights, or, if a record is not to be
taken, the date as of which the shareholders of Common Stock of
record to be entitled to such dividend, distribution or rights are
to be determined;
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<PAGE>
(ii) the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation,
winding up or purchase, retirement or redemption is expected to
become effective, and the date, if any, as of which the Company's
shareholders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property deliverable upon
such reclassification, reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up or purchase,
retirement or redemption; and
(iii) if any matters referred to in the foregoing clauses (i) and (ii) are
to be voted upon by shareholders of Common Stock, the date as of
which those shareholders to be entitled to vote are to be
determined.
5. Officers' Certificate. Whenever the Exercise Price or the aggregate
---------------------
number of Warrant Securities purchasable pursuant to this Warrant shall be
adjusted as required by the provisions of Section 3 above, the Company shall
promptly file with its Secretary or an Assistant Secretary at its principal
office, and with its transfer agent, if any, an officers' certificate executed
by the Company's President and Secretary or Assistant Secretary, describing the
adjustment and setting forth, in reasonable detail, the facts requiring such
adjustment and the basis for and calculation of such adjustment in accordance
with the provisions of this Warrant. Each such officers' certificate shall be
made available to the Holder or Holders of this Warrant for inspection at all
reasonable times, and the Company, after each such adjustment, shall promptly
deliver a copy of the officers' certificate relating to that adjustment to the
Holder or Holders of this Warrant. The officers' certificate described in this
Section 5 shall be deemed to be conclusive as to the correctness of the
adjustment reflected therein if, and only if, no Holder of this Warrant delivers
written notice to the Company of an objection to the adjustment within 30 days
after the officers' certificate is delivered to the Holder or Holders of this
Warrant. The Company will use diligent efforts to make its books and records
reasonably available for inspection and copying during normal business hours by
the Holder so as to permit a determination as to the correctness of the
adjustment. If written notice of an objection is delivered by a Holder to the
Company and the parties cannot reconcile the dispute, the Holder and the Company
shall submit the dispute to arbitration pursuant to the provisions of Section 15
below. Failure to prepare or provide the officers' certificate shall not modify
the parties' rights thereunder.
6. Reservation of Warrant Securities. The Company hereby agrees that
---------------------------------
at all times prior to September 30, 2000, it will have authorized and will
reserve and keep available for issuance and delivery to the Holder that number
of shares of its Common Stock that may be required from time to time for
issuance and delivery upon the exercise of the then unexercised portion of this
Warrant and all other similar Warrants then outstanding and unexercised.
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7. Fractional Shares. No fractional shares or scrip representing
-----------------
fractional shares shall be issued upon the exercise of all or any part of this
Warrant. With respect to any fraction of a share of any security called for
upon any exercise of this Warrant, the Company shall pay to the Holder an amount
in money equal to that fraction multiplied by the current market value of that
share. The current market value shall be determined as follows:
(i) if the security at issue is listed on a national securities exchange
or admitted to unlisted trading privileges on such an exchange, the
current value shall be the last reported sale price of that security
on such exchange on the last business day prior to the date of the
applicable exercise of this Warrant or, if no such sale is made on
such day, the average of the highest closing bid and the lowest
asked price for such day on such exchange; or
(ii) if the security at issue is not so listed or admitted to unlisted
trading privileges, the current market value shall be the average of
the last reported highest bid and lowest asked prices quoted on the
National Association of Securities Dealers Automated Quotation
System or, if not so quoted, then by the National Quotation Bureau,
Inc. on the last business day prior to the day of the applicable
exercise of this Warrant; or
(iii) if the security at issue in not so listed or admitted to unlisted
trading privileges and bid and asked prices are not reported, the
current market value shall be determined in such reasonable manner
as may be prescribed from time to time by the Board of Directors of
the Company.
8. Rights of the Holder. The Holder shall not be entitled to any
--------------------
rights as a shareholder in the Company by reason of this Warrant, either at law
or equity, except as specifically provided for herein. The Company covenants,
however, that for so long as this Warrant is at least partially unexercised, it
will furnish any Holder of this Warrant with copies of all reports and
communications furnished to the shareholders of the Company.
9. Warrant Securities to be Fully Paid. The Company covenants that all
-----------------------------------
Warrant Securities that may be issued and delivered to a Holder of this Warrant
upon the exercise of this Warrant and payment of the Exercise Price will be,
upon such delivery, validly and duly issued, fully paid and nonassessable.
10. Notices. All notices, certificates, requests, or other similar
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items provided for in this Warrant shall be in writing and shall be personally
delivered or deposited in the United States mail, postage prepaid, addressed to
the respective party as indicated in the portions of this Warrant preceding
Section 1. All notices shall be deemed to be delivered upon personal delivery or
upon the expiration of three (3) business days following deposit in the United
States mail,
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postage prepaid. The addresses of the parties may be changed, and addresses of
other Holders and holders of Warrant Securities may be specified, by written
notice delivered pursuant to this Section 10. The Company's principal office
shall be deemed to be the address provided pursuant to this Section for the
delivery of notices to the Company.
11. Applicable Law. This Warrant shall be governed by and construed in
--------------
accordance with the laws of the State of Texas, and courts located in Texas
shall have exclusive jurisdiction over all disputes arising hereunder.
12. Arbitration. The Company and the Holder, and by receipt of this
-----------
Warrant or any Warrant Securities, all subsequent Holders or holders of Warrant
Securities, agree to submit all controversies, claims, disputes and matters of
difference with respect to this Warrant, including, without limitation, the
application of this Section 12 to arbitration in Austin, Texas, according to the
rules and practices of the American Arbitration Association from time to time in
force. This agreement to arbitrate shall be specifically enforceable.
Arbitration may proceed in the absence of any party if notice of the proceeding
has been given to that party. The parties agree to abide by all awards rendered
in any such proceeding. These awards shall be final and binding on all parties
to the extent and in the manner provided by the rules of civil procedure enacted
in Texas. All awards may be filed, as a basis of judgment and of the issuance
of execution for its collection, with the clerk of one or more courts, state or
federal, having jurisdiction over either the party against whom that award is
rendered or its property. No party shall be considered in default hereunder
during the pendency of arbitration proceedings relating to that default.
13. Termination. Unless otherwise terminated hereunder, the right to
-----------
exercise this Warrant shall expire and the Warrant Expiration Date shall be
hereby deemed to occur upon the effective date of a merger or consolidation of
the Company with or into another corporation, or the sale of all or
substantially all of the Company's assets to another corporation or person, if,
immediately after any such merger, consolidation or sale of assets, at least
fifty percent (50%) of the voting power of the surviving corporation or such
other person, as the case may be, is owned by persons who are not shareholders
of the Company immediately prior to such merger, consolidation or sale of
assets, provided that the Holders receive notice of such merger or consolidation
or sale of assets at least twenty (20) days prior to the effective date of such
merger, or consolidation or sale of assets. Notwithstanding the foregoing, the
Warrants shall not terminate if the Warrants are assumed by or exchanged with
Warrants of the surviving corporation in the merger, consolidation or sale of
assets, in which case such assumption or exchange shall be effective in
accordance with Section 3 hereof.
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14. Miscellaneous Provisions.
------------------------
(a) Subject to the terms and conditions contained herein, this Warrant
shall be binding on the Company and its successors and shall inure to the
benefit of the original Holder, its successors and assigns and all holders of
Warrant Securities.
(b) In the event of any litigation or arbitration between the parties
hereto, the prevailing party in such litigation or arbitration shall be entitled
reimbursement by the other party for all costs and expenses resulting from such
litigation or arbitration, including, but not limited to, all reasonable
attorney's fees and disbursements.
(c) This Warrant cannot be changed or terminated or any performance or
condition waived in whole or in part except by an agreement in writing signed by
the party against whom enforcement of the change, termination or waiver is
sought.
(d) If any provision of this Warrant shall be held to be invalid,
illegal or unenforceable, such provision shall be severed, enforced to the
extent possible, or modified in such a way as to make it enforceable, and the
invalidity, illegality or unenforceability shall not affect the remainder of
this Warrant.
(e) The Company agrees to execute such further agreements, conveyances,
certificates and other documents as may be reasonably requested by the Holder to
effectuate the intent and provisions of this Warrant.
(f) Paragraph headings used in this Warrant are for convenience only and
shall not be taken or construed to define or limit any of the terms or
provisions of this Warrant. Unless otherwise provided, or unless the context
shall otherwise require, the use of the singular shall include the plural and
the use of any gender shall include all genders.
ATTEST: CLINICOR, INC.
By: ____________________ By: _______________________
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EXHIBIT A
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NOTICE OF EXERCISE
------------------
The undersigned Holder of a Warrant hereby:
(a) irrevocably elects to exercise the Warrant to the extent of
purchasing ______ Units;
(b) makes payment in full of the aggregate Exercise Price for those
Units in the amount of $___________ by the delivery of certified funds or a bank
cashier's check in the amount of $______________;
(c) requests that a certificate for such Units be issued in the name of
the undersigned, or, if the name and address of some other person is specified
below, in the name of such other person:
_________________________________________________
_________________________________________________
_________________________________________________
(Name and address of person other than the undersigned
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in whose name Units are to be registered)
(d) requests, if the number of Units purchased or transferred are not
all the Units purchasable pursuant to the unexercised portion of the Warrant,
that a new Warrant of like tenor for the remaining Units purchasable pursuant to
the Warrant be issued and delivered to the undersigned at the address stated
below.
Dated: ________________________ ___________________________________________
Signature
(This signature must conform in all
respects to the name of the Holder
as specified on the face of the
Warrant.)
______________________________________
Printed Name
Social Security Number or
Employer ID Number: ____________________________________
Address: ____________________________________
<PAGE>
ASSIGNMENT
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(Form of Assignment to be Executed if the
Warrant Holder Desires to Transfer Warrants Evidenced Hereby)
FOR VALUE RECEIVED, _________________________________________________
hereby sells, assigns and transfers to ___________________________________
______________________________________________________________________________.
(Please print name and address including zip code.)
Please insert social security, federal tax I.D.
number or other identifying number
_______________________________________________________________________Warrants
represented by this Warrant Certificate and does hereby irrevocably constitute
and appoint
_______________________________________________________________________Attorney,
to transfer said Warrants on the books of the Company with full power of
substitution.
Dated: Signature
(Signature must conform in all respects to
name of holder as specified on the face of
this Warrant Certificate)
SIGNATURE GUARANTEED:
NOTE: Any transfer or assignment of this Warrant Certificate is subject to
- ----
compliance with the restrictions on transfer imposed under the Warrant.
<PAGE>
EXHIBIT 10(e)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made effective as
of February 27, 1995, by and between Pegasus Tax and Financial Planning
Services, Inc., a Nevada corporation ("Pegasus"), Randy Haag ("Haag") and
Russell Armstrong ("Armstrong") (and collectively, the "Pegasus Parties") on the
one hand and Clinicor, Inc., a Texas corporation ("Clinicor") and Thomas P.
O'Donnell ("O'Donnell") and Robert S. Sammis ("Sammis") (and collectively, the
"Clinicor Parties") on the other.
RECITALS
WHEREAS, the Board of Directors of Pegasus (the "Pegasus Board") and the
Board of Directors of Clinicor (the "Clinicor Board"), respectively, believe it
is in the long-term strategic interests of Pegasus and its shareholders and of
Clinicor and its shareholders that Pegasus and Clinicor effect the transactions
contemplated hereby; and
WHEREAS, Pegasus and Clinicor desire to adopt a plan of reorganization
pursuant to the provisions of Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"), providing for the merger of Clinicor with and
into Pegasus (the "Merger") pursuant to which all of the issued and outstanding
shares of Common Stock, without par value, of Clinicor ("Clinicor Common Stock")
will be converted into and exchanged for shares of Common Stock, $0.001 par
value, of Pegasus ("Pegasus Common Stock"), all pursuant to the plan of
reorganization set forth herein; and
WHEREAS, the Pegasus Board and all of the Pegasus Shareholders and the
Clinicor Board and all of the Clinicor Shareholders have each approved this
Agreement, the Merger and the other transactions contemplated hereby; and
WHEREAS, Pegasus and Clinicor desire to effect the Merger and the other
transactions contemplated hereby; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties, covenants and agreements made by each to the other as an inducement
to the consummation of the Merger and the other transactions contemplated
hereby:
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreement contained herein, the
parties hereto hereby agree as follows:
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I. CONTEMPLATED BUSINESS COMBINATION
In accordance with the terms and subject to the conditions of this
Agreement, Pegasus and Clinicor shall effect the Merger as follows:
1.1 THE MERGER. At the Effective Time (as defined in Section 1.3), in
----------
accordance with this Agreement, the General Corporation Law of the State of
Nevada (the "Nevada Law") and the General Corporation Law of the State of Texas
(the "Texas Law"), Clinicor shall be merged with and into Pegasus, the separate
existence of Clinicor shall cease, Pegasus shall continue as the surviving
corporation and shall be governed by the laws of the State of Nevada, and
Pegasus shall change its corporate name to "Clinicor, Inc.". Pegasus is herein
sometimes referred to as the "Surviving Corporation".
1.2 EFFECT OF THE MERGER. At the Effective Time:
--------------------
(A) The title to all real estate and other property owned by each of
Pegasus and Clinicor (collectively, the "Constituent Corporations") is
vested in the Surviving Corporation without reversion or impairment;
(B) The Surviving Corporation has all of the liabilities of each of
the Constituent Corporations;
(C) A proceeding pending against any of the Constituent Corporations
may be continued as if the Merger did not occur or the Surviving
Corporation may be substituted in the proceeding for Clinicor;
(D) Article I of the articles of incorporation of the Surviving
Corporation is amended to the extent provided in the Articles of Merger;
and
(E) The shares of each of the Constituent Corporations that are to be
converted into shares, obligations or other securities of the Surviving
Corporation are converted, and the former holders of the shares are
entitled only to the rights provided in the Articles of Merger to be filed
as provided in Section 1.3 hereof or to their rights under Sections 78.471
to 78.502 of the Nevada Law;
all in accordance with Section 78.459 of the Nevada Law and Section 5.01 of the
Texas Law.
1.3 CONSUMMATION OF THE MERGER. As soon as is practicable on the Closing
--------------------------
Date (as defined in Section 1.4) after all conditions to the consummation of the
Merger set forth herein have been satisfied or duly waived, the parties hereto
shall cause the Merger to be consummated by filing (a) with the Secretary of
State of the State of Nevada, Articles of Merger in such form as is required by,
and executed, acknowledged and certified in accordance with, the relevant
provisions of the Nevada
-2-
<PAGE>
Law, and (b) with the Secretary of State of Texas, Articles of Merger in such
form as is required by, and executed, acknowledged and certified in accordance
with, the relevant provisions of the Texas Law (the later of the time of such
filings or the effective time of the Articles of Merger issued by the Nevada
Secretary of State pursuant to Section 5.04 of the Texas Law is herein referred
to as the "Effective Time").
1.4 CLOSING. The closing of the Merger (the "Closing") shall take place
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(a) at the offices of Pezzola & Reinke, 1999 Harrison Street, Suite 1300,
Oakland, California 94612, at 10:00 a.m., San Francisco time, on the business
day following (i) the date of the last to occur of compliance with the
conditions to the Closing set forth in this Agreement or (b) at such other time
and place or on such other date as Pegasus and Clinicor shall mutually agree
(the "Closing Date").
1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Articles of
----------------------------------------
Incorporation of Pegasus (the "Articles") and the By-Laws of Pegasus (the "By-
Laws"), as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation and By-Laws of the Surviving Corporation and
thereafter shall continue to be its Articles of Incorporation and By-Laws until
amended as provided therein and in accordance with the Nevada Law.
1.6 CONVERSION OF SECURITIES. In accordance with the terms and subject to
------------------------
the conditions of this Agreement, at the Effective Time, by virtue of the Merger
and without any action on the part of Pegasus, Clinicor or the holder of any of
the following securities:
(A) Each share of Pegasus Common Stock outstanding immediately prior
to the Effective Time shall remain outstanding as a share of Pegasus Common
Stock (the "Common Stock of the Surviving Corporation"), and shall not be
converted into any other securities or cash pursuant to the Merger.
(B) Each share of Clinicor Common Stock outstanding immediately prior
to the Effective Time shall be automatically converted into one hundred
sixty-six point four (166.4) fully paid and nonassessable shares of Common
Stock of the Surviving Corporation (the "Exchange Ratio").
The Exchange Ratio shall be adjusted to reflect fully the effect of any
stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into Pegasus Common Stock or
Clinicor Common Stock), exchange of shares, reclassification,
reorganization, recapitalization or other similar change with respect to
the Pegasus Common Stock or the Clinicor Common Stock occurring after the
date hereof and prior to the Effective Time. After the Effective Time, each
record holder of a certificate or certificates that immediately prior
thereto represented outstanding shares of Clinicor Common Stock shall be
entitled, upon surrender thereof to the Surviving Corporation or the
exchange or transfer agent (the "Exchange Agent") for the Common Stock of
the Surviving Corporation, promptly to receive in exchange therefor a
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<PAGE>
certificate or certificates representing the number of whole shares of
Common Stock of the Surviving Corporation into which such shares of
Clinicor Common Stock shall have been converted pursuant to this Section
1.6, in such denominations and registered in such names as such holder may
request, and, in addition, each such holder who would otherwise be entitled
to a fraction of a share of Common Stock of the Surviving Corporation shall
be entitled, upon such surrender of a certificate or certificates to the
Surviving Corporation or the Exchange Agent, promptly to be paid cash in
accordance with Section 1.6(e). Until so surrendered, each certificate that
immediately prior to the Effective Time represented outstanding shares of
Clinicor Common Stock shall be deemed from and after the Effective Time,
for all corporate purposes other than the payment of dividends or other
distributions, to evidence the ownership of the number of whole shares of
Common Stock of the Surviving Corporation into which such shares of
Clinicor Common Stock shall have been so converted and the right to be paid
in cash, without interest thereon, in lieu of the issuance of any factional
share of Common Stock of the Surviving Corporation in accordance with
Section 1.6(e). Unless and until any such certificate that immediately
prior to the Effective Time represented outstanding shares of Clinicor
Common Stock shall be so surrendered, no dividends or other distributions
payable to the holders of Common Stock of the Surviving Corporation, as of
the Effective Time or any time thereafter, shall be paid to the holder of
such certificate; provided however, that, upon surrender of such
certificate that immediately prior to the Effective Time represented
outstanding shares of Clinicor Common Stock, there will be promptly paid to
the record holder of the certificate or certificates issued in exchange
therefor the amount, without interest thereon, of dividends and other
distributions, if any, that theretofore became payable with respect to the
number of whole shares of Common Stock of the Surviving Corporation issued
to such holder.
(C) All shares of Common Stock of the Surviving Corporation (and, in
certain circumstances, the right to be paid cash in certain amounts) into
which shares of Clinicor Common Stock shall have been converted pursuant to
this Section 1.6 shall be issued (and cash paid) in full satisfaction of
all rights pertaining to such converted shares.
(D) If any certificate for shares of Common Stock of the Surviving
Corporation is to be issued in a name other than that of the record holder
of the certificate surrendered in exchange therefor, it will be a condition
of the issuance thereof that the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the
person requesting such issuance shall have paid to the Surviving
Corporation or any agent designated by it any transfer or other taxes
required by reason of the issuance of a certificate for shares of Common
Stock of the Surviving Corporation in any name other than that of the
record holder of the certificate surrendered, or established to the
satisfaction of the Surviving Corporation or any agent designated by it
that such tax has been paid or is not payable.
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<PAGE>
(E) No fraction of a share of Common Stock of the Surviving
Corporation shall be issued, but in lieu thereof each record holder of
shares of Clinicor Common Stock who would otherwise be entitled to a
fraction of a share of Common Stock of the Surviving Corporation shall be
entitled, upon surrender to the Surviving Corporation or the Exchange Agent
of a certificate or certificates that immediately prior to the Effective
Time represented outstanding shares of Clinicor Common Stock, promptly to
be paid in cash an amount equal to the value of such fraction of a share
based upon the Exchange Ratio in effect at the Effective Time. For
purposes of this Merger, such value shall be deemed to be $1.00 per share.
No interest shall be paid on any such amount.
(F) All shares of Clinicor Common Stock held by a record holder shall
be aggregated for the purposes of computations of the number of shares of
Common Stock of the Surviving Corporation issuable and cash to be paid in
lieu of fractional shares hereunder.
1.7 LETTERS OF TRANSMITTAL. Promptly after the Effective Time, the
----------------------
Surviving Corporation shall, or shall cause the Exchange Agent to, mail, to each
record holder of a certificate or certificates that immediately prior to the
Effective Time represented outstanding shares of Clinicor Common Stock a letter
of transmittal and reasonable instructions for such holder's use in effecting
the surrender of such certificate or certificates in exchange for a certificate
or certificates representing shares of Common Stock of the Surviving
Corporation.
1.8 LOST, STOLEN OR DESTROYED CERTIFICATE. In the event that any
-------------------------------------
certificate evidencing shares of Clinicor Common Stock shall be alleged to have
been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for
such alleged lost, stolen or destroyed certificate, upon the making of an
affidavit of such allegation by the record holder thereof, a certificate for
such shares of Common Stock of the Surviving Corporation and such record holder
shall be entitled to any cash payments required pursuant to Section 1.6;
provided however, that the Surviving Corporation may, in its discretion and as a
condition precedent to the issuance thereof, require such holder of such alleged
lost, stolen or destroyed certificate to deliver a bond in such sum as the
Surviving Corporation may reasonably direct as indemnity against any claim that
may be made against the Surviving Corporation and/or the Exchange Agent with
respect to the certificate alleged to have been lost, stolen or destroyed.
1.9 FURTHER ACTION. Each of Pegasus and Clinicor shall take all such
--------------
reasonable and lawful action as may be necessary or appropriate in order to
effectuate the Merger as promptly as possible. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Constituent Corporations, the directors and officers of
each of the Constituent Corporations are fully authorized and empowered in the
name and on behalf of their respective corporation or otherwise to take, and
shall take, all such further action.
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<PAGE>
1.10 CERTAIN AGREEMENTS. The Surviving Corporation, from and after the
------------------
Effective Time, agrees that it may be served with process in the State of Texas
in any proceeding for the enforcement of any obligation of Clinicor.
II. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF PEGASUS. Except as set forth on
-----------------------------------------
Schedule II attached hereto and incorporated herein by reference, the Pegasus
Parties, jointly and severally, hereby each represent and warrant to Clinicor
that:
(A) ORGANIZATION AND COMPLIANCE WITH LAW. Pegasus is a corporation
------------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has all requisite corporate power and corporate
authority and all requisite governmental and other authorizations to own,
lease and operate its assets and properties and to carry on its business as
now being conducted, except such governmental and other authorizations (if
any) where the failure to have such authorizations does not and would not,
either individually or in the aggregate, have a material adverse effect on
the financial condition, results of operations or business of Pegasus.
Pegasus is duly qualified as a foreign corporation to do business and is in
good standing in the State of Texas. Except as disclosed in Schedule II,
Pegasus possesses all permits, licenses, authorizations, certificates,
franchises, orders, consents or other indicia of authority required by any
governmental, administrative or regulatory authority or agency and is in
compliance with all applicable laws, judgments, orders, decrees, rules and
regulations. Pegasus has heretofore delivered to Clinicor true and complete
copies of the Articles of Incorporation and the By-Laws of Pegasus as in
existence on the date hereof.
(B) CAPITALIZATION.
--------------
(I) The authorized capital stock of Pegasus consists of
75,000,000 shares of Pegasus Common Stock, $0.001 par value per share.
Immediately prior to the Effective Time, there are issued and
outstanding 1,421,000 shares of Pegasus Common Stock, all of which are
validly issued, fully paid and nonassessable and were issued in
compliance with all applicable federal and state securities laws.
Immediately prior to the Effective Time, there are also reserved for
issuance 2,000,000 shares of Pegasus Common Stock issuable under
Pegasus' 1995 Employee and Consultant Stock Option Plan (the "Option
Plan"). All outstanding shares of Pegasus capital stock are validly
issued, fully paid and nonassessable, and no holder thereof is
entitled to any preemptive rights. All shares of Common Stock of the
Surviving Corporation issued in accordance with this Agreement, when
issued, will be validly issued, fully paid and nonassessable, and,
except as provided in Section 6.1(i), will not have any preemptive
rights. Pegasus is not a party to, nor is Pegasus aware of, any voting
agreement, voting trust or similar agreement, arrangement or
understanding relating to any class of capital stock of, or any
agreement, arrangement or understanding providing for registration
rights with respect to any class of capital stock or other securities
of, Pegasus.
-6-
<PAGE>
(II) Other than as disclosed or as contemplated by this
Agreement, the Pegasus Option Plan, and any shares of capital stock of
Pegasus issued pursuant to any of the foregoing, there are not now,
and at the Effective Time there will not be, any (A) outstanding
shares of capital stock or other equity securities of Pegasus, or (B)
outstanding options, warrants, scrip, rights to subscribe for, calls
or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of any class of
capital stock of Pegasus, or contracts, agreements, arrangements or
understandings to which Pegasus is a party, or by which it is or may
be bound, to issue additional shares of any class of its capital stock
or options, warrants, scrip or rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, any additional shares of
any class of capital stock of Pegasus.
(C) AUTHORIZATION AND VALIDITY OF AGREEMENTS. Pegasus has all
----------------------------------------
requisite corporate power and corporate authority to enter into this
Agreement and to perform its obligations hereunder, and the execution and
delivery by Pegasus of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action. This Agreement has been duly executed and delivered by
Pegasus and is the valid and binding obligation of Pegasus, enforceable
against Pegasus in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, moratorium or similar
laws affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court
before which any proceedings therefor may be brought.
(D) NO NOTICES OR APPROVALS REQUIRED AND NO CONFLICTS. None of the
-------------------------------------------------
execution and delivery of this Agreement by Pegasus, the performance by
Pegasus of its obligations hereunder or the consummation by Pegasus of the
transactions contemplated hereby will:
(I) conflict with the Articles of Incorporation or the By-
Laws of Pegasus;
(II) assuming satisfaction of the requirements set forth in
Clause (iii) (A) and (B) below, violate any provision of law
applicable to Pegasus;
(III) require any consent or approval of, or filing with or
notice to, any public body or authority, domestic or foreign, under
any provision of law applicable to Pegasus except for (A) requirements
of Federal and state securities laws, and (B) the filing of this
Agreement or Articles of Merger in accordance with the Nevada Law and
the filing of Articles of Merger and the issuance of a Certificate of
Merger in accordance with the Texas Law; or
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<PAGE>
(IV) require any consent, approval or notice under, or violate,
breach, be in conflict with or constitute a default (or an event that,
with notice or lapse of time or both, would constitute a default)
under, or permit the termination of, or result in the creation or
imposition of any lien upon any assets, properties or business of
Pegasus under, any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, contract, instrument
or other agreement or commitment, order, judgment or decree to which
Pegasus is a party or by which Pegasus or any of the assets or
properties thereof is bound or encumbered.
(E) PEGASUS AGREEMENTS AND FINANCIAL STATEMENTS.
-------------------------------------------
(I) All material contacts, agreements, arrangements and
understanding of Pegasus have been disclosed in Schedule II except for
those contracts, agreements, arrangements and understandings that have
already been fully performed and as to which there are not contingent
liabilities on the part of Pegasus.
(II) Pegasus has delivered to Clinicor copies of its audited
financial statements (balance sheet and income statement) at February
28, 1994 (the "Pegasus Financial Statements"). The Pegasus Financial
Statements are complete and correct in all material respects and have
been prepared in accordance with generally accepted accounting
principals applied on a consistent basis throughout the periods
indicated, except that such statements may not contain all footnotes
required by generally accepted accounting principals. The Pegasus
Financial Statements accurately set out and describe the financial
position and operating results of Pegasus as of the dates, and for the
periods, indicated therein, subject to normal year-end adjustments.
(III) Except as set forth in Schedule II, to the best knowledge
of all Pegasus Parties, Pegasus does not have any debt, liability or
obligation of any nature, whether accrued, absolute or contingent, and
whether due or to become due, that is not reflected or reserved
against in the Pegasus Financial Statements.
(F) CONDUCT OF BUSINESS IN THE ORDINARY COURSE AND ABSENCE OF CERTAIN
-----------------------------------------------------------------
CHANGES AND EVENTS.
------------------
(I) Since February 28, 1994, Pegasus has taken no action of
the type referred to in Section 4.1 and there has not been any
material adverse change in the financial condition, results of
operations or business of Pegasus and there has not been any
condition, event or development that is reasonably expected by Pegasus
to result in a material adverse change in the financial condition,
results of operations or business of Pegasus and that would be
required to be disclosed in the Pegasus Financial Statements or the
notes thereto under generally
-8-
<PAGE>
accepted accounting principles. Pegasus is not a party to any
collective bargaining agreements and believes that its relations with
its employees are generally satisfactory. Since February 28, 1994, no
significant labor dispute with any employees of Pegasus or union
organizing effort has existed or, to the knowledge of Pegasus, is
imminent or threatened.
(II) Pegasus is not in violation of its Articles of
Incorporation or Bylaws or in default in the performance of, and no
event has occurred that, with no notice or lapse of time or both,
would constitute a default in the performance of, any note, bond,
indenture, mortgage, deed of trust, leases, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment, order, judgment or decree to which Pegasus is a party or
by which Pegasus or any of the assets or properties thereof is bound
or encumbered.
(G) CERTAIN FEES. Neither Pegasus or any of its directors, officers,
------------
employees, agents or representatives, on behalf of Pegasus or its board of
directors, or any committee thereof, has employed any financial advisor,
actuary, broker or finder or incurred any liability for any financial
advisory, actuarial, brokerage or finders' fees or commissions in
connection with the transactions contemplated hereby.
(H) LITIGATION. There are no claims, actions, suits, investigations
----------
or proceedings pending or, to the knowledge of Pegasus, threatened against
or affecting Pegasus or any of its assets or properties, at law or in
equity, before or by any Federal, state, municipal or other governmental
agency or authority, foreign or domestic, or before any arbitration board
or panel, wherever located.
(I) EMPLOYEE BENEFIT PLANS. There are no "employee pension plans",
----------------------
as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), maintained by Pegasus for the benefit of its
employees.
(J) TAXES.
-----
(I) All returns and reports, including without limitation
information and withholding returns and reports (collectively, "Tax
Returns") of or relating to any foreign, Federal, state, local or
other income, premium, property, sales, excise and other taxes of any
nature whatsoever, including any interest, penalties and additions to
tax in respect thereof ("Tax" or "Taxes") heretofore required to be
filed by Pegasus have been duly filed on a timely basis. To the best
knowledge of all Pegasus Parties, all such Tax Returns were complete
and accurate in all material respects. To the best knowledge of all
Pegasus Parties, Pegasus has paid or has made adequate provision for
the payment of all Taxes.
(II) As of the date of this Agreement there are no audits or
administrative proceedings, court proceedings or claims pending
against
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<PAGE>
Pegasus with respect to any Taxes, no assessment, deficiency or
adjustment has been asserted or, to the knowledge of Pegasus, proposed
with respect to any Tax Return of or with respect to Pegasus and there
are no liens for Taxes upon the assets or properties of Pegasus except
liens for Taxes not yet delinquent.
(III) There are not in force any waivers or agreements,
arrangements or understandings by or with respect to Pegasus or for an
extension of time for the assessment or payment of any Taxes. Pegasus
has not received a written ruling of a taxing authority relating to
Taxes or entered into a written and legally binding agreement with a
taxing authority relating to Taxes that would have a continuing
material adverse effect after the Closing Date. Pegasus is not
required to include in income any adjustment pursuant to Section
481(a) of the Code by reason of a voluntary change in accounting
method initiated by Pegasus and to the best knowledge of Pegasus the
IRS has not proposed any such adjustment or change in accounting
method.
(IV) Pegasus has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party.
(K) BOOKS AND RECORDS. The financial records and books of
-----------------
account of Pegasus are complete and correct, and have been maintained in
accordance with good business practices and are fairly reflected in the
Financial Statements. Copies of the minute books of Pegasus as delivered to
counsel for Clinicor contain all minutes and other records of the board of
directors (including committees of the board) and shareholders of Pegasus,
are accurate records of all meetings and corporate action of the
shareholders, the board of directors and all directors' committees of
Pegasus since its formation, and correctly reflect all issuances of stock
of any kind by Pegasus. The stock records of Pegasus accurately reflect all
transfers of record ownership of said stock from the date of organization
of Pegasus until the date hereof.
(L) DISCLOSURE. Neither this Agreement, nor any of the schedules,
----------
attachments, exhibits, written statements, documents, certificates or other
materials prepared or supplied by Pegasus with respect to the transactions
contemplated hereby contain any untrue statements of a material fact or
omit a material fact necessary to make the statements contained herein or
therein not misleading. The Pegasus Parties, jointly and severally,
represent and warrant that to their knowledge there is no fact which
Pegasus has not disclosed to the Clinicor Parties, in writing, which
involves a claim or loss in excess of $5,000, individually, or in the
aggregate, or which could reasonably be anticipated to have a material
adverse effect upon the existing or expected financial condition, operating
results, assets, customer relations, employee relations or business
prospects of Pegasus.
(M) DISSENTING SHAREHOLDER RIGHTS. No holders of outstanding shares
-----------------------------
of Pegasus Common Stock shall be, or have the right to become, entitled to
dissenting shareholder/appraisal rights pursuant to Nevada Law arising out
of or in connection with this Merger.
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<PAGE>
2.2 REPRESENTATIONS AND WARRANTIES OF CLINICOR. Except as set forth on
------------------------------------------
Schedule II attached hereto and incorporated herein by reference, the Clinicor
Parties, jointly and severally, each hereby represent and warrant to Pegasus
that:
(A) ORGANIZATION AND COMPLIANCE WITH LAW. Clinicor is a corporation
------------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Texas and has all requisite corporate power and corporate
authority and all requisite governmental and other authorizations to own,
lease and operate its assets and properties and to carry on its business as
now being conducted, except such governmental and other authorizations (if
any) where the failure to have such authorizations does not and would not,
either individually or in the aggregate, have a material adverse effect on
the financial condition, results of operations or business of Clinicor.
Clinicor is duly qualified as a foreign corporation to do business and is
in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary. Clinicor possesses all permits, license,
authorizations, certificates, franchises, orders, consents or other indicia
of authority required by any governmental, administrative or regulatory
authority or agency and is in compliance with all applicable laws,
judgments, orders, decrees, rules and regulations. Clinicor has heretofore
delivered to Pegasus true and complete copies of its Articles of
Incorporation and Bylaws as in existence on the date hereof.
(B) CAPITALIZATION.
(I) The authorized capital stock of Clinicor consists of
1,000,000 shares of Clinicor Common Stock with no par value.
Immediately prior to the Effective Time, there are issued and
outstanding 12,500 shares of Clinicor Common Stock. Immediately prior
to the Effective Time, Clinicor had six (6) record shareholders. All
outstanding shares of Clinicor Common Stock are validly issued, fully
paid and nonassessable and were issued in compliance with all
applicable federal and state securities laws, and no holder thereof is
entitled to any preemptive rights. Clinicor is not a party to, nor is
Clinicor aware of, any voting agreement, voting trust or similar
agreement, arrangement or understanding relating to any class of
capital stock of, or any agreement, arrangement or understanding
providing for registration rights with respect to any class of capital
stock or other securities of, Clinicor.
(II) There are not now, and at the Effective Time there will
not be, any (A) outstanding shares of capital stock or other equity
securities of Clinicor, or (B) outstanding options, warrants, scrip,
rights to subscribe for, calls or commitments of, any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any class of capital stock of Clinicor, or
contracts, agreements, arrangements or understandings to which
Clinicor is a party, or by which it is or may be bound, to issue
additional shares of any class of its capital stock or options,
warrants, scrip or rights to subscribe for, calls or commitments
-11-
<PAGE>
of any character whatsoever relating, or securities or rights
convertible into or exchangeable for, any additional shares of any
class of capital stock of Clinicor.
(C) AUTHORIZATION AND VALIDITY OF AGREEMENTS. Clinicor has all
----------------------------------------
requisite corporate power and corporate authority to enter into this
Agreement and to perform its obligations hereunder, and the execution and
delivery by Clinicor of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action. This Agreement has been duly executed and delivered by
Clinicor and is the valid and binding obligation of Clinicor, enforceable
against Clinicor in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, moratorium or similar
laws affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court
before which any proceedings therefor may be brought.
(D) NO NOTICES OR APPROVALS REQUIRED AND NO CONFLICTS. None of the
-------------------------------------------------
execution and delivery of this Agreement by Clinicor, the performance by
Clinicor of its obligations hereunder or the consummation by Clinicor of
the transactions contemplated hereby will:
(I) conflict with the Articles of Incorporation or Bylaws of
Clinicor;
(II) assuming satisfaction of the requirements set forth in
Clause (iii) (A) and (B) below, violate any provision of law
applicable to Clinicor;
(III) require any consent or approval of, or filing with or
notice to, any public body or authority, domestic or foreign, under
any provision of law applicable to Clinicor, except for (A)
requirements of Federal and state securities laws, (B) the filing of
Articles of Merger and the issuance of a Certificate of Merger in
accordance with the Nevada Law; or
(IV) require any consent, approval or notice under, or violate,
breach, be in conflict with or constitute a default (or an event that,
with notice or lapse of time or both, would constitute a default)
under, or permit the termination of, or result in the creation or
imposition of any lien upon any assets, properties or business of
Clinicor under any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, contract, instrument
or other agreement or commitment, order, judgment or decree to which
Clinicor is a party or by which Clinicor or any of the assets or
properties thereof is bound or encumbered, except those disclosed in
Schedule II.
(E) CLINICOR AGREEMENTS AND FINANCIAL STATEMENTS.
--------------------------------------------
(I) All material contracts, agreements, arrangements and
understandings of Clinicor have been disclosed in Schedule II except
for
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<PAGE>
those contracts, agreements, arrangements and understandings that
have already been fully performed and as to which there are no
contingent liabilities on the part of Clinicor.
(II) Clinicor has delivered to Clinicor copies of its unaudited
financial statements (balance sheet and income statement) at December
31, 1993 and unaudited financial statements for the year ended
December 31, 1994 (collectively, the "Clinicor Financial Statements").
The Clinicor Financial Statements are complete and correct in all
material respects and have been prepared in accordance with generally
accepted accounting principals applied on a consistent basis
throughout the periods indicated, except that such statements may not
contain all footnotes required by generally accepted accounting
principals. The Clinicor Financial Statements accurately set out and
describe the financial position and operating results of Clinicor as
of the dates, and for the periods, indicated therein, subject to
normal year-end adjustments.
(III) Schedule II sets forth the outstanding balance and
amortization rate of all debt and amount and aging of all trade
payables which are individually in excess of $5,000 of Clinicor as of
December 31, 1994. Except as set forth in Schedule II, Clinicor does
not have any debt, liability or obligation of any nature, whether
accrued, absolute or contingent, and whether due or to become due,
that is not reflected or reserved against in the Clinicor Financial
Statements, except for those that (a) may have been incurred after the
date of the Clinicor Financial Statements or (b) are not required by
generally accepted accounting principles to be included in the
Clinicor Financial Statements, all of which debts, liabilities and
obligations to the best knowledge of all Clinicor Parties are not in
the aggregate in excess of $25,000 and were incurred in the ordinary
course of business and are usual and normal in amount, both
individually and in the aggregate. For purposes of this subsection
(e)(iii), all indebtedness, liabilities, agreements, understandings,
instruments, and contracts involving the same person or entity
(including persons or entities Clinicor has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting
the individual minimum dollar amounts of such subsection.
(F) CONDUCT OF BUSINESS IN THE ORDINARY COURSE AND ABSENCE OF CERTAIN
-----------------------------------------------------------------
CHANGES AND EVENTS.
------------------
(I) Except as contemplated by this Agreement since December
31, 1994, Clinicor has taken no action of the type referred to in
Section 3.1 and there has not been any material adverse change in the
financial condition, results of operations or businesses of Clinicor
and there has not been any condition, event or development that is
reasonably expected by Clinicor to result in a material adverse change
in the financial condition, results of operations or business of
Clinicor and that would be required to be disclosed in the Clinicor's
Financial Statements or the notes thereto under generally accepted
accounting principles.
-13-
<PAGE>
Clinicor is not a party to any collective bargaining agreement and
believes that its relations with its employees are generally
satisfactory. Since December 31, 1994, no significant labor dispute
with any employees of Clinicor or union organizing effort has existed
or, to the knowledge of Clinicor, is imminent or threatened.
(II) Clinicor is not in violation of its charter or bylaws or
in default in the performance of, and no event has occurred that, with
notice or lapse of time or both, would constitute a default in the
performance of, any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, contract, instrument
or other agreement or commitment, order, judgment or decree to which
Clinicor is a party or by which Clinicor or any of the assets or
properties thereof is bound or encumbered.
(G) CERTAIN FEES. Neither Clinicor nor any of its directors,
------------
officers, employees, agents or representatives, on behalf of Clinicor or
its board of directors, or any committee thereof, has employed any
financial advisor, actuary, broker or finder or incurred any liability for
any financial advisory, actuarial, brokerage or finders' fees or
commissions in connection with the transactions contemplated hereby.
(H) LITIGATION. There are no claims, actions, suits, investigations
----------
or proceedings pending or, to the knowledge of Clinicor, threatened against
or affecting Clinicor or any of its assets or properties, at law or in
equity, before or by any Federal, state, municipal or other governmental
agency or authority, foreign or domestic, or before any arbitration board
or panel, wherever located.
(I) EMPLOYEE BENEFIT PLANS. There are no "employee pension benefit
----------------------
plans", as defined in Section 3(2) of ERISA, maintained by Clinicor for the
benefit of its employees.
(J) TAXES.
-----
(I) All Tax Returns of or relating to any Taxes heretofore
required to be filed by Clinicor have been duly filed on a timely
basis. To the best knowledge of all Clinicor Parties, all such Tax
Returns were complete and accurate in all material respects. To the
best knowledge of all Clinicor Parties, Clinicor has paid or made
adequate provision for the payment of all Taxes.
(II) As of the date of this Agreement there are no audits or
administrative proceedings, court proceedings or claims pending
against Clinicor with respect to any Taxes, no assessment, deficiency
or adjustment has been asserted or, to the knowledge of Clinicor,
proposed with respect to any Tax Return of or with respect to Clinicor
and there are no liens for Taxes upon the assets or properties of
Clinicor, except liens for Taxes not yet delinquent.
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(III) There are not in force any waivers or agreements
arrangements or understandings by or with respect to Clinicor of or
for an extension of time for the assessment or payment of any Taxes.
Clinicor has not received a written ruling of a taxing authority
relating to Taxes or entered into a written and legally binding
agreement with a taxing authority relating to Taxes that would have a
continuing material adverse effect after the Closing Date. Clinicor is
not required to include in income any adjustment pursuant to Section
481(a) of the Code by reason of a voluntary change in accounting
method initiated by Clinicor and, to the best knowledge of Clinicor,
the IRS has not proposed any such adjustment or change in accounting
method.
(IV) Clinicor has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party.
(K) PATENTS AND OTHER INTANGIBLE RIGHTS. To the best knowledge of
-----------------------------------
all Clinicor Parties, Clinicor has good title (without any unlawful
misappropriation) to all patents, copyrights, tradenames and service marks
covering Clinicor's existing technology and proprietary property rights,
including but not limited to, any invention, trade secrets, or intellectual
property rights (collectively the "Trade Secret Property Rights"), or
adequate licenses and rights to use the Trade Secret Property Rights of
others on terms deemed favorable by Clinicor, which are necessary for the
conduct of the business of Clinicor as now conducted or proposed to be
conducted. To the best of Clinicor's knowledge after due inquiry and
investigation, the business of Clinicor does not infringe upon or conflict
with the Trade Secret Property Rights of others in a manner which would
materially or adversely affect the business of Clinicor as now conducted or
proposed to be conducted. None of the Trade Secret Property Rights is
subject to any mortgage, pledge, lien, charge, security interest or
encumbrance or a lease or license (except for leases or licenses to or from
Clinicor), or any claim or litigation proceedings alleging a violation of
the rights of any third party. Clinicor has not granted exclusive rights to
manufacture, assemble, sell or use any Trade Secret Property Rights and is
not otherwise bound by any agreement which affects Clinicor's exclusive
right to manufacture, sell or assemble its products or Trade Secret
Property Rights. To the best knowledge of Clinicor after reasonable
investigation and inquiry, no shareholder or employee of Clinicor is under
any restriction, whether contractual, or by virtue of previous employment
or otherwise, that would prevent him from performing his duties for
Clinicor or prevent Clinicor from using the Trade Secret Property Rights.
All patents, trademarks, copyright registrations and applications therefor
of Clinicor are set forth in Schedule II. No employee or consultant of
Clinicor is in violation of any term of any proprietary information or
confidentiality agreement with Clinicor.
(L) BUSINESS PLAN. Clinicor's business plan previously delivered to
-------------
Pegasus (the "Business Plan") was prepared in good faith by Clinicor
and does not, to the best of Clinicor's knowledge, contain any untrue
statement of a material fact, except that with respect to projections
contained in the Business
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<PAGE>
Plan, the projections are not deemed by Clinicor to be a valid or reliable
indicators of Clinicor's future financial performance, and the Pegasus
Parties should not and may not rely on such projections.
(M) BOOKS AND RECORDS. The financial records and books of account of
-----------------
Clinicor are complete and correct, and have been maintained in accordance
with good business practices and are fairly reflected in the Financial
Statements. Copies of the minute books of Clinicor as delivered to counsel
to Pegasus contain all minutes and other records of the board of directors
(including committees of the board) and shareholders of Clinicor, are
accurate records of all meetings and corporate action of the shareholders,
the board of directors and all directors' committees of Clinicor since its
formation, and correctly reflect all issuances of stock of any kind by
Clinicor. The stock records of Clinicor accurately reflect all transfers of
record ownership of said stock from the date of organization of Clinicor
until the date hereof.
(N) DISCLOSURE. Neither this Agreement, nor any of the schedules,
----------
attachments, exhibits, written statements, documents, certificates or
other materials prepared or supplied by Clinicor with respect to the
transactions contemplated hereby contain any untrue statements of a
material fact or omit a material fact necessary to make the statements
contained herein or therein not misleading. The Clinicor Parties, jointly
and severally, represent and warrant to their knowledge that there is no
fact which Clinicor has not disclosed to the Pegasus Parties, in writing,
which involves a claim or loss in excess of $5,000, individually, or in the
aggregate, or which could reasonably be anticipated to have a material
adverse effect upon the existing or expected financial condition, operating
results, assets, customer relations, employee relations or business
prospects of Clinicor.
(O) DISSENTING SHAREHOLDER RIGHTS. No holders of outstanding shares
-----------------------------
of Clinicor Common Stock shall be, or have the right to become, entitled
to dissenting shareholder/appraisal rights pursuant to Texas Law arising
out of or in connection with this Merger.
III. COVENANTS OF CLINICOR
3.1 CONDUCT OF BUSINESS BY CLINICOR PENDING THE MERGER. Clinicor
--------------------------------------------------
covenants and agrees with Pegasus that, with respect to Clinicor prior to the
Effective Time, unless Pegasus shall otherwise agree in writing or as is
otherwise expressly contemplated by this Agreement or set forth in Schedule III:
(A) The business of Clinicor will be conducted only in, and Clinicor
will not take any material action except in, the ordinary course of
business and consistent with prior practices.
(B) Clinicor will not directly or indirectly do any of the following:
(i) issue, sell, pledge, dispose of or encumber (A) any shares of capital
stock of Clinicor, (B) any investment assets of Clinicor other than in the
ordinary course of business consistent with prior practices or in
transactions not in excess of
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<PAGE>
$25,000 in the aggregate, or (C) any other assets or properties of Clinicor
other than in the ordinary course of business and consistent with prior
practices or in transactions not in excess of $25,000 in the aggregate;
(ii) amend or propose to amend its charter or Bylaws; (iii) split, combine
or reclassify any outstanding capital stock, or declare, set aside or pay
any dividend or distribution payable in cash, stock, property or otherwise
with respect to its capital stock whether now or hereafter outstanding;
(iv) redeem, purchase or acquire or offer to acquire any of its capital
stock; or (v) agree or commit to do any of the foregoing.
(C) Clinicor will not directly or indirectly do any of the following:
(i) grant, issue, sell, pledge or dispose of any options, warrants or
rights of any kind to acquire any shares of any class of capital stock of
Clinicor or any securities that are convertible or exchangeable therefor;
(ii) acquire (whether by merger, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership or other business
organization or division thereof; (iii) incur any indebtedness for borrowed
money or issue any debt securities; (iv) cancel any material debts or
obligations owing to it; (v) liquidate or merge into or consolidate with
any other corporation; or (vi) agree or commit to do any of the foregoing.
(D) Clinicor will not enter into, amend in any material respect,
terminate or waive any material right under any contract or agreement
referred to in Clause (i) or (iii) of Section 2.2(e) or that would have
been disclosed pursuant to such clause if such contract or agreement had
been in effect as of the date hereof.
(E) Clinicor will not enter into or amend any employment, consulting,
separation or termination agreement, arrangement or understanding nor take
any action with respect to the grant of any separation or termination pay
or with respect to any increase of benefits payable under its separation or
termination pay policies or agreements or arrangements in effect as of the
date hereof; provided however, that this Section 3.1(e) shall not prohibit
entering into employment agreements, arrangements or understandings to the
extent permitted by Section 3.1(f) or payments by Clinicor in excess of
those provided for under existing separation or termination pay policies if
made in settlement of employment termination claims arising in the ordinary
course and the amount of such payments is consistent with prior practices.
(F) Clinicor will not (i) hire any new executive employee, (ii) hire
any new management employee with annual compensation greater than $60,000,
(iii) except for replacement in the ordinary course of business consistent
with prior practices, hire any other new employee, (iv) except in the
ordinary course of business consistent with prior practices, increase the
compensation of any employee, or (v) adopt or amend (except to comply with
applicable law) any bonus, profit sharing, compensation, stock option,
pension, retirement, separation, deferred compensation or other employee
benefit plan, agreement, trust fund or arrangement for the benefit or
welfare of, any employee or former employee.
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<PAGE>
(G) Clinicor will not make any capital expenditure or commitment for
which it is not contractually bound at the date hereof except (i) necessary
replacements in the ordinary course of business consistent with past
practices, and (ii) other capital expenditures and commitments not to
exceed $25,000 in the aggregate. All capital expenditures and commitments
in excess of $25,000 for which Clinicor is contractually bound at the date
hereof are disclosed in Schedule III.
(H) Subject to the provisions hereof, Clinicor will use all
reasonable efforts (i) to preserve intact the business organization of
Clinicor, to maintain in effect any licenses, franchises, authorizations or
similar rights material to the business of Clinicor, to keep available the
services of its current officers and key employees and to preserve the
goodwill of those having relationships with Clinicor, and (ii) to cooperate
with Pegasus in jointly communicating with Clinicor's employees and
independent contractors, regarding the Merger and continuing operations
after consummation of the Merger.
3.2 NO SOLICITATION OF ACQUISITION TRANSACTIONS. Clinicor will not
-------------------------------------------
directly or indirectly, through any director, officer, employee, agent,
representative or otherwise, solicit, initiate or intentionally encourage
submission of any inquiries, proposals or offers from any person or entity
(other than Pegasus) relating to any merger, consolidation, share exchange,
purchase or other acquisition of all or (other than in the ordinary course of
business) any substantial portion of the assets of or any substantial equity
interest in Clinicor or any business combination with Clinicor (collectively, an
"Acquisition Transaction"), or participate in any discussions or negotiations
regarding, or furnish to any other person any information with respect to
Clinicor or afford access to the properties, books or records of Clinicor for
the purposes of, or cooperate with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person or entity to seek or effect
an Acquisition Transaction; provided however, that (a) Clinicor may furnish or
cause to be furnished any information with respect to Clinicor and its business,
properties or assets, or afford access to the properties, books or records of
Clinicor to a third party, (b) Clinicor may cooperate with, assist or engage in
discussions or negotiations with a third party with respect to an Acquisition
Transaction but in each case referred to in Clauses (a) and (b) of this Section
3.2, only to the extent that the Clinicor Board shall determine (after
consultation with outside counsel knowledgeable in corporate fiduciary matters)
that such action is necessary in order for the Clinicor Board to act in
accordance with its fiduciary obligations under applicable law. Clinicor will
promptly notify Pegasus if any such inquiry, proposal or offer, or any contact
with any person or entity with respect thereto, is made, describing to Pegasus
the substance thereof.
IV. COVENANTS OF PEGASUS
4.1 CONDUCT OF BUSINESS BY PEGASUS PENDING THE MERGER. Pegasus covenants
-------------------------------------------------
and agrees with Clinicor that, with respect to Pegasus prior to the Effective
Time, unless Clinicor shall otherwise agree in writing or as is otherwise
expressly contemplated by this Agreement or as set forth in Schedule IV:
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<PAGE>
(A) The businesses of Pegasus will be conducted only in, and Pegasus
will not take any material action except in, the ordinary course of
business and consistent with prior practices.
(B) Pegasus will not directly or indirectly do any of the following:
(i) issue, sell, pledge, dispose of or encumber (A) any shares of capital
stock of Pegasus, (B) any investment assets of Pegasus; (ii) amend or
propose to amend its Articles of Incorporation or Bylaws; (iii) split,
combine or reclassify any outstanding capital stock, or declare, set aside
or pay any dividend or distribution payable in cash, stock, property or
otherwise with respect to its capital stock whether now or hereafter
outstanding; (iv) redeem, purchase or acquire or offer to acquire any of
their capital stock; or (v) agree or commit to do any of the foregoing.
(C) Except as contemplated herein, Pegasus will not directly or
indirectly do any of the following: (i) grant, issue, sell, pledge or
dispose of any options, warrants or rights of any kind to acquire shares of
capital stock of Pegasus or any securities that are convertible or
exchangeable therefor; (ii) acquire (whether by way of merger,
consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division
thereof; (iii) incur any indebtedness for borrowed money or issue any debt
securities; (iv) cancel any material debts or obligations owing to it,
except in connection with the settlement of policy claims; (v) liquidate or
merge into or consolidate with any other corporation; or (vi) agree or
commit to do any of the foregoing.
(D) Subject to the provisions hereof, Pegasus will use all reasonable
efforts (i) to preserve intact the business organization of Pegasus to
maintain in effect any licenses, franchises, authorizations or similar
rights material to the businesses of Pegasus and to preserve the goodwill
of those having relationships with Pegasus and (ii) to cooperate with
Clinicor in jointly communicating with Clinicor's employees and independent
contractors, regarding the Merger and continuing operations after
consummation of the Merger.
4.2 RESERVATION OF PEGASUS CAPITAL STOCK. Prior to the Effective Time,
------------------------------------
Pegasus shall reserve for issuance, out of its authorized but unissued capital
stock, such number of shares of Pegasus Common Stock as may be issuable upon
consummation of the Merger.
4.3 CONTINUING DIRECTORS. At the Effective Time, Pegasus will take such
--------------------
action as may be necessary to appoint or elect Arthur Haag, Robert Sammis and
Thomas O'Donnell to the Pegasus Board.
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V. MUTUAL COVENANTS
5.1 EXPENSES. Except as otherwise set forth on Schedule V, all cost and
--------
expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such costs and expenses.
5.2 ADDITIONAL AGREEMENTS. In accordance with the terms and subject to
---------------------
the conditions hereof, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to fulfill the conditions and
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement.
5.3 NOTIFICATION OF CERTAIN MATTERS. Clinicor will give prompt notice to
-------------------------------
Pegasus, and Pegasus will give prompt notice to Clinicor, of (a) the occurrence,
or failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time, and (b) any material failure of Clinicor or Pegasus, or any
director, officer, employee, agent or representative thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder.
5.4 AGREEMENT TO DEFEND. In the event any claim, action, suit,
-------------------
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the transactions contemplated hereby or seeks damages in
connection therewith, whether before or after the Effective Time, the parties
hereto agree to cooperate and use all reasonable efforts to defend against and
respond thereto.
5.5 CONTINUED DISCLOSURE OBLIGATIONS. After the Effective Time, the
--------------------------------
Surviving Corporation shall be obligated to continue to provide and make
publicly available the information identified in Rule 15(c)(2)(11) to meet the
conditions imposed by Rule 144(c)(2) and Standard and Poor's and/or Moody's
listing requirements for a period of at least three years after the Merger so as
to permit the Surviving Corporation's eligible unrestricted stock to be traded
over-the-counter on the NASD electronic bulletin board in accordance with SEC
rules and regulations.
5.6 AUTHORIZED DIRECTORS. After the Effective Time, the authorized number
--------------------
of Board members of the Surviving Corporation shall be three (3) with Arthur
Haag, Robert Sammis and Thomas O'Donnell named as the three Directors, each to
hold office for a two year term commencing on the Effective Date. The number of
authorized directors shall not be increased or decreased without a consent of
all of the directors. Each of Sammis and O'Donnell shall use their best efforts
to insure compliance of this covenant by them and the Surviving Corporation.
5.6 AUTHORIZED OFFICERS. Effective as of the Effective Time, the officers
-------------------
of Pegasus shall have resigned and the officers of Clinicor in office
immediately prior to the Effective Time shall become the officers of the
Surviving Corporation.
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VI. CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
------------------------------------------------------------
respective obligations of each party hereto to effect the Merger and to
consummate the other transactions contemplated hereby will be subject to the
fulfillment at or prior to the Closing of the following conditions:
(A) The Merger and this Agreement shall have been approved and
adopted by the unanimous vote of the shareholders of Pegasus and the
shareholders of Clinicor.
(B) No order shall have been entered and remain in effect in any
action or proceeding before any Federal or state court or governmental
agency or other Federal or state regulatory or administrative agency or
commission that would prevent or make illegal the consummation of the
Merger.
(C) There shall have been obtained permits, consents and approvals of
securities or "blue sky" commissions or agencies of any jurisdiction and of
other governmental bodies or agencies that may reasonably be deemed
necessary so that the consummation of the Merger and the other transactions
contemplated hereby will be in compliance with applicable laws, and they
shall not contain (i) any condition that, in the judgment of Pegasus
reasonably exercised, would reasonably be expected to result in a material
adverse change in the financial condition, results of operations or
businesses of either Pegasus, or Clinicor or (ii) any condition that, in
the judgment of Clinicor reasonably exercised, would reasonably be expected
to result in a material adverse change in the financial condition, results
of operations or businesses of Pegasus.
(D) Prior to the Effective Time, Haag, Armstrong and Irawan Onggara
shall have purchased in the aggregate 750,000 shares of Common Stock of
Pegasus, at a purchase price of $1.00 per share in cash pursuant to Stock
Purchase Agreements substantially in the form attached hereto as Exhibit
6.2(d).
(E) The Surviving Corporation and Randy Haag shall have entered into
an Investment Banking Rights Agreement in substantially the form attached
hereto as Exhibit 6.2(e).
(F) At the Effective Time, the Surviving Corporation shall have
entered into a three year option agreement under the Pegasus Option Plan
with each of Frank Ofner and Arthur Haag and shall have issued (i) options
to Frank Ofner to purchase up to 25,000 shares of Common Stock of the
Surviving Corporation at an exercise price of $0.10 per share, and (ii)
options to Arthur Haag to purchase up to 25,000 shares of Common Stock of
the Surviving Corporation at an exercise price of $0.10 per share.
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(G) At the Effective Time, the Surviving Corporation shall have
issued to each of Sammis and O'Donnell 150,000 incentive stock options
under the Pegasus Option Plan with an exercise price of $1.25 per share and
a five (5) year term, subject to the following vesting conditions:
(i) The first 100,000 stock options will vest 50,000 each to
Messrs. Sammis and O'Donnell no earlier than one (1) year after the Closing
if for the 1995 fiscal year the Surviving Corporation achieves sales of
$5.0 million or $750,000 in pre-tax earnings;
(ii) The next 50,000 options to each of Messrs. Sammis and
O'Donnell will vest no earlier than January 1, 1998 if prior thereto for
any rolling 12 month period the Surviving Corporation achieves $12 million
in sales or $2 million in pre-tax earnings; and
(iii) The final set of 50,000 options to each of Messrs. Sammis
and O'Donnell will vest no earlier than January 1, 1999 if prior thereto
for any rolling 12 month period the Surviving Corporation achieves $18
million in sales or $3 million in pre-tax earnings.
Each of the above options may be exercisable by delivery of a three-year
promissory note from Sammis and O'Donnell (as applicable) payable to the
Surviving Corporation, with interest only payable annually at the rate
required by the Internal Revenue Code to avoid the imputation of interest.
(H) At the Effective Time, the Surviving Corporation shall have also
entered into five year option agreements under the Pegasus Option Plan with
certain existing shareholders of Clinicor for options to purchase an
aggregate of 29,679 shares of Common Stock with an exercise price of $1.25.
Such options shall vest in increments of 16,959, 8,481 and 4,239 shares
upon the occurrence of each of the milestones/conditions set forth in
Section (g) immediately above.
(I) The Surviving Corporation and certain shareholders of Pegasus
shall have entered into a Preemptive Rights Agreement in substantially the
form attached hereto as Exhibit 6.1(i).
(J) The Surviving Corporation and each of Robert Sammis and Thomas
O'Donnell shall have entered into a Non-Compete Agreement in substantially
the form attached hereto as Exhibit 6.1(j).
(K) O'Donnell and Sammis shall have entered into a Proprietary
Information and Inventions Agreement with the Surviving Corporation in
substantially the form attached hereto as Exhibit 6.1(k).
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PEGASUS. The obligations of
-----------------------------------------------
Pegasus to effect the Merger and to consummate the other transactions
contemplated hereby are, at the option of Pegasus, also subject to the
fulfillment at or prior to the Closing of the following conditions:
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(A) The representations and warranties of Clinicor contained in
Section 2.2 shall be accurate in all material respects as of the date of
this Agreement, and there shall be no inaccuracy in any such
representations and warranties as of the Closing Date except to the extent
that any such inaccuracy individually or in the aggregate does not
constitute a material adverse change in the financial condition, results of
operations or businesses of Clinicor; all of the terms, covenants and
conditions of this Agreement to be complied with and performed by Clinicor
at or before the Closing shall have been duly complied with and performed
in all material respects; and a certificate to the foregoing effect dated
as of the Closing Date and signed by the Chief Executive Officer or Chief
Financial Officer of Clinicor shall have been delivered to Pegasus.
(B) Since the date of this Agreement, no material adverse change in
the financial condition, results of operations or businesses of Clinicor
shall have occurred and a certificate to such effect dated as of the
Closing Date and signed by the Chief Executive Officer or Chief Financial
Officer of Clinicor shall have been delivered to Pegasus.
(C) Holders of shares of Clinicor Common Stock shall not have
dissenters' rights with respect to the Merger or the other transactions
contemplated hereby, as provided in Section 5.11 of the Texas Law.
(D) Pegasus shall have received a written opinion of counsel to
Clinicor, dated as of the Closing Date, substantially to the effect set
forth in Exhibit 6.2(d) hereto.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF CLINICOR. The obligations of
------------------------------------------------
Clinicor to effect the Merger and consummate the other transactions contemplated
hereby are, at the option of Clinicor, also subject to the fulfillment at or
prior to the Closing of the following conditions:
(A) The representations and warranties of Pegasus contained in
Section 2.1 shall be accurate in all material respects as of the date of
this Agreement, and there shall be no inaccuracy in any such
representations and warranties as of the Closing Date except to the extent
that any such inaccuracy individually or in the aggregate does not
constitute a material adverse change in the financial condition, results of
operations or businesses of Pegasus; all of the terms, covenants and
conditions of this Agreement to be complied with and performed by Pegasus
at or before the Closing shall have been duly complied with and performed
in all material respects; and a certificate to the foregoing effect dated
as of the Closing Date and signed by the Chief Executive Officer or Chief
Financial Officer of Pegasus shall have been delivered to Clinicor.
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(B) Since the date of this Agreement, no material adverse change in
the financial condition, results of operations or businesses of Pegasus
shall have occurred, and a certificate to such effect dated as of the
Closing Date and signed by the Chief Executive Officer or Chief Financial
Officer of Pegasus shall have been delivered to Clinicor.
(C) Pegasus shall have taken such action as may be necessary to
appoint or elect to the Pegasus Board the Arthur Haag, Robert Sammis and
Thomas O'Donnell as contemplated by Section 4.10.
(D) Clinicor shall have received a written opinion of counsel to
Pegasus, dated as of the Closing Date, substantially to the effect set
forth in Exhibit 6.3(d) hereto.
VII. MISCELLANEOUS
7.1 WAIVER AND AMENDMENT. Any provision of this Agreement may be waived
--------------------
at any time by the party that is, or whose shareholders or shareholders are,
entitled to the benefits thereof. This Agreement may not be amended or
supplemented at any time, except by an instrument in writing signed on behalf of
each party hereto; provided however, that after this Agreement has been approved
and adopted by the shareholders of Pegasus and the shareholders of Clinicor this
Agreement may be amended only as may be permitted by applicable provisions of
the Nevada Law and the Texas Law.
7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------------------
warranties in this Agreement shall survive the consummation of the Merger.
7.3 PUBLIC STATEMENTS. Pegasus and Clinicor agree to consult with each
-----------------
other prior to issuing any press release or otherwise making any public
statement or disclosure with respect to the transactions contemplated hereby,
and neither will issue any such press release or make any such public statement
or disclosure prior to such consultation, except as may be required by law or
applicable stock exchange policy.
7.4 KNOWLEDGE. All references in this Agreement to knowledge of a
---------
corporation shall be deemed to mean knowledge of any one or more of its
executive officers.
7.5 ASSIGNMENT. This Agreement will not be assignable by the parties
----------
hereto.
7.6 NOTICES. All notices, requests, claims, demands and other
-------
communications hereunder will be in writing and will be given (and will be
deemed to have been duly received if so given) by delivery by cable, telegram,
telex, telecopy or by registered or certified mail, postage prepaid, return
receipt requested, to the respective parties as follows:
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if to Pegasus:
PEGASUS TAX AND FINANCIAL
PLANNING SERVICES, INC.
11747 Quail Creek Drive
Houston, TX
Telephone Number:
Telecopy Number: (713) 320-9035
with copy to:
Donald C. Reinke, Esq.
Pezzola & Reinke
1999 Harrison Street, Suite 1300
Oakland, CA 94612
Telephone Number: 510/839-1350
Telecopy Number: 510/834-7440
and if to Clinicor:
Clinicor Corporation
307 Camp Craft Road, Suite 200
Austin, TX 78746
Telephone Number: 512/327-7524
Telecopy Number: 512/327-8226
with copy to:
Karen Bartoletti, Esq.
Graves, Dougherty, Hearon & Moody
515 Congress Avenue, Suite 2300
Austin, TX 78701
Telephone Number: 512/480-5612
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE SUBSTANTIVE LAW OF THE STATE OF TEXAS WITHOUT GIVING EFFECT
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF, EXCEPT TO THE EXTENT THE INTERNAL
CORPORATE AFFAIRS OF PEGASUS OR THE SURVIVING CORPORATION ARE GOVERNED BY THE
LAWS OF THE STATE OF NEVADA.
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7.8 SEVERABILITY. If any term, provision, covenant, agreement or
------------
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants, agreements and restrictions of this Agreement will continue in full
force and effect and will in no way be affected, impaired or invalidated.
7.9 COUNTERPARTS. This Agreement may be executed in counterparts, each of
------------
which will be an original, but all of which together will constitute one and the
same agreement.
7.10 HEADINGS. The section headings herein are for convenience only and
--------
will not affect the construction hereof.
7.11 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
----------------
between the parties hereto and supersedes all other prior agreements and
understandings, both oral and written, between the parties relating to the
subject matter hereof and thereof.
IN WITNESS WHEREOF, Pegasus has caused this Agreement to be signed by its
Chairman or its President or a Vice President and attested by its Secretary or
an Assistant Secretary, and Clinicor has caused this Agreement to be signed by
its Chairman or its President or a Vice President and attested by its Secretary
or an Assistant Secretary, all as of the date first above written.
-26-
<PAGE>
7.8 SEVERABILITY. If any term, provision, covenant, agreement or
------------
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants, agreements and restrictions of this Agreement will continue in full
force and effect and will in no way be affected, impaired or invalidated.
7.9 COUNTERPARTS. This Agreement may be executed in counterparts, each of
------------
which will be an original, but all of which together will constitute one and the
same agreement.
7.10 HEADINGS. The section headings herein are for convenience only and
--------
will not affect the construction hereof.
7.11 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
----------------
between the parties hereto and supersedes all other prior agreements and
understandings, both oral and written, between the parties relating to the
subject matter hereof and thereof.
IN WITNESS WHEREOF, Pegasus has caused this Agreement to be signed by its
Chairman or its President or a Vice President and attested by its Secretary or
an Assistant Secretary, and Clinicor has caused this Agreement to be signed by
its Chairman or its President or a Vice President and attested by its Secretary
or an Assistant Secretary, all as of the date first above written.
PEGASUS TAX AND FINANCIAL CLINICOR, INC.
SERVICES, INC. A TEXAS CORORATION
A NEVADA CORPORATION
by /s/ Arthur P. Haag by /s/ Thomas P. O'Donnell
------------------------ ----------------------------
(Signature) (Signature)
ARTHUR P. HAAG, PRESIDENT THOMAS P. O'DONNELL, PRESIDENT
- -------------------------- ------------------------------
(Print Name & Title) (Print Name & Title)
/s/ Randolph Haag /s/ Thomas P. O'Donnell
- -------------------------- ------------------------------
RANDOLPH HAAG THOMAS P. O'DONNELL
1918.B Holly Hill Drive
- -------------------------- ------------------------------
Austin TX 78746
- -------------------------- ------------------------------
(Address) (Address)
/s/ Russell Armstrong /s/ Robert S. Sammis
- -------------------------- ------------------------------
RUSSELL ARMSTRONG ROBERT S. SAMMIS
9454 Wilshire Blvd., 6th Floor 3709 Gilbert
- -------------------------- ------------------------------
Beverly Hills, CA 90212 Austin, Tx 78703
- -------------------------- ------------------------------
(Address) (Address)
-26-
<PAGE>
Exhibits and Schedules Omitted
<PAGE>
EXHIBIT 10(f)
COVENANT
NOT TO COMPETE AGREEMENT
------------------------
THIS COVENANT NOT TO COMPETE AGREEMENT is made and entered effective as of
February 27, 1995, by and among CLINICOR, INC., a Nevada corporation, formerly
--
known as PEGASUS TAX AND FINANCIAL PLANNING SERVICES, INC. (the "Corporation"),
THOMAS P. O'DONNELL ("O'Donnell") and ROBERT SAMMIS ("Sammis").
RECITALS
A. O'Donnell and Sammis are employees, officers, directors and principal
shareholders of this Corporation.
B. In consideration of the merger of their former company, Clinicor,
Inc., a Texas corporation, into this Corporation pursuant to that certain
Agreement and Plan of Merger dated February 17, 1995 (the "Merger Agreement")
under which they were issued shares and stock options in this Corporation, and
as a condition of their continued employment, they have agreed to enter into
this Covenant Not To Compete Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the terms and conditions set forth
herein, and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. COVENANT NOT TO COMPETE.
-----------------------
A. COVENANT. For a period commencing from the Effective Time (as
--------
defined in the Merger Agreement) and ending two years after their termination of
employment either voluntarily or by this Corporation "for cause" (defined to
include but not be limited to (i) neglect of his duties or a violation of any of
the provisions of any employment agreement or other arrangement with the
Corporation, which continues after written notice and a reasonable opportunity
(not to exceed thirty (30) days) in which to cure; (ii) fraud, embezzlement,
defalcation or conviction of any felonious offense; or (iii) intentionally
imparting confidential information relating to the Corporation or its business
to competitors or to other third parties other than in the course of carrying
out his corporate duties) (hereinafter the "Covenant Period"), neither O'Donnell
or Sammis shall, directly or indirectly, engage or participate in any activities
within the United States (hereinafter the "Covenant Territory"), which are the
same as, or competitive with, the activities the Corporation presently performs
or contemplates performing as set forth in Clinicor's Business Plan (as
identified in the Merger Agreement) (hereinafter the "Prohibited Activities").
B. COVENANT SEVERABILITY. O'Donnell and Sammis agree that the above
---------------------
covenant shall be deemed a series of separate covenants, one for each state and
county in the Covenant Territory. Each covenant shall be deemed independent and
severable. The invalidity or partial invalidity or unenforceability of any one
covenant shall not affect the validity or unenforceability of any other covenant
provided in this Section.
2. MISCELLANEOUS.
-------------
A. ADDITIONAL DOCUMENTS. Each of the parties agrees to execute and
--------------------
deliver, at the request of the other party, any and all other documents or other
written instruments as may be reasonably necessary to effectuate the purposes of
this Agreement.
B. APPLICABLE LAW. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Texas.
C. ATTORNEYS' FEES; COSTS. If a party breaches this Agreement, the
----------------------
breaching party shall pay all costs and attorneys' fees incurred by the other
party in connection with such breach, whether or not any arbitration or
litigation is commenced.
D. COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, each of which may be executed by less than all of the parties,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one (1) instrument.
<PAGE>
E. DESCRIPTIVE HEADINGS. The headings used herein are descriptive
--------------------
only and for the convenience of identifying provisions, and are not
determinative of the meaning or effect of any such provisions.
F. ENTIRE AGREEMENT. This Agreement constitutes the entire
----------------
agreement and understanding among the parties with respect to the subject
matters herein and supersedes and replaces any prior agreements and
understandings, whether oral or written, between and among them with respect to
such matters. The provisions of this Agreement may be waived, altered, amended
or repealed in whole or in part only upon the written consent of all parties to
this Agreement and either Randy Haag or Arthur Haag so long as either Haag is a
shareholder in the Corporation.
G. NO IMPLIED WAIVERS. The failure of either party at any time to
------------------
require performance by the other party of any provision hereof shall not affect
in any way the right to require such performance at any time thereafter, nor
shall the waiver by either party of a breach of any provision hereof be taken or
held to be a waiver of any subsequent breach of the same provision or any other
provision.
H. NONASSIGNABILITY. Neither this Agreement, nor any interest
----------------
herein, shall be assigned, transferred, hypothecated or otherwise conveyed by
any party without the prior written consent of the other parties. Any such
attempted conveyance in violation of this Section shall be void.
I. SEVERABILITY. If for any reason any provision of this Agreement
------------
shall be determined to be invalid or inoperative, the validity and effect of the
other provisions hereof shall not be affected thereby, provided that no such
severability shall be effective if it causes a material detriment to any party.
J. SUCCESSORS AND ASSIGNS. Subject to any provisions herein with
----------------------
regard to assignment, all covenants and agreements herein shall bind and inure
to the benefit of the respective heirs, executors, administrators, successors
and assigns of the parties hereto.
K. NOTICE. Any notice, payment, report or other communication
------
required or permitted to be given by one party to any other party by this
Agreement shall be in writing and either (i) served personally on the other
party; (ii) sent by express, registered or certified first class mail, postage
prepaid, addressed to the other party or parties at its address indicated next
to their signatures below, or to such other address as any addressee shall have
theretofore furnished to the other parties by like notice; (iii) delivered by
commercial courier to the other party; or (iv) sent by facsimile with the
original sent by express mail. Such notice shall be deemed received on the
second day after transmittal if sent by one day courier together with a
transmission of such notice by facsimile if the recipient has the capability to
receive a facsimile at its address and if sent by other methods shall be deemed
received upon receipt.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
CLINICOR, INC., FORMERLY
PEGASUS TAX AND FINANCIAL PLANNING SERVICES, INC.
307 Camp Craft Road, Suite 200
Austin, TX 78746
by /s/ Thomas P. O'Donnell
--------------------------------
(Signature)
THOMAS P.O'DONNELL, PRESIDENT
- -----------------------------------
(Print Name & Title)
/s/ Thomas P. O'Donnell /s/ Robert S. Sammis
- ----------------------------------- -----------------------------------
THOMAS P. O'DONNELL ROBERT S. SAMMIS
1918-B HOLLY HILL DR 3709 Gilbert
- ----------------------------------- -----------------------------------
AUSTIN, TX 78746 Austin, TX 78703
- ----------------------------------- -----------------------------------
(Address) (Address)
-2-
<PAGE>
EXHIBIT 10(g)
CLINICOR, INC.
STATEMENT REGARDING
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
WITH
THOMAS P. O'DONNELL
-------------------
Attached to this Statement is your Employee Proprietary Information and
Inventions Agreement (the "Agreement") with CLINICOR, INC., a Nevada
corporation, formerly known as Pegasus Tax and Financial Planning Services, Inc,
(the "Company").
Please take the time to review the Agreement carefully. The Agreement
contains material restrictions on your right to disclose or use, during or after
your employment, information learned or developed by you during your employment
with the Company.
The Company considers this Agreement to be very important to the protection
of its business. The Company intends to enforce the terms of the Agreement and
to pursue, as appropriate, injunctions, restraining orders and money damages,
should you violate the Agreement.
If you have any questions concerning the Agreement you may wish to consult
an attorney. The employees and agents of the Company are not authorized to, and
will not, give you legal advice concerning the Agreement.
If you have read and understand the Agreement, and if you agree to its
terms and conditions, please return a fully executed copy of it to the Company,
retaining one copy for yourself.
Reviewed and Understood:
Dated: February 27, 1995 /s/ Thomas P. O'Donnell
--------------------------
(Signature)
<PAGE>
CLINICOR, INC.
EMPLOYEE PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
1. I understand that, in the course of my work as an employee of CLINICOR
INC., a Nevada corporation, formerly known as Pegasus Tax and Financial Planning
Services, Inc. (the "Company"), I have had and may have access to Proprietary
Information (as defined below) concerning the Company and its customers. In
consideration of my employment by the Company, I agree to hold in confidence all
such Proprietary Information and will not disclose such information directly or
indirectly to anyone outside of the Company, or use, copy, publish, summarize,
make lists of or remove from Company premises such information (or remove from
the premises any other property of the Company) except (a) during my employment
to the extent necessary to carry out my responsibilities as an employee of the
Company; and (b) after termination of my employment, as specifically authorized
by the Company's Board of Directors. I further understand that the publication
of any Proprietary Information through literature or speeches must be approved
in advance in writing by the President of the Company, or his designee.
2. I understand that the reference to "Proprietary Information" in this
Agreement means all information and any idea in whatever form, tangible or
intangible, whether disclosed to, or learned by or developed by me, pertaining
in any manner to the business of the Company (or any affiliate of it that might
be formed) and of the Company's customer's including, but not limited to, the
Company's business plans and objectives, financial projections, marketing plans,
technical data, patentable and unpatentable designs, concepts, ideas,
inventions, know how and other trade secrets of the Company, (all of which are
hereinafter referred to as the "Proprietary Information") unless: (a) the
information is or becomes publicly known through lawful means; (b) the
information was rightfully in my possession or part of my general knowledge
prior to my employment by the Company; or (c) the information is disclosed to me
without confidential or proprietary restriction by a third party who rightfully
possesses the information (without confidential or proprietary restriction) and
did not learn of it directly or indirectly, from the Company. With respect to
each of the above exceptions, I shall have the burden of proof. Although
certain information may be generally known in the relevant industry, the fact
that the Company uses it may not be so known. In such instance, the knowledge
that the Company uses the information would comprise Proprietary Information.
Furthermore, the fact that various fragments of information or data may be
generally known in the relevant industry does not mean that the manner in which
the Company combines them, and the results obtained thereby, are known. In such
instance, that would also comprise Proprietary Information.
3. I agree that I will maintain at my workstation, or in other places
under my control, only such Proprietary Information which I have a current
"need-to-know," and that I will return to the appropriate person or otherwise
properly dispose of Proprietary Information once my need to know is no longer
extant. I agree that I will not make copies of information unless I have a
legitimate need for such copies in connection with my work.
-1-
<PAGE>
4. I hereby acknowledge and agree that all personal property, including,
without limitation, all books, manuals, records, models, reports, notes,
contracts, lists and other documents, Proprietary Information and equipment
furnished to or prepared by me in course of or incident to my employment,
belongs to the Company and shall be promptly returned to the Company upon
termination of my employment by the Company.
5. I also agree, in consideration of my continued employment by the
Company, that I will maintain adequate and current written records on my
conception and development of all "Invention Ideas" and to disclose to the
Company all Invention Ideas and relevant records. "Invention Ideas" as used in
this Agreement shall mean any and all Ideas, processes, trademarks, service
marks, inventions, discoveries, patents, copyrights and improvements to the
foregoing that are conceived, developed or created by me alone or with others
during my employment with the Company -- whether or not conceived, developed or
created during regular work hours -- and that: (a) fall within the existing or
contemplated business of the Company or any affiliate of it that might be
formed; (b) relate to actual or demonstrably anticipated research or development
of the Company (or any affiliate of it that might be formed); (c) result from
work done by me for or at the request of the Company (or any affiliate of it
that might be formed); or (d) result from my use of or access to any Proprietary
Information or any equipment, supplies, facilities, memoranda, data, customer
lists, processes or the like of the Company (or any affiliate of it that might
be formed).
6. I further agree that all information ad records pertaining to any
idea, process, trademark, service mark, invention, discovery, patent or
copyright that I do not believe to be an Invention Idea, but that is conceived,
developed or created by me (alone or with others) during my employment with the
Company relating to the Company's present or future health care contract
research business activities and related applications, markets, and
technologies, shall be promptly disclosed to the Company (such disclosure to be
received in confidence). The Company shall examine such information to
determine if in fact the idea, process or invention, etc., is an Invention Idea
subject to this Agreement.
7. I further agree to assign to the Company, without further
consideration, my entire right, title and interest (throughout the United States
and in all foreign countries), free and clear of all liens and encumbrances, in
and to each Invention Idea relating to the Company's present or future health
care contract research business activities and related applications, markets,
and technologies, which shall be the sole property of the Company, whether or
not patentable. In the event any Invention Idea shall be deemed by the Company
to be patentable or otherwise registrable, I shall assist the Company (at its
expense) in obtaining letters patent or other applicable registrations thereon
and shall execute all documents and do all other things (including testifying at
the Company's expense) necessary or proper to obtain letters patent or other
applicable registrations thereon and vest to the Company, or any affiliate of it
that might be formed, as specified by the Board of Directors of the Company,
with full title thereto. Should the Company be unable to secure my signature on
any document necessary to apply for, prosecute, obtain or enforce any patent,
copyright or other right or protection relating to any Invention Idea, whether
due to my mental or physical incapacity or any other cause, I hereby irrevocably
designate and appoint the Company and each of its duly authorized officers and
agents as my agent and
-2-
<PAGE>
attorney-in-fact, to act for and in my behalf and stead, to execute and file any
such document and to do all other lawfully permitted acts to further the
prosecution, issuance and enforcement of patents, copyrights or other rights or
protections with the same force and effect as if executed and delivered by me.
8. I acknowledge that there are no ideas, processes, trademarks, service
marks, inventions, discoveries, patents, copyrights or improvements to the
foregoing that I desire to exclude from this Agreement other than those
specified on the back of this form. To the best of my knowledge, there is no
existing contract in conflict with this Agreement or any other contract to
assign ideas, processes, inventions, trademarks, service marks, discoveries,
patents or copyrights that is now in existence between me and any other person,
corporation, partnership or other business or governmental entity. I will not
disclose to the Company, or use, or induce the Company to use, an proprietary
information or trade secrets of others. I represent and warrant that I have
returned all property and confidential information belonging to all prior
employees.
9. Because of the difficulty of establishing when any idea, process,
invention, etc., is first conceived by me, or whether it results from access to
Proprietary Information of the Company or the Company's equipment, facilities
and data, I further agree that any idea, process, trademark, service mark,
invention, discovery, patent, copyright or any improvement to the foregoing
shall be presumed to be an Invention Idea relating to the Company's present or
future health care contract research business activities and related
applications, markets, and technologies if it falls within subsection 6(a), (b),
(c) or (d) and is made, used, sold, exploited or reduced to practice by me or
---
with my aid within one (1) year after termination of my employment with the
Company. In any legal dispute concerning this Section 10, I can rebut the above
presumption if I can prove that the idea, process, etc., in question was not
first conceived of during my employment with the Company, did not result from,
or was in any way affected by, the use of Proprietary Information of the
Company, and did not involve the use of the Company's equipment, facilities or
data.
10. I further understand that the Company may assign to another person or
entity the Company's rights to Invention Ideas covered by this Agreement, and
the Company's other rights under this Agreement.
11. Nothing in Sections 1 through 11 are intended to limit any remedy of
the Company under applicable law. In the event of termination (voluntary or
otherwise) of my employment with the Company, I agree promptly and without
request, to deliver to and inform the Company of all documents and data
pertaining to my employment and the Proprietary Information and Invention Ideas
of the Company or its clients, whether prepared by me or otherwise coming into
my possession or control, and to sign any requested documentation in furtherance
of the foregoing. I will not retain any written or other tangible material
containing any information concerning or disclosing any of the Proprietary
Information or Invention Ideas of the Company or its clients. In addition, I
recognize that breach of this Agreement may cause the Company irreparable harm
for which money is inadequate compensation. I therefore agree that the Company
will be entitled to injunctive relief to enforce this Agreement, in addition to
damages and other available remedies.
-3-
<PAGE>
12. This Agreement shall be governed by and construed in accordance with
the laws of and enforced in the State of Texas applicable to contracts as if
between Texas residents entered into within the State of Texas. If for any
reason any provision of this Agreement shall be determined to be invalid or
inoperative, the validity and effect of the other provisions herein shall not be
affected thereby, provided that no such severability shall be effective if it
causes a material detriment to any party.
13. The parties intend that the terms of this Agreement shall be the final
expression of their agreement with respect to the subject matter hereof and may
not be contradicted by evidence of any prior or contemporaneous agreement. The
parties further intend that this Agreement shall constitute the complete and
exclusive statement of its terms and that no extrinsic evidence whatsoever may
be introduced in any judicial administrative, or other legal proceeding
involving this Agreement. This Agreement may not be amended except by an
agreement in writing signed by me, by a duly authorized representative of the
Company and either Randy Haag or Arthur Haag so long as either Haag is a
shareholder of the Company.
14. If there is a dispute under this Agreement, the prevailing party shall
pay all costs and attorneys' fees incurred by the other party in connection with
such dispute, whether or not any arbitration or litigation is commenced.
15. This Agreement shall be binding upon me and my heirs, executors,
administrators, successors and assigns and shall inure to the benefit of the
Company's successors and assigns.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY NOTED ON EXHIBIT A TO THIS FORM ANY IDEAS, PROCESSES, TRADEMARKS,
SERVICE MARKS, INVENTIONS, DISCOVERIES, PATENTS, COPYRIGHTS OR IMPROVEMENTS TO
THE FOREGOING THAT I DESIRE TO EXCLUDE FROM THIS AGREEMENT.
Thomas P. O'Donnell
- -----------------------
Employee's Name
/s/ Thomas P. O'Donnell Date: 2-27-95
- ------------------------ ----------
Employee's Signature
-4-
<PAGE>
EXHIBIT A
---------
List of Excluded Inventions
---------------------------
None.
<PAGE>
EXHIBIT 10 (h)
CLINICOR, INC.
STATEMENT REGARDING
EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT
WITH
ROBERT S. SAMMIS
----------------
Attached to this Statement is your Employee Proprietary Information and
Inventions Agreement (the "Agreement") with CLINICOR, INC., a Nevada
corporation, formerly known as Pegasus Tax and Financial Planning Services, Inc.
(the "Company").
Please take the time to review the Agreement carefully. The Agreement
contains material restrictions on your right to disclose or use, during or after
your employment, information learned or developed by you during your employment
with the Company.
The Company considers this Agreement to be very important to the protection
of its business. The Company intends to enforce the terms of the Agreement and
to pursue, as appropriate, injunctions, restraining orders and money damages,
should you violate the Agreement.
If you have any questions concerning the Agreement you may wish to consult
an attorney. The employees and agents of the Company are not authorized to, and
will not, give you legal advice concerning the Agreement.
If you have read and understand the Agreement, and if you agree to its
terms and conditions, please return a fully executed copy of it to the Company,
retaining one copy for yourself.
Reviewed and Understood:
Dated: February 27, 1995 /s/ Robert S. Sammis
-- -----------------------------
(Signature)
<PAGE>
CLINICOR, INC.
EMPLOYEE PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
1. I understand that, in the course of my work as an employee of
CLINICOR, Inc. a Nevada corporation, formerly known as Pegasus Tax and Financial
Planning Services, INC. (the "Company"), I have had and may have access to
Proprietary Information (as defined below) concerning the Company and its
customers. In consideration of my employment by the Company, I agree to hold in
confidence all such Proprietary Information and will not disclose such
information directly or indirectly to anyone outside of the Company, or use,
copy, publish, summarize, make lists of or remove from Company premises such
information (or remove from the premises any other property of the Company)
except (a) during my employment to the extent necessary to carry out my
responsibilities as an employee of the Company; and (b) after termination of my
employment, as specifically authorized by the Company's Board of Directors, I
further understand that the publication of any Proprietary Information through
literature or speeches must be approved in advance in writing by the President
of the Company, or his designee.
2. I understand that the reference to "Proprietary Information" in this
Agreement means all information and any idea in whatever form, tangible or
intangible, whether disclosed to, or learned by or developed by me, pertaining
in any manner to the business of the Company (or any affiliate of it that might
be formed) and of the Company's customer's including, but not limited to, the
Company's business plans and objectives, financial projections, marketing plans,
technical data, patentable and unpatentable designs, concepts, ideas,
inventions, know how and other trade secrets of the Company, (all of which are
hereinafter referred to as the "Proprietary Information") unless: (a) the
information is or becomes publicly known through lawful means; (b) the
information was rightfully in my possession or part of my general knowledge
prior to my employment by the Company; or (c) the information is disclosed to me
without confidential or proprietary restriction by a third party who rightfully
possesses the information (without confidential or proprietary restriction) and
did not learn of it directly or indirectly, from the Company. With respect to
each of the above exceptions, I shall have the burden of proof. Although certain
information may be generally known in the relevant industry, the fact that the
Company uses it may not be so known. In such instance, the knowledge that the
Company uses the information would comprise Proprietary Information.
Furthermore, the fact that various fragments of information or data may be
generally known in the relevant industry does not mean that the manner in which
the Company combines them, and the results obtained thereby, are known. In such
instance, that would also comprise Proprietary Information.
3. I agree that I will maintain any my workstation, or in other places
under my control, only such Proprietary Information which I have a current
"need-to-know," and that I will return to the appropriate person or otherwise
properly dispose of Proprietary Information once my need to know is no longer
extant. I agree that I will not make copies of information unless I have a
legitimate need for such copies in connection with my work.
-1-
<PAGE>
4. I hereby acknowledge and agree that all personal property, including,
without limitation, all books, manuals, records, models, reports, notes,
contracts, lists and other documents, Proprietary Information and equipment
furnished to or prepared by me in the course of or incident to my employment,
belongs to the Company and shall be promptly returned to the Company upon
termination of my employment by the Company.
5. I also agree, in consideration of my continued employment by the
Company, that I will maintain adequate and current written records on my
conception and development of all "Invention Ideas" and to disclose to the
Company all Invention Ideas and relevant records. "Invention Ideas" as used in
this Agreement shall mean any and all ideas, processes, trademarks, service
marks, inventions, discoveries, patents, copyrights and improvements to the
foregoing that are conceived, developed or created by me alone or with others
during my employment with the Company -- whether or not conceived, developed or
created during regular work hours -- and that: (a) fall within the existing or
contemplated business of the Company or any affiliate of it that might be
formed; (b) relate to actual or demonstrably anticipated research or development
of the Company (or any affiliate of it that might be formed); (c) result from
work done by me for or at the request of the Company (or any affiliate of it
that might be formed); or (d) result from my use of or access to any Proprietary
Information or any equipment, supplies, facilities, memoranda, data, customer
lists, processes or the like of the Company (or any affiliate of it that might
be formed).
6. I further agree that all information and records pertaining to any
idea, process, trademark, service mark, invention, discovery, patent or
copyright that I do not believe to be an Invention Idea, but that is conceived,
developed or created by me (alone or with others) during my employment with the
Company relating to the Company's present or future health care contract
research business activities and related applications, markets, and
technologies, shall be promptly disclosed to the Company (such disclosure to be
received in confidence). The Company shall examine such information to determine
if in fact the idea, process or invention, etc., is an Invention Idea subject to
this Agreement.
7. I further agree to assign to the Company, without further
consideration, my entire right, title and interest (throughout the United States
and in all foreign countries), free and clear of all liens and encumbrances,
in and to each Invention Idea relating to the Company's present or future health
care contract research business activities and related applications, markets,
and technologies, which shall be the sole property of the Company, whether or
not patentable. In the event any Invention Idea shall be deemed by the Company
to be patentable or otherwise registrable, I shall assist the Company (at its
expense) in obtaining letters patent or other applicable registrations thereon
and shall execute all documents and do all other things (including testifying at
the Company's expense) necessary or proper to obtain letters patent or other
applicable registrations thereon and vest to the Company, or any affiliate of it
that might be formed, as specified by the Board of Directors of the Company,
with full title thereto. Should the Company be unable to secure my signature on
any document necessary to apply for, prosecute, obtain or enforce any patent,
copyright or other right of protection relating to any Invention Idea, whether
due to my mental or physical incapacity or any other cause, I hereby irrevocably
designate and appoint the Company and each of its duly authorized officers and
agents as my agent and
-2-
<PAGE>
attorney-in-fact, to act for and in my behalf and stead, to execute and file any
such document and to do all other lawfully permitted acts to further the
prosecution, issuance and enforcement of patents, copyrights or other rights or
protections with the same force and effect as if executed and delivered by me.
8. I acknowledge that there are no ideas, processes, trademarks, service
marks, inventions, discoveries, patents, copyrights or improvements to the
foregoing that I desire to exclude from this Agreement other than those
specified on the back of this form. To the best of my knowledge, there is no
existing contract in conflict with this Agreement or any other contract to
assign ideas, processes, inventions, trademarks, service marks, discoveries,
patents or copyrights that is now in existence between me and any other person,
corporation, partnership or other business or governmental entity. I will not
disclose to the Company, or use, or induce the Company to use, an proprietary
information or trade secrets of others. I represent and warrant that I have
returned all property and confidential information belonging to all prior
employers.
9. Because of the difficulty of establishing when any idea, process,
invention, etc., is first conceived by me, or whether it results from access to
Proprietary Information of the Company or the Company's equipment, facilities
and data, I further agree that any idea, process, trademark, service mark,
invention, discovery, patent, copyright or any improvement to the foregoing
shall be presumed to be an Invention Idea relating to the Company's present or
future health care contract research business activities and related
applications, markets, and technologies if it falls within subsection 6(a), (b),
(c) or (d) and is made, used, sold, exploited or reduced to practice by me or
---
with my aid within one (1) year after termination of my employment with the
Company. In any legal dispute concerning this Section 10, I can rebut the above
presumption if I can prove that the idea, process, etc., in question was not
first conceived of during my employment with the Company, did not result from,
or was in any way affected by, the use of Proprietary Information of the
Company, and did not involve the use of the Company's equipment, facilities or
data.
10. I further understand that the Company may assign to another person or
entity the Company's rights to Invention Ideas covered by this Agreement, and
the Company's other rights under this Agreement.
11. Nothing in Sections 1 through 11 are intended to limit any remedy of
the Company under applicable law. In the event of termination (voluntary or
otherwise) of my employment with the Company, I agree promptly and without
request, to deliver to and inform the Company of all documents and data
pertaining to my employment and the Proprietary Information and Invention Ideas
of the Company or its clients, whether prepared by me or otherwise coming into
my possession or control; and to sign any requested documentation in furtherance
of the foregoing. I will not retain any written or tangible material containing
any information concerning or disclosing any of the Proprietary Information or
Invention Ideas of the Company or its clients. In addition, I recognize that
breach of this Agreement may cause the Company irreparable harm for which money
is inadequate compensation. I therefore agree that the Company will be entitled
to injunctive relief to enforce this Agreement, in addition to damages and other
available remedies.
-3-
<PAGE>
12. This Agreement shall be governed by and construed in accordance with
the laws of and enforced in the State of Texas applicable to contracts as if
between Texas residents entered into within the State of Texas. If for any
reason any provision of this Agreement shall be determined to be invalid or
inoperative, the validity and effect of the other provisions herein shall not be
affected thereby, provided that no such severability shall be effective if it
causes a material detriment to any party.
13. The parties intend that the terms of this Agreement shall be the final
expression of their agreement with respect to the subject matter hereof and may
not be contradicted by evidence of any prior or contemporaneous agreement. The
parties further intend that this Agreement shall constitute the complete and
exclusive statement of its terms and that no extrinsic evidence whatsoever may
be introduced in any judicial administrative, or other legal proceeding
involving this Agreement. This Agreement may not be amended except by an
agreement in writing signed by me, by a duly authorized representative of the
Company and either Randy Haag or Arthur Haag so long as either Haag is a
shareholder of the Company.
14. If there is a dispute under this Agreement, the prevailing party shall
pay all costs and attorneys' fees incurred by the other party in connection with
such dispute, whether or not any arbitration or litigation is commenced.
15. This Agreement shall be binding upon me and my heirs, executors,
administrators, successors and assigns and shall inure to the benefit of the
Company's successors and assigns.
I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE
COMPLETELY NOTED ON EXHIBIT A TO THIS FORM ANY IDEAS, PROCESSES, TRADEMARKS,
SERVICE MARKS, INVENTIONS, DISCOVERIES, PATENTS, COPYRIGHTS OR IMPROVEMENTS TO
THE FOREGOING THAT I DESIRE TO EXCLUDE FROM THIS AGREEMENT.
Robert S. Sammis
- --------------------
Employee's Name
/s/ Robert S. Sammis DATE: 2-27-95
- --------------------- ----------
Employee's Signature
-4-
<PAGE>
EXHIBIT A
---------
List of Excluded Inventions
---------------------------
None.
<PAGE>
EXHIBIT 10(i)
AGREEMENT
This agreement is entered into between Randolph J. Haag ("Haag") and
Clinicor, Inc., a Nevada corporation (the "Company"), on the 5th day of March,
1996.
W I T N E S S E T H:
WHEREAS, Haag has in the past provided certain consulting services to the
Company; and
WHEREAS, Haag is the beneficiary of certain contract rights arising under
various agreements to which Haag and the Company are parties; and
WHEREAS, in consideration of Haag's prior consulting services and his
relinquishment of the above-referenced contract rights, the Company has agreed
to issue to Haag an option (the "Option") to purchase certain shares of the
Company's common stock and to pay Haag Twenty Five Thousand and No/100 Dollars
($25,000.00) in cash;
NOW, THEREFORE, the parties hereto agree as follows:
1. Actions at Closing. Simultaneously with the execution hereof, the
------------------
Company (i) shall pay to Haag Twenty Five Thousand and No/100 Dollars
($25,000.00) in cash, (ii) shall pay to SJ Capital Inc. Eleven Thousand One
Hundred Seventy and 34/100 Dollars ($11,170.34) in cash, which will satisfy in
full the Company's obligation to pay consulting fees pursuant to Section 3(c) of
that certain Sales Agent Agreement made effective as of September 15, 1995 by
and between the Company and SJ Capital Inc. and (iii) shall
<PAGE>
execute and deliver to Haag an option agreement in the form attached hereto as
Exhibit A.
- ---------
2. Covenants and Representations. Haag represents to the Company the
-----------------------------
following:
(a) Haag understands that the Option and any Common Stock
(collectively, the "Securities") purchased upon its exercise are securities, the
issuance of which requires compliance with federal and state securities laws.
(b) Haag is aware of the Company's business plan and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Haag is acquiring
the Securities for investment for his own account and not with a view to, or for
resale in connection with, any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
(c) Haag acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Haag further acknowledges and understands
that the Company is under no obligation to register the Securities. Haag
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such
-2-
<PAGE>
registration is not required in the opinion of counsel satisfactory to the
Company, and any other legend required under applicable state securities laws.
(d) In connection with any subsequent underwritten public offering of
the Company's securities, Haag agrees: (i) not to sell, make short sale of,
loan, grant any options for the purchase of, or otherwise dispose of any shares
of Common Stock acquired through exercise of the Option without the prior
written consent of the Company or the underwriters managing such underwritten
public offering for a period of one hundred eighty (180) days from the effective
date of such registration, and (ii) to execute any agreement reflecting this
Section 2(d) as may be requested by the underwriters at the time of the public
offering.
(e) Haag has reviewed with his own tax and securities advisors the
federal and state consequences associated with receipt and exercise of the
Option. Haag is relying solely upon his own advisors and not upon any statements
or representations of the Company or any of its agents with respect to tax
treatment of the Option or transferability of the Common Stock issuable upon
exercise of the Option. Haag understands that Haag (and not the Company) shall
be responsible for Haag's own tax liability that may result in connection with
the transactions contemplated by this Agreement. Haag hereby authorizes the
Company to make appropriate
-3-
<PAGE>
arrangements for any withholding of tax that may be required under applicable
law in connection with the exercise of the Option.
3. Release of Contract Rights. Haag hereby releases and discharges the
--------------------------
Company from any and all obligations of the Company to Haag pursuant to (i) the
Preemptive Rights Agreement dated February 27, 1995 between the Company, Haag
and others and (ii) the Investment Banking Rights Agreement dated February 27,
1995 between Haag and the Company. Haag agrees that, upon execution hereof, he
will have no continuing claims or rights of any kind (whether known, unknown,
accrued, absolute, contingent or otherwise) under either such agreement. Haag
hereby consents to any modification or amendment that may hereafter be proposed
by the Company to the Covenant Not to Compete Agreement dated February 27, 1995
among the Company, Thomas P. O'Donnell and Robert Sammis or to the Employee
Proprietary Information and Inventions Agreements to which the Company and
Thomas P. O'Donnell and Robert Sammis are parties, regardless of when those
amendments or modifications may be proposed or effected. Haag hereby waives and
relinquishes any contract rights and claims (whether known, unknown, accrued,
absolute, contingent or otherwise) that he may have pursuant to (i) the
Agreement and Plan of Merger dated February 27, 1995, by and among Haag, the
Company and others, (ii) the Stock Purchase Agreement dated February 27, 1995
between Haag and the Company and (iii) any other agreements between Haag and the
Company, regardless
-4-
<PAGE>
of whether the contracts in question are expressly identified herein.
4. Survival. The representations, warranties, covenants and agreements
--------
made herein shall survive the closing of the transactions contemplated hereby.
5. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
6. Entire Agreement. This Agreement constitutes the entire agreement.
----------------
7. Title and Subtitles. The titles of the Sections and subsections of
-------------------
this Agreement are for the convenience of reference only and are not to be
considered in construing this Agreement.
8. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Texas.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year hereinabove first written.
/s/ Randolph Haag
------------------------------
RANDOLPH J. HAAG
CLINICOR, INC.
By /s/ Tom O'Donnell
----------------------------
Its President
-------------------------
-6-
<PAGE>
EXHIBIT A
---------
OPTION AGREEMENT
This Agreement, dated the _____ day of _______________, 1996, by and
between Clinicor, Inc., a Nevada corporation (the "Company"), and Randolph J.
Haag (the "Optionee");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to grant unto the Optionee an option to
purchase fifty thousand (50,000) shares of its common stock;
NOW, THEREFORE, for good and valuable consideration, as well as the
covenants and agreements herein contained, the receipt and sufficiency of all of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the right
---------------
and option to purchase, subject to all of the terms and conditions of this
Agreement, up to an aggregate fifty thousand (50,000) shares of the common
stock, $.001 par value, of the Company (referred to herein as the "Option
Stock"), at a cost of One Dollar ($1.00) per share (the "Option"). The per
share exercise price from time to time in effect hereunder is referred to herein
as the "Exercise Price."
2. Term of Option. The term of the Option shall commence on the date
--------------
hereof and shall automatically terminate and expire on February 28, 2001.
<PAGE>
3. Time of Exercise. This Option may be exercised by Optionee at any time
----------------
during the term hereof, in whole or in part, but for not less than five thousand
(5,000) shares at a time (subject to adjustment pursuant to Section 10 below).
4. Method of Exercise. As modified by Section 6, the Option may be
------------------
exercised by the Optionee's delivery to the Company of a written notice stating
that the Optionee desires to exercise the Option, specifying the number of
shares of Option Stock to be purchased, together with cash or a certified or
cashier's check payable to the order of the Company for an amount equal to the
Exercise Price multiplied by the number of shares of Option Stock being
purchased. The Company may then require that there be presented to and filed
with it such evidence as it may deem necessary to establish that the Option
Stock to be purchased is being acquired for investment and not with a view to
distribution or resale and is otherwise being acquired in accordance with
applicable securities laws.
5. Delivery. As promptly as possible after receipt of the Optionee's
--------
written notice and payment and of such evidence of intent to acquire for
investment and of compliance with applicable securities laws as may be required
by the Company, the Company will deliver to the Optionee certificates for the
number of shares of Option Stock being purchased, issued in the Optionee's name.
6. Like Kind Exercise. Notwithstanding any provisions herein to the
------------------
contrary, if on the date of exercise the fair market
2
<PAGE>
value of one (1) share of Option Stock is greater than the Exercise Price, then
in lieu of exercising this Option for cash, the Optionee may elect (by
appropriate designation in the written notice of exercise) to receive shares
equal to the value of this Option (or the portion thereof being exercised), in
which event the Company shall issue to the Optionee a number of shares of Common
Stock computed using the following formula:
Y (A-B)
X = _______
A
Where X = the number of shares of Common Stock to be issued to the
Optionee
Y = the number of shares of Option Stock being purchased under
the Option
A = the fair market value of one (1) share of the Option Stock
(at the date of exercise)
B = Exercise Price (as adjusted to the date of exercise)
For purposes of the above calculation, fair market value of one (1) share of
Option Stock shall be determined by the Company's Board of Directors in good
faith; provided, however, that where there exists a public market for the
Company's Common Stock at the time of such exercise, and where the average
trading volume for the forty-five (45) trading days prior to exercise is not
less than twenty thousand (20,000) shares per day (reflecting the buy and sell
sides of transactions involving an average of ten thousand (10,000) shares per
day), then the fair market value per share shall be the average of the closing
bid and asked prices of the Common Stock
3
<PAGE>
quoted in the Over-The-Counter Market Summary or the last reported sale price or
the closing price quoted on the Nasdaq National Market or on any exchange on
which the Common Stock is listed, whichever is applicable, for such forty-five
(45) trading days prior to the date of exercise. Notwithstanding the foregoing,
in the event the Option is exercised in connection with a Company's initial
public offering of Common Stock, the fair market value per share shall be the
per share public price.
7. Rights of Optionee. This Option shall not entitle the Optionee to any
------------------
of the rights of a stockholder of the Company.
8. Transfer of Option. This Option may not be transferred in any manner
------------------
otherwise than by will or by the laws of descent or distribution and may be
exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of Optionee.
9. Notices. Whenever the Exercise Price or the number of shares of
-------
Option Stock purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Financial
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, and the Exercise Price and number of shares purchasable hereunder
after giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed to the Optionee.
4
<PAGE>
10. Adjustments. The Exercise Price and the number of shares purchasable
-----------
hereunder are subject to adjustment from time to time as follows:
(a) Merger, Reorganization, etc. If at any time while this Option is
----------------------------
outstanding there shall be (i) a reorganization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein) or (ii) a merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving entity, or a reverse
triangular merger in which the Company is the surviving entity but the shares of
the Company's capital stock outstanding immediately prior to the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash, or otherwise, then, as a part of such reorganization, merger
or consolidation, provision shall be made so that the Optionee shall thereafter
be entitled to receive upon exercise of this Option the number of shares of
stock or other securities or property of the successor corporation resulting
from such reorganization, merger or consolidation that a holder of the shares
deliverable upon exercise of this Option would have been entitled to receive in
such reorganization, consolidation or merger if this Option had been exercised
immediately before such transaction, all subject to further adjustment as
provided in this Section 10. The foregoing provisions of this Section 10 shall
similarly apply to successive reorganizations, consolidations and mergers. If
the
5
<PAGE>
per-share consideration payable to the Optionee for shares in connection with
any such transaction is in a form other than cash or marketable securities, then
the value of such consideration shall be determined in good faith by the
Company's Board of Directors.
(b) Reclassification, etc. If the Company, at any time while this
----------------------
Option remains outstanding, by reclassification of securities or otherwise,
shall change any of the securities as to which purchase rights under this Option
exist into the same or a different number of securities of any other class or
classes, this Option shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as the result of such change
with respect to the securities that were subject to the purchase rights under
this Option immediately prior to such reclassification or other change, and the
Exercise Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 10.
(c) Split, Subdivision or Combination of Shares. If the Company at
-------------------------------------------
any time while this Option, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Option exist, into a different number of securities of the
same class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination.
6
<PAGE>
11. Notices. Any notice or communication required or permitted hereunder
-------
shall be sufficiently given if in writing and if delivered (including delivery
by private courier or facsimile transmittal) or sent by registered or certified
mail, postage prepaid, return receipt requested:
(a) if to the Company, addressed to
Clinicor, Inc.
307 Camp Craft Road, Suite 200
Austin, Texas 78746
Attention: President
(b) if to the Optionee, addressed to
Randolph J. Haag
359 Jacaranda
Danville, CA 94506.
or to such other address as either party shall designate by written notice to
the other. Such notice shall be effective as of the date received or (if mailed
as described above) three (3) days after the date of mailing.
12. Law. This Option shall be governed and construed in accordance with
---
the laws of the State of Texas, exclusive of principles of conflicts of law.
13. Section Headings. Section and other headings contained in this Option
----------------
are for reference purposes only and are in no way intended to define, amplify or
limit the scope or intent of this Option or any of its provisions.
14. Terms. Common nouns and pronouns will be deemed to refer to the
-----
masculine, feminine, neuter, singular and plural as the
7
<PAGE>
identity of a person or persons, firm or corporation may in the contexts
require.
15. Further Actions. Each party will execute and deliver such papers,
---------------
documents and instruments, and perform such acts, as are necessary and
appropriate to implement the terms of this Option and the intent of the parties
hereto.
16. Amendments. No alterations, modifications, amendments or changes to
----------
this Option will be effective or binding upon the parties unless the same shall
have been agreed to in writing by all parties.
IN WITNESS WHEREOF, the parties hereto have executed this agreement on the
day and year first written above.
COMPANY:
CLINICOR, INC.
By_________________________________
Its______________________________
OPTIONEE:
/s/ Randolph J.Haag
-----------------------------------
RANDOLPH J. HAAG
8
<PAGE>
EXHIBIT 10(j)
OPTION AGREEMENT
This Agreement, dated the 5th day of March, 1996, by and between Clinicor,
Inc., a Nevada corporation (the "Company"), and Randolph J. Haag (the
"Optionee");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to grant unto the Optionee an option to
purchase fifty thousand (50,000) shares of its common stock;
NOW, THEREFORE, for good and valuable consideration, as well as the
covenants and agreements herein contained, the receipt and sufficiency of all of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the right
---------------
and option to purchase, subject to all of the terms and conditions of this
Agreement, up to an aggregate fifty thousand (50,000) shares of the common
stock, $.001 par value, of the Company (referred to herein as the "Option
Stock"), at a cost of One Dollar ($1.00) per share (the "Option"). The per
share exercise price from time to time in effect hereunder is referred to herein
as the "Exercise Price."
2. Term of Option. The term of the Option shall commence on the date
--------------
hereof and shall automatically terminate and expire on February 28, 2001.
3. Time of Exercise. This Option may be exercised by Optionee at any
----------------
time during the term hereof, in whole or in part,
<PAGE>
but for not less than five thousand (5,000) shares at a time (subject to
adjustment pursuant to Section 10 below).
4. Method of Exercise. As modified by Section 6, the Option may be
------------------
exercised by the Optionee's delivery to the Company of a written notice stating
that the Optionee desires to exercise the Option, specifying the number of
shares of Option Stock to be purchased, together with cash or a certified or
cashier's check payable to the order of the Company for an amount equal to the
Exercise Price multiplied by the number of shares of Option Stock being
purchased. The Company may then require that there be presented to and filed
with it such evidence as it may deem necessary to establish that the Option
Stock to be purchased is being acquired for investment and not with a view to
distribution or resale and is otherwise being acquired in accordance with
applicable securities laws.
5. Delivery. As promptly as possible after receipt of the Optionee's
--------
written notice and payment and of such evidence of intent to acquire for
investment and of compliance with applicable securities laws as may be required
by the Company, the Company will deliver to the Optionee certificates for the
number of shares of Option Stock being purchased, issued in the Optionee's name.
6. Like Kind Exercise. Notwithstanding any provisions herein to the
------------------
contrary, if on the date of exercise the fair market value of one (1) share of
Option Stock is greater than the Exercise Price, then in lieu of exercising this
Option for cash, the
2
<PAGE>
Optionee may elect (by appropriate designation in the written notice of
exercise) to receive shares equal to the value of this Option (or the portion
thereof being exercised), in which event the Company shall issue to the Optionee
a number of shares of Common Stock computed using the following formula:
Y (A-B)
X = _______
A
Where X = the number of shares of Common Stock to be issued to the
Optionee
Y = the number of shares of Option Stock being purchased under
the Option
A = the fair market value of one (1) share of the Option Stock
(at the date of exercise)
B = Exercise Price (as adjusted to the date of exercise)
For purposes of the above calculation, fair market value of one (1) share of
Option Stock shall be determined by the Company's Board of Directors in good
faith; provided, however, that where there exists a public market for the
Company's Common Stock at the time of such exercise, and where the average
trading volume for the forty-five (45) trading days prior to exercise is not
less than twenty thousand (20,000) shares per day (reflecting the buy and sell
sides of transactions involving an average of ten thousand (10,000) shares per
day), then the fair market value per share shall be the average of the closing
bid and asked prices of the Common Stock quoted in the Over-The-Counter Market
Summary or the last reported sale price or the closing price quoted on the
Nasdaq National
3
<PAGE>
Market or on any exchange on which the Common Stock is listed, whichever is
applicable, for such forty-five (45) trading days prior to the date of exercise.
Notwithstanding the foregoing, in the event the Option is exercised in
connection with a Company's initial public offering of Common Stock, the fair
market value per share shall be the per share public price.
7. Rights of Optionee. This Option shall not entitle the Optionee to any
------------------
of the rights of a stockholder of the Company.
8. Transfer of Option. This Option may not be transferred in any manner
------------------
otherwise than by will or by the laws of descent or distribution and may be
exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of Optionee.
9. Notices. Whenever the Exercise Price or the number of shares of
-------
Option Stock purchasable hereunder shall be adjusted pursuant to Section 10
hereof, the Company shall issue a certificate signed by its Chief Financial
Officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, and the Exercise Price and number of shares purchasable hereunder
after giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed to the Optionee.
4
<PAGE>
10. Adjustments. The Exercise Price and the number of shares purchasable
-----------
hereunder are subject to adjustment from time to time as follows:
(a) Merger, Reorganization, etc. If at any time while this Option is
----------------------------
outstanding there shall be (i) a reorganization (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein) or (ii) a merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving entity, or a reverse
triangular merger in which the Company is the surviving entity but the shares of
the Company's capital stock outstanding immediately prior to the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash, or otherwise, then, as a part of such reorganization, merger
or consolidation, provision shall be made so that the Optionee shall thereafter
be entitled to receive upon exercise of this Option the number of shares of
stock or other securities or property of the successor corporation resulting
from such reorganization, merger or consolidation that a holder of the shares
deliverable upon exercise of this Option would have been entitled to receive in
such reorganization, consolidation or merger if this Option had been exercised
immediately before such transaction, all subject to further adjustment as
provided in this Section 10. The foregoing provisions of this Section 10 shall
similarly apply to successive reorganizations, consolidations and mergers. If
the
5
<PAGE>
per-share consideration payable to the Optionee for shares in connection with
any such transaction is in a form other than cash or marketable securities, then
the value of such consideration shall be determined in good faith by the
Company's Board of Directors.
(b) Reclassification, etc. If the Company, at any time while this
----------------------
Option remains outstanding, by reclassification of securities or otherwise,
shall change any of the securities as to which purchase rights under this Option
exist into the same or a different number of securities of any other class or
classes, this Option shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable as the result of such change
with respect to the securities that were subject to the purchase rights under
this Option immediately prior to such reclassification or other change, and the
Exercise Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 10.
(c) Split, Subdivision or Combination of Shares. If the Company at
-------------------------------------------
any time while this Option, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Option exist, into a different number of securities of the
same class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination.
6
<PAGE>
11. Notices. Any notice or communication required or permitted hereunder
-------
shall be sufficiently given if in writing and if delivered (including delivery
by private courier or facsimile transmittal) or sent by registered or certified
mail, postage prepaid, return receipt requested:
(a) if to the Company, addressed to
Clinicor, Inc.
307 Camp Craft Road, Suite 200
Austin, Texas 78746
Attention: President
(b) if to the Optionee, addressed to
Randolph J. Haag
359 Jacaranda
Danville, CA 94506.
or to such other address as either party shall designate by written notice to
the other. Such notice shall be effective as of the date received or (if mailed
as described above) three (3) days after the date of mailing.
12. Law. This Option shall be governed and construed in accordance with
---
the laws of the State of Texas, exclusive of principles of conflicts of law.
13. Section Headings. Section and other headings contained in this Option
----------------
are for reference purposes only and are in no way intended to define, amplify or
limit the scope or intent of this Option or any of its provisions.
14. Terms. Common nouns and pronouns will be deemed to refer to the
-----
masculine, feminine, neuter, singular and plural as the
7
<PAGE>
identity of a person or persons, firm or corporation may in the contexts
require.
15. Further Actions. Each party will execute and deliver such papers,
---------------
documents and instruments, and perform such acts, as are necessary and
appropriate to implement the terms of this Option and the intent of the parties
hereto.
16. Amendments. No alterations, modifications, amendments or changes to
----------
this Option will be effective or binding upon the parties unless the same shall
have been agreed to in writing by all parties.
IN WITNESS WHEREOF, the parties hereto have executed this agreement on the
day and year first written above.
COMPANY:
CLINICOR, INC.
By/s/ Thomas P. O'Donnell
---------------------------------
Its President
OPTIONEE:
/s/
-----------------------------------
RANDOLPH J. HAAG
8
<PAGE>
EXHIBIT 10 (k)
CLINICOR, INC.
1995 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are:
--------------------
. to attract and retain the best available personnel for positions of
substantial responsibility;
. to provide additional incentive to Employees and Consultants to remain
with the Company; and
. to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.
2. DEFINITIONS. As used herein, the following definitions shall apply:
-----------
A. "ADMINISTRATOR" means the Board or any of its Committees as shall
-------------
be administering the Plan, in accordance with Section 4 of the Plan.
B. "APPLICABLE LAWS" means the legal requirements relating to the
---------------
administration of stock option plans under state corporate and securities laws
and the Code.
C. "BOARD" means the Board of Directors of the Company.
-----
D. "CODE" means the Internal Revenue Code of 1986, as amended.
----
E. "COMMITTEE" means a Committee appointed by the Board in
---------
accordance with Section 4 of the Plan.
F. "COMMON STOCK" means the Common Stock of the Company.
------------
G. "COMPANY" means CLINICOR, INC., a Nevada corporation, formerly
-------
Pegasus Tax and Financial Planning Services, Inc., a Nevada corporation.
H. "CONSULTANT" means any person, including an advisor, engaged by
----------
the Company or a Parent or Subsidiary to render services, and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company, or who are not
compensated by the Company for their services as Directors.
I. "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
----------------------------------------------
employment or consulting relationship is not interrupted or terminated by the
Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Company, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless re-employment upon
the expiration of such leave is guaranteed by contract (including certain
Company policies) or statute; provided, further, that on the ninety-first (91st)
day of any such leave (where re-employment is not guaranteed by contract or
statute) the Optionee's Incentive Stock Option shall automatically convert to a
Nonstatutory Stock Option; or (ii) transfers between locations of the Company or
between the Company, its Parent, its Subsidiaries, or its successor.
<PAGE>
J. "DIRECTOR" means a member of the Board.
--------
K. "DISABILITY" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.
L. "EMPLOYEE" means any person, including Officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a Director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
M. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
------------
amended.
N. "FAIR MARKET VALUE" means, as of any date, the value of Common
-----------------
Stock determined as follows:
I) If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no shares were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last market
trading day prior to the date of determination, as reported in The Wall Street
---------------
Journal, or such other source as the Administrator deems reliable;
- -------
II) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market System thereof), or is regularly quoted by a recognized
securities dealer, but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal, or such other source as
-----------------------
the Administrator deems reliable;
III) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
O. "INCENTIVE STOCK OPTION" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
P. "NONSTATUTORY STOCK OPTION" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
Q. "NOTICE OF GRANT" means a written notice evidencing certain terms
---------------
and conditions of an individual Option grant. The Notice of Grant is part of
the Option Agreement.
R. "OFFICER" means a person who is an officer of the Company within
-------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated there under.
S. "OPTION" means a stock option granted pursuant to the Plan.
------
-2-
<PAGE>
T. "OPTION AGREEMENT" means a written agreement between the Company
----------------
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
U. "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
-----------------------
options are surrendered in exchange for options with a lower exercise price.
V. "OPTIONED STOCK" means the Common Stock subject to an Option.
--------------
W. "OPTIONEE" means an Employee or Consultant who holds an
--------
outstanding Option.
X. "PARENT" shall mean a "parent corporation," whether now or
------
hereafter existing, as defined in Section 424(e) of the Code.
Y. "PLAN" shall mean this 1995 Employee and Consultant Stock Option
----
Plan.
Z. "RULE 16B-3" means Rule 16b-3 of the Exchange Act, or any
----------
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
AA. "SHARE" means a share of the Common Stock, as adjusted in
-----
accordance with Section 12 of the Plan.
BB. "SUBSIDIARY" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 2,000,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock. However, should the Company reacquire Shares which
were issued pursuant to the exercise of an Option, such Shares shall not become
available for future grant under the Plan.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has been terminated); provided,
--------
however, that Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. ADMINISTRATION OF THE PLAN.
--------------------------
A. PROCEDURE.
---------
I) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-
------------------------------
3, the Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors nor
Officers.
II) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS
-----------------------------------------------------
SUBJECT TO SECTION 16(B). With respect to Option grants made to Employees who
- ------------------------
are also Officers or Directors subject to Section 16(b) of the Exchange Act, the
Plan shall be administered by (A) the Board, if the Board may administer the
Plan in compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3, or (B) a committee designated by the Board
to administer the Plan, which committee shall be constituted to comply with the
rules
-3-
<PAGE>
governing a plan intended to qualify as a discretionary plan under Rule 16b-3.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time, the Board
may increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the rules governing
a plan intended to qualify as a discretionary plan under Rule 16b-3;
III) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With respect
--------------------------------------------
to Option grants made to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board; or (B)
a committee designated by the Board, which committee shall be constituted to
satisfy Applicable Laws. Once appointed, such Committee shall serve in its
designated capacity and otherwise directed by the Board. The Board may increase
the size of the new Committee and appoint additional members, remove members
(with or without cause), and substitute new members, fill vacancies (however
caused), and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by Applicable Laws.
B. POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
---------------------------
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
I) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
II) to select the Consultants and Employees to whom Options may
be granted hereunder;
III) to determine whether and to what extent Options are granted
hereunder;
IV) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
V) to approve forms of agreement for use under the Plan;
VI) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
VII) to reduce the exercise price of any Option to the then-
current Fair Market Value, if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
VIII) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
IX) to prescribe, amend and rescind rules and regulations
relating to the Plan;
-4-
<PAGE>
X) to modify or amend each Option (subject to Section 16 of
the Plan);
XI) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted by
the Administrator;
XII) to institute an Option Exchange Program;
XIII) to determine the terms and restrictions applicable to
Options; and
XIV) to make all other determinations deemed necessary or
advisable for administering the Plan.
C. EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
----------------------------------
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. ELIGIBILITY. Nonstatutory Stock Options may be granted to Employees
-----------
and Consultants. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option may
be granted additional Options.
6. LIMITATIONS.
-----------
A. Each Option shall be designated in the Notice of Grant as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of Shares subject to an Optionee's incentive stock options granted by the
Company, any Parent or Subsidiary, which become exercisable for the first time
during any calendar year (under all plans of the Company, or any Parent or
Subsidiary), exceeds $100,000, such excess Options shall be treated as Non-
statutory Stock Options. For purposes of this Section 6.a., Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares shall be determined as of the time of grant.
B. Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
7. TERM OF PLAN. Subject to Section 16 of the Plan, the Plan shall
------------
become effective upon the earlier to occur of its adoption by the Board, or its
approval by the stockholders of the Company as described in Section 18 of the
Plan. It shall continue in effect for a term of ten (10) years, (unless
terminated earlier) under Section 14 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Notice
--------------
of Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company, or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
-5-
<PAGE>
9. OPTION EXERCISE PRICE AND CONSIDERATION.
---------------------------------------
A. EXERCISE PRICE. The per Share exercise price for the Shares to
--------------
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
I) In the case of an Incentive Stock Option:
A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company, or any Parent or
Subsidiary, the per Share exercise price shall be no less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant.
B) granted to any Employee, the per Share exercise price
shall be no less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.
II) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.
B. WAITING PERIOD AND EXERCISE DATES. At the time an Option is
---------------------------------
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.
C. FORM OF CONSIDERATION. The Administrator shall determine the
---------------------
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist of:
I) cash;
II) check;
III) promissory note;
IV) other Shares which (a) in the case of Shares acquired upon
exercise of an Option, have been owned by the Optionee for more than six (6)
months on the date of surrender; and (b) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
V) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
VI) any combination of the foregoing methods of payment; or
VII) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
-6-
<PAGE>
10. EXERCISE OF OPTION.
------------------
A. PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms of the Plan, and
at such times and under such conditions as determined by the Administrator and
set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when the Company receives:
(I) written notice of exercise, together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an exercise
of the Option (all in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (II) full payment for the Shares with
respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
Stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 12 of the
Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
B. TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Upon
----------------------------------------------------
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may exercise
his or her Option, but only within such period of time as is determined by the
Administrator, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration of
the term of such Option as set forth in the Notice of Grant). In the case of an
Incentive Stock Option, the Administrator shall determine such period of time
(in no event to exceed ninety (90) days from the date of termination) when the
Option is granted. If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
C. DISABILITY OF OPTIONEE. In the event that an Optionee's
----------------------
Continuous Status as an Employee or Consultant terminates as a result of
Optionee's Disability, the Optionee may exercise his or her Option at any time
within twelve (12) months from the date of such termination, but only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
-7-
<PAGE>
D. DEATH OF OPTIONEE. In the event of the death of an Optionee, the
-----------------
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death,
the Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate and the Shares covered by such Option shall
revert to the Plan.
E. RULE 16B-3. Options granted to individuals subject to Section 16
----------
of the Exchange Act ("Insiders"), must comply with the applicable provisions of
Rule 16b-3 and shall contain such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption from Section 16 of
the Exchange Act with respect to Plan transactions.
11. NONTRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
-----------------------------
assigned, hypothecated, transferred, or disposed of in any manner, other than by
Will or by the laws of descent or distribution, and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER, ASSET
----------------------------------------------------------------------
SALE OR CHANGE OF CONTROL.
-------------------------
A. CHANGES IN CAPITALIZATION. Subject to any required action by the
-------------------------
Stockholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option, and the number of Shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per Share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares of Common Stock subject to an Option.
B. DISSOLUTION OR LIQUIDATION. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its
sole discretion in such instances, declare that any Option shall terminate as of
a date fixed by the Board and give each Optionee the right to exercise his or
her Option as to all or any part of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable.
-8-
<PAGE>
C. MERGER OR ASSET SALE. Subject to the provisions of paragraph (d)
--------------------
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option shall be assumed or an equivalent option or right shall be
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, the
Administrator shall, in lieu of such assumption or substitution, provide for the
Optionee to have the right to exercise the Option as to all or a portion of the
Optioned Stock, including Shares as to which it would not otherwise be
exercisable. If the Administrator makes an Option exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option will terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase, for each
Share of Optioned Stock subject to the Option immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per-share consideration received by
holders of Common Stock in the merger or sale of assets.
D. CHANGE IN CONTROL. In the event of a "Change of Control" of the
-----------------
Company, as defined in paragraph (e) below, then the following acceleration and
valuation provisions shall apply:
I) Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control, any Options
outstanding on the date such Change in Control is determined to have occurred
that are not yet exercisable and vested on such date shall become fully
exercisable and vested;
II) Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control, all outstanding
Options, to the extent they are exercisable and vested (including Options that
shall become exercisable and vested pursuant to subparagraph i) above), shall be
terminated in exchange for a cash payment equal to the Change in Control Price
(reduced by the exercise price applicable to such Options). These cash proceeds
shall be paid to the Optionee or, in the event of death of an Optionee, prior to
payment, to the estate of the Optionee or a person who acquired the right to
exercise the Option by bequest or inheritance.
III) Any payment made pursuant to this paragraph (d) shall not
exceed the maximum amount which could be paid to an Optionee without having the
payment treated as an "excess parachute payment" within the meaning of (S)280G
of the Code.
E. DEFINITION OF "CHANGE IN CONTROL". For purposes of this Section
---------------------------------
12, a "Change in Control" means the happening of any of the following:
-9-
<PAGE>
I) When any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee), is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than twenty-five percent (25%) of the combined voting power of the Company's
then-outstanding securities entitled to vote generally in the election of
directors; or
II) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least seventy-five percent
(75%) of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve an agreement for the
sale or disposition by the Company of all or substantially all the Company's
assets; or
III) A change in the composition of the Board of Directors of
the Company occurring within a two (2) year period, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (A) are directors of the Company as of the date
the Plan is approved by the stockholders; or (B) are elected, or nominated for
election, to the Board of Directors of the Company with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of directors to the Company).
F. CHANGE IN CONTROL PRICE. For purposes of this Section 12,
-----------------------
"Change in Control Price" shall be, as determined by the Board: (i) the highest
Fair Market Value of a Share within the 60-day period immediately preceding the
date of determination of the Change of Control Price by the Board (the "60-Day
Period"); or (ii) the highest price paid or offered per Share, as determined by
the Board, in any bona fide transaction or bona fide offer related to the Change
in Control of the Company, at any time within the 60-Day Period; or (iii) some
lower price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a Share.
13. DATE OF GRANT. The date of grant of an Option shall be, for all
-------------
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
-------------------------------------
A. AMENDMENT AND TERMINATION. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.
B. STOCKHOLDER APPROVAL. The Company shall obtain Stockholder
--------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such Stockholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.
-10-
<PAGE>
C. EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES.
----------------------------------
A. LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable Laws,
and the requirements of any stock exchange or quotation system upon which the
Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
B. INVESTMENT REPRESENTATION. As a condition to the exercise of an
-------------------------
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares, if, in the opinion of counsel for the Company, such a representation is
required.
16. LIABILITY OF COMPANY.
--------------------
A. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
-----------------------------
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
B. GRANTS EXCEEDING ALLOTTED SHARES. If the Option Stock covered by
--------------------------------
an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional Stockholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless Stockholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 14.b. of the Plan.
17. RESERVATION OF SHARES. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. STOCKHOLDER APPROVAL. Continuance of the Plan shall be subject to
--------------------
approval by the Stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such Stockholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
-11-
<PAGE>
EXHIBIT 10 (l)
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAW,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (A) THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS COVERING SUCH
SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS
UNDER APPLICABLE STATE LAW.
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Option Agreement") by and between Clinicor,
Inc., formerly known as Pegasus Tax and Financial Planning Services, Inc., a
Nevada corporation (hereinafter referred to as the "Company") and the "Optionee"
identified below. The terms and conditions of this Option Agreement are subject
to the terms, definitions and provisions of the 1995 Pegasus Employee and
Consultant Stock Option Plan (the "Plan") adopted by the Company. The Plan is
hereby incorporated by reference and attached hereto as Exhibit 1, as may be
amended from time to time in accordance with the provisions of the Plan.
1. PRINCIPAL TERMS. The principal terms and conditions of this Option
---------------
Agreement are summarized below, subject to the more detailed provisions set
forth elsewhere in this Option Agreement:
A. GRANT DATE. The "Grant Date" is February 27, 1995.
----------
B. OPTIONEE. The "Optionee" is THOMAS P. O'DONNELL.
--------
C. OPTION SHARES. The Company hereby grants to Optionee an Option to
-------------
purchase One Hundred Fifty Thousand (150,000) shares of Common Stock (the
"Shares"), subject to the terms and conditions of this Option Agreement and
the Plan.
D. EXERCISE PRICE. The exercise price is $1.25 for each share of Common
--------------
Stock, which price if an "incentive stock option" is not less than the
fair market value per share of Common Stock on the Grant Date, as
determined by the Board; provided, however, in the event Optionee is an
Employee and owns stock representing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of
its Parent or Subsidiary corporations immediately before the Grant Date,
said exercise price is not less than one hundred ten percent (110%) of the
fair market value per share of Common Stock on the Grant Date as determined
by the Board.
E. TERM/AMENDMENT. The term of this Option commences on the Grant Date
--------------
and shall terminate on the fifth (5th) anniversary date of the Grant Date.
Notwithstanding the foregoing, in no event may this Option be exercised
more than ten (10) years from the Grant Date, and this Option may be
exercised during such term only in accordance with the Plan and the terms
of this Option. However, in the case of an Option granted to an Optionee
who, at the time the Option is granted, is an employee and owns stock
representing more than ten percent (10%) of the voting power of all classes
of stock of the Company or any Parent or Subsidiary, the term of the Option
shall be no more than five (5) years from the Grant Date. The provisions
of this Agreement may be waived, altered, amended or repealed in whole or
in part only upon the written consent of all parties to this Agreement and
either Randy Haag or Arthur Haag so long as either Haag is a shareholder in
the Company.
-1-
<PAGE>
F. VESTING/EXERCISE.
----------------
(I) "Vested" shares are the only Shares that Optionee may purchase
hereunder. As of the Grant Date, no Shares are Vested Shares. The
remaining balance of the Shares shall vest as set forth on Exhibit 2
attached hereto and incorporated herein by reference (provided, however,
that in no event shall all such Option Shares vest at a rate less than
twenty percent (20%) per year; the Option shall be exercised pursuant to
the terms of Section 3 below only as to whole shares; no fractional shares
may be purchased).
(II) In the event of Optionee's termination, disability or death,
the exercise rights of Optionee are also subject to Section 7
(termination), Section 8 (disability) and Section 9(death).
(III) In no event may this Option as an Incentive Stock Option become
exercisable at a time or times which, when this Option is aggregated with
all other incentive stock options granted to Optionee by the Company or any
Parent or Subsidiary, would result in Shares having an aggregate fair
market value (determined for each Share as of the date of grant of the
option covering such share) in excess of $100,000 becoming first available
for purchase upon exercise of one or more incentive stock options during
any calendar year. All such shares in excess of the $100,000 limit shall
automatically become shares covered by non-statutory stock options.
2. NATURE OF THE OPTION. If Optionee is an Employee of the Company, this
--------------------
Option is intended to qualify as an Incentive Stock Option. If Optionee is
a Consultant of the Company or the provisions of this Option Agreement or
the Plan fail to qualify for Incentive Stock Option treatment under the
Code, this Option shall be deemed a Nonstatutory Stock Option. It is the
intention of the Company, however, that the provisions of this Option
Agreement and the Plan qualify for Incentive Stock Option treatment under
the Code with respect to Optionees who are employees of the Company.
3. METHOD OF EXERCISE. This Option shall be exercisable by written notice in
------------------
the form attached as Exhibit 3. The Notice of Exercise shall state the
election to exercise the Option, the number of Shares in respect of which
the Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such Shares
as may be required by the Company pursuant to the provisions of the Plan.
Such written notice shall be signed by Optionee and shall be delivered in
person or by certified mail to the President, Secretary or Chief Financial
Officer of the Company. The written notice shall be accompanied by payment
of the exercise price. This Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the exercise
price. Until the issuance (as evidenced by the appropriate entry on the
books of the Company or a duly authorized transfer agent of the Company) of
the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to
the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
upon exercise of the Option.
No shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares may then
be listed.
4. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON TRANSFER. By receipt of this
----------------------------------------------------
Option, by its execution, and by its exercise in whole or in part, Optionee
represents to the Company the following:
A. Optionee understands that this Option and any Shares purchased upon
its exercise are securities, the issuance of which requires compliance with
federal and state securities laws.
-2-
<PAGE>
B. Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the securities.
Optionee is acquiring these securities for investment for Optionee's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
C. Optionee acknowledges and understands that the securities constitute
"restricted securities" under the Securities Act and must be held
indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to
register the securities. Optionee understands that the certificate
evidencing the securities will be imprinted with a legend which prohibits
the transfer of the securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company, and any other legend required under applicable state securities
laws.
D. Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof, in a non-public offering subject to
the satisfaction of certain conditions. Rule 701 provides that if the
issuer qualifies under Rule 701 at the time of exercise of the Option by
the Optionee, such exercise will be exempt from registration under the
Securities Act. In the event the Company later becomes subject to the
reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, ninety (90) days thereafter the securities exempt under Rule
701 may be resold, subject to the satisfaction of certain conditions
specified by Rule 144, including among other things: (i) the sale being
made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under
the Securities Exchange Act of 1934); and, in the case of an affiliate,
(ii) the availability of certain public information about the Company, and
the amount of securities being sold during any three month period not
exceeding the limitations specified in Rule 144(e), if applicable.
Notwithstanding this Paragraph 4.(D), the Optionee acknowledges and agrees
to the restrictions set forth in Paragraph 4.(E).
In the event that the Company does not qualify under Rule 701 at the time
of exercise of the Option, then the securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
among other things: (i) the availability of certain public information
about the Company; (ii) the resale occurring not less than two years after
the party has purchased, and made full payment for, within the meaning of
Rule 144, the securities to be sold; and (iii) in the case of an affiliate,
or of a non-affiliate who has held the securities less than three years,
the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term
is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the
specified limitations stated therein, if applicable.
E. In connection with the Company's subsequent underwritten public
offering of the Company's securities, Optionee agrees: (i) not to sell,
make short sale of, loan, grant any options for the purchase of, or
otherwise dispose of any shares of Common Stock of the Company held by
Optionee (except traded shares Optionee purchased in the open market and
those shares included in the registration) without the prior written
consent of the Company or the underwriters managing such underwritten
public offering of the Company's securities for one hundred eighty (180)
days from the effective date of such registration, and (ii) to execute any
agreement reflecting Section 4(E)(i) above as may be requested by the
underwriters at the time of the public offering.
-3-
<PAGE>
5. METHOD OF PAYMENT. Payment of the purchase price shall be made by cash or
-----------------
by delivery of a three year Promissory Note and Pledge Agreement in the
form attached hereto as Exhibit 4.
6. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the issuance
------------------------
of such Shares upon such exercise or the method of payment of consideration
for such shares would constitute a violation of any applicable federal or
state securities or other law or regulation, including any rule under Part
207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise
of this Option, the Company may require Optionee to make any representation
and warranty to the Company as may be required by any applicable law or
regulation.
7. TERMINATION OF STATUS AS AN EMPLOYEE.
------------------------------------
In the event of termination of Optionee's Continuous Status as an employee,
Optionee shall have only three months after such termination date (but not
later than expiration of the option term) to exercise this Option and then
the exercise can be only to the extent that Optionee was entitled to
exercise it at the date of such termination (i.e. vested Options). To the
extent that Optionee was not entitled to exercise this Option at the date
of such termination, this Option shall terminate as to those "non-vested"
Shares and the non-vested Shares, if any, shall be forfeited to the Plan.
To the extent Optionee does not exercise this Option timely, then any
unexercised option shares, if any, shall be forfeited to the Plan.
8. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 7 above,
----------------------
in the event of termination of Optionee's Continuous Status as an Employee
or Consultant as a result of Optionee's permanent and total disability (as
defined in Section 22(e) (3) of the Code), Optionee may, but only within
twelve (12) months from the date of termination of employment or consulting
relationship (but in no event later than the date of expiration of the Term
of this Option as set forth in Section 1(E) hereof, exercise this Option to
the extent Optionee was entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise this
Option at the date of termination, or if Optionee does not exercise such
Option (which Optionee was entitled to exercise) within the time specified
herein, this Option shall terminate and all unexercised option shares, if
any, shall be forfeited to the Plan.
9. DEATH OF OPTIONEE. In the event of the death of Optionee:
-----------------
A. During the term of this Option while an Employee or Consultant of the
Company and having been in Continuous Status as an Employee or Consultant
since the Grant Date of this Option, this Option may be exercised, at any
time within twelve (12) months following the date of death (but in no event
later than the date of expiration of the term of this Option as set forth
in Section 11 below), by Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the
extent of the right to exercise that would have accrued had Optionee
continued living and remained in Continuous Status as an Employee or
Consultant twelve (12) months after the date of death.
B. Within three months after the termination of Optionee's Continuous
Status as an employee or consultant, this Option may be exercised, at any
time within twelve (12) months following the date of death (but in no event
later than the date of expiration of the term of this Option as set forth
in Section 1(E) hereof, by Optionee's estate or by a person who acquired
the right to exercise this Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the date of
termination.
-4-
<PAGE>
10. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in any
-----------------------------
manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The
terms of this Option shall be binding upon the executors, administrators,
heirs, successors and assigns of Optionee.
11. EARLY DISPOSITION OF STOCK. If Optionee is an employee, Optionee
--------------------------
understands that, if Optionee disposes of any Shares received under this
Option within two (2) years after the date of this Agreement or within one
(1) year after such Shares were transferred to Optionee, Optionee will be
treated for federal income tax purposes as having received ordinary income
at the time of such disposition in an amount generally measured as the
excess of (i) the lower of the fair market value of the Shares at the date
of disposition or the fair market value of the Shares at the Grant Date
over (ii) the price paid for the Shares. The amount of such ordinary
income may be measured differently if Optionee is an officer, director or
10% control person (defined in Section 2(E) hereof) or if the Shares were
subject to a substantial risk of forfeiture at the time they were
transferred. Any gain recognized on such a premature sale of the Shares in
excess of the amount treated as ordinary income will be characterized as
capital gain. Optionee hereby agrees to notify the Company in writing
-------------------------------------------------------
within thirty (30) days after the date of any such disposition. Optionee
--------------------------------------------------------------
understands that if Optionee disposes of such Shares at any time after the
expiration of such two-year and one-year holding periods, any gain on such
sale will generally be treated as long-term capital gain.
12. TAXATION UPON EXERCISE OF OPTION: If Optionee is a consultant, Optionee
--------------------------------
understands that, upon exercise of this Option, Optionee will generally
recognize income for tax purposes in an amount equal to the excess of the
then fair market value of the Shares over the exercise price. If Optionee
is an employee and this Option is an Incentive Stock Option, Optionee
understands that, upon exercise of this Option, Optionee will generally
recognize income for purposes of the alternative minimum tax in amount
equal to the excess of the then fair market value of the Shares over the
exercise price.
13. TAX CONSEQUENCES. The Optionee understands that any of the foregoing
----------------
references to taxation are based on federal income tax laws and regulations
now in effect. The Optionee has reviewed with the Optionee's own tax
advisors the federal, state, local and foreign tax consequences of the
transactions contemplated by this Agreement. The Optionee is relying solely
on such advisors and not on any statements or representations of the
Company or any of its agents. The Optionee understands that the Optionee
(and not the Company) shall be responsible for the Optionee's own tax
liability that may arise as a result of the transactions contemplated by
this Agreement. The Optionee hereby authorizes the company to make
appropriate arrangements for any withholding of tax liability which may be
required under applicable law in connection with the grant or exercise of
this Option.
14. PARTIES' SIGNATURES - DUPLICATE ORIGINALS: This Option Agreement between
-----------------------------------------
the parties identified in Section 1 hereof shall be signed in two duplicate
originals as follows:
A. The Company shall sign two (2) duplicate originals of the "Company's
Signature Page" for this Option Agreement.
B. The Optionee shall sign two (2) duplicate originals of the "Optionee's
Signature Page" for this Option Agreement together, where applicable, with
Optionee's spouse.
C. One complete duplicate original of this Option Agreement, (complete
with one company signature page and one Optionee signature page) will be
given to the Company and the other to Optionee.
-5-
<PAGE>
Executed on behalf of the Company to be effective on the date first set forth
above.
CLINICOR, INC.
By /s/ Robert S. Sammis
--------------------------
(Signature)
Robert S. Sammis V.P.
- ----------------------------
(Print Name & Title)
LIST OF EXHIBITS:
1. Copy of 1995 Stock Option Plan
2. Vesting Schedule
3. Form of Notice of Exercise
4. Promissory Note and Pledge Agreement
-6-
<PAGE>
ACKNOWLEDGEMENT BY OPTIONEE
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION
1(F) HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE, OR CONSULTANT
AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED
THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND
AGREES THAT THIS OPTION, THE COMPANY'S PLAN WHICH IS INCORPORATED HEREIN BY
REFERENCE, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET
FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS AN EMPLOYEE, OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD,
OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT
TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH
OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan (a copy of which is annexed
hereto as Exhibit 1) represents that Optionee is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee has reviewed the Plan and this Option Agreement
in their entirety, has had an opportunity to obtain the advice of counsel prior
to executing this Option and fully understands all provisions of the Option.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board or of the Committee upon any questions arising
under the Plan. Optionee further agrees to notify the Company upon any change
in the residence address indicated below.
This Acknowledgement is executed by Optionee as of February 27, 1995, to be
considered effective as of the Grant Date of the Option.
OPTIONEE Residence:
/s/ Thomas P. O'Donnell 1918 B HOLLY HILL DR
- ------------------------ --------------------------
(Signature) (Street)
THOMAS P. O'DONNELL AUSTIN, TX 78746
- ------------------------ --------------------------
(Print Name) (City, State, Zip)
Please also complete the following (if applicable):
The undersigned, being the spouse of the above-named Optionee, does hereby
acknowledge that the undersigned has read and is familiar with the provisions of
the Option Agreement (including this page), and the undersigned hereby agrees
thereto and joins therein to the extent, if any, that the agreement and joiner
of the undersigned may be necessary.
OPTIONEE'S SPOUSE
________________________ __________________________
Signature Print Name
-7-
<PAGE>
EXHIBIT 1
1995 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
-8-
<PAGE>
CLINICOR, INC.
1995 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are:
--------------------
. to attract and retain the best available personnel for positions of
substantial responsibility;
. to provide additional incentive to Employees and Consultants to remain
with the Company; and
. to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.
2. DEFINITIONS. As used herein, the following definitions shall apply:
-----------
A. "ADMINISTRATOR" means the Board or any of its Committees as shall
-------------
be administering the Plan, in accordance with Section 4 of the Plan.
B. "APPLICABLE LAWS" means the legal requirements relating to the
---------------
admin istration of stock option plans under state corporate and securities laws
and the Code.
C. "BOARD" means the Board of Directors of the Company.
-----
D. "CODE" means the Internal Revenue Code of 1986, as amended.
----
E. "COMMITTEE" means a Committee appointed by the Board in
---------
accordance with Section 4 of the Plan.
F. "COMMON STOCK" means the Common Stock of the Company.
------------
G. "COMPANY" means CLINICOR, INC., a Nevada corporation, formerly
-------
Pegasus Tax and Financial Planning Services, Inc., a Nevada corporation.
H. "CONSULTANT" means any person, including an advisor, engaged by
----------
the Company or a Parent or Subsidiary to render services, and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company, or who are not
compensated by the Company for their services as Directors.
I. "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
----------------------------------------------
employment or consulting relationship is not interrupted or terminated by the
Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Company, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless re-employment upon
the expiration of such leave is guaranteed by contract (including certain
Company policies) or statute; provided, further, that on the ninety-first (91st)
day of any such leave (where re-employment is not guaranteed by contract or
statute) the Optionee's Incentive Stock Option shall automatically convert to a
Nonstatutory Stock Option; or (ii) transfers between locations of the Company or
between the Company, its Parent, its Subsidiaries, or its successor.
<PAGE>
J. "DIRECTOR" means a member of the Board.
--------
K. "DISABILITY" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.
L. "EMPLOYEE" means any person, including Officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a Director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
M. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
------------
amended.
N. "FAIR MARKET VALUE" means, as of any date, the value of Common
-----------------
Stock determined as follows:
I) If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no shares were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last market
trading day prior to the date of determination, as reported in The Wall Street
---------------
Journal, or such other source as the Administrator deems reliable;
- -------
II) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market System thereof), or is regularly quoted by a recognized
securities dealer, but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal, or such other source as
-----------------------
the Administrator deems reliable;
III) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
O. "INCENTIVE STOCK OPTION" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
P. "NONSTATUTORY STOCK OPTION" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
Q. "NOTICE OF GRANT" means a written notice evidencing certain terms
---------------
and conditions of an individual Option grant. The Notice of Grant is part of
the Option Agreement.
R. "OFFICER" means a person who is an officer of the Company within
-------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated there under.
S. "OPTION" means a stock option granted pursuant to the Plan.
------
-2-
<PAGE>
T. "OPTION AGREEMENT" means a written agreement between the Company
----------------
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
U. "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
-----------------------
options are surrendered in exchange for options with a lower exercise price.
V. "OPTIONED STOCK" means the Common Stock subject to an Option.
--------------
W. "OPTIONEE" means an Employee or Consultant who holds an
--------
outstanding Option.
X. "PARENT" shall mean a "parent corporation," whether now or
------
hereafter existing, as defined in Section 424(e) of the Code.
Y. "PLAN" shall mean this 1995 Employee and Consultant Stock Option
----
Plan.
Z. "RULE 16B-3" means Rule 16b-3 of the Exchange Act, or any
----------
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
AA. "SHARE" means a share of the Common Stock, as adjusted in
-----
accordance with Section 12 of the Plan.
BB. "SUBSIDIARY" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 2,000,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock. However, should the Company reacquire Shares which
were issued pursuant to the exercise of an Option, such Shares shall not become
available for future grant under the Plan.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has been terminated); provided,
--------
however, that Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. ADMINISTRATION OF THE PLAN.
--------------------------
A. PROCEDURE.
---------
I) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-
------------------------------
3, the Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors nor
Officers.
II) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS
-----------------------------------------------------
SUBJECT TO SECTION 16(B). With respect to Option grants made to Employees who
- ------------------------
are also Officers or Directors subject to Section 16(b) of the Exchange Act, the
Plan shall be administered by (A) the Board, if the Board may administer the
Plan in compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3, or (B) a committee designated by the Board
to administer the Plan, which committee shall be constituted to comply with the
rules
-3-
<PAGE>
governing a plan intended to qualify as a discretionary plan under Rule 16b-3.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time, the Board
may increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the rules governing
a plan intended to qualify as a discretionary plan under Rule 16b-3;
III) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With respect
--------------------------------------------
to Option grants made to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board; or (B)
a committee designated by the Board, which committee shall be constituted to
satisfy Applicable Laws. Once appointed, such Committee shall serve in its
designated capacity and otherwise directed by the Board. The Board may increase
the size of the new Committee and appoint additional members, remove members
(with or without cause), and substitute new members, fill vacancies (however
caused), and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by Applicable Laws.
B. POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
---------------------------
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
I) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
II) to select the Consultants and Employees to whom Options may
be granted hereunder;
III) to determine whether and to what extent Options are granted
hereunder;
IV) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
V) to approve forms of agreement for use under the Plan;
VI) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
VII) to reduce the exercise price of any Option to the then-
current Fair Market Value, if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
VIII) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
IX) to prescribe, amend and rescind rules and regulations
relating to the Plan;
-4-
<PAGE>
X) to modify or amend each Option (subject to Section 16 of
the Plan);
XI) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted by
the Administrator;
XII) to institute an Option Exchange Program;
XIII) to determine the terms and restrictions applicable to
Options; and
XIV) to make all other determinations deemed necessary or
advisable for administering the Plan.
C. EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
----------------------------------
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. ELIGIBILITY. Nonstatutory Stock Options may be granted to Employees
-----------
and Consultants. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option may
be granted additional Options.
6. LIMITATIONS.
-----------
A. Each Option shall be designated in the Notice of Grant as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of Shares subject to an Optionee's incentive stock options granted by the
Company, any Parent or Subsidiary, which become exercisable for the first time
during any calendar year (under all plans of the Company, or any Parent or
Subsidiary), exceeds $100,000, such excess Options shall be treated as Non
statutory Stock Options. For purposes of this Section 6.a., Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares shall be determined as of the time of grant.
B. Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
7. TERM OF PLAN. Subject to Section 16 of the Plan, the Plan shall
------------
become effective upon the earlier to occur of its adoption by the Board, or its
approval by the stockholders of the Company as described in Section 18 of the
Plan. It shall continue in effect for a term of ten (10) years, (unless
terminated earlier) under Section 14 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Notice
--------------
of Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company, or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
-5-
<PAGE>
9. OPTION EXERCISE PRICE AND CONSIDERATION.
---------------------------------------
A. EXERCISE PRICE. The per Share exercise price for the Shares to
--------------
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
I) In the case of an Incentive Stock Option:
A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company, or any Parent or
Subsidiary, the per Share exercise price shall be no less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant.
B) granted to any Employee, the per Share exercise price
shall be no less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.
II) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.
B. WAITING PERIOD AND EXERCISE DATES. At the time an Option is
---------------------------------
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.
C. FORM OF CONSIDERATION. The Administrator shall determine the
---------------------
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist of:
I) cash;
II) check;
III) promissory note;
IV) other Shares which (a) in the case of Shares acquired upon
exercise of an Option, have been owned by the Optionee for more than six (6)
months on the date of surrender; and (b) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
V) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
VI) any combination of the foregoing methods of payment; or
VII) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
-6-
<PAGE>
10. EXERCISE OF OPTION.
------------------
A. PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms of the Plan, and
at such times and under such conditions as determined by the Administrator and
set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when the Company receives:
(I) written notice of exercise, together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an exercise
of the Option (all in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (II) full payment for the Shares with
respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
Stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 12 of the
Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
B. TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Upon
----------------------------------------------------
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may exercise
his or her Option, but only within such period of time as is determined by the
Administrator, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration of
the term of such Option as set forth in the Notice of Grant). In the case of an
Incentive Stock Option, the Administrator shall determine such period of time
(in no event to exceed ninety (90) days from the date of termination) when the
Option is granted. If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
C. DISABILITY OF OPTIONEE. In the event that an Optionee's
----------------------
Continuous Status as an Employee or Consultant terminates as a result of
Optionee's Disability, the Optionee may exercise his or her Option at any time
within twelve (12) months from the date of such termination, but only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
-7-
<PAGE>
D. DEATH OF OPTIONEE. In the event of the death of an Optionee, the
-----------------
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death,
the Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate and the Shares covered by such Option shall
revert to the Plan.
E. RULE 16B-3. Options granted to individuals subject to Section 16
----------
of the Exchange Act ("Insiders"), must comply with the applicable provisions of
Rule 16b-3 and shall contain such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption from Section 16 of
the Exchange Act with respect to Plan transactions.
11. NONTRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
-----------------------------
assigned, hypothecated, transferred, or disposed of in any manner, other than by
Will or by the laws of descent or distribution, and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER, ASSET
----------------------------------------------------------------------
SALE OR CHANGE OF CONTROL.
-------------------------
A. CHANGES IN CAPITALIZATION. Subject to any required action by the
-------------------------
Stockholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option, and the number of Shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per Share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares of Common Stock subject to an Option.
B. DISSOLUTION OR LIQUIDATION. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its
sole discretion in such instances, declare that any Option shall terminate as of
a date fixed by the Board and give each Optionee the right to exercise his or
her Option as to all or any part of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable.
-8-
<PAGE>
C. MERGER OR ASSET SALE. Subject to the provisions of paragraph (d)
--------------------
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option shall be assumed or an equivalent option or right shall be
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, the
Administrator shall, in lieu of such assumption or substitution, provide for the
Optionee to have the right to exercise the Option as to all or a portion of the
Optioned Stock, including Shares as to which it would not otherwise be
exercisable. If the Administrator makes an Option exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option will terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase, for each
Share of Optioned Stock subject to the Option immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per-share consideration received by
holders of Common Stock in the merger or sale of assets.
D. CHANGE IN CONTROL. In the event of a "Change of Control" of the
-----------------
Company, as defined in paragraph (e) below, then the following acceleration and
valuation provisions shall apply:
I) Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control, any Options
outstanding on the date such Change in Control is determined to have occurred
that are not yet exercisable and vested on such date shall become fully
exercisable and vested;
II) Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control, all outstanding
Options, to the extent they are exercisable and vested (including Options that
shall become exercisable and vested pursuant to subparagraph i) above), shall be
terminated in exchange for a cash payment equal to the Change in Control Price
(reduced by the exercise price applicable to such Options). These cash proceeds
shall be paid to the Optionee or, in the event of death of an Optionee, prior to
payment, to the estate of the Optionee or a person who acquired the right to
exercise the Option by bequest or inheritance.
III) Any payment made pursuant to this paragraph (d) shall not
exceed the maximum amount which could be paid to an Optionee without having the
payment treated as an "excess parachute payment" within the meaning of (S)280G
of the Code.
E. DEFINITION OF "CHANGE IN CONTROL". For purposes of this Section
---------------------------------
12, a "Change in Control" means the happening of any of the following:
-9-
<PAGE>
I) When any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee), is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than twenty-five percent (25%) of the combined voting power of the Company's
then-outstanding securities entitled to vote generally in the election of
directors; or
II) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least seventy-five percent
(75%) of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve an agreement for the
sale or disposition by the Company of all or substantially all the Company's
assets; or
III) A change in the composition of the Board of Directors of
the Company occurring within a two (2) year period, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (A) are directors of the Company as of the date
the Plan is approved by the stockholders; or (B) are elected, or nominated for
election, to the Board of Directors of the Company with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of directors to the Company).
F. CHANGE IN CONTROL PRICE. For purposes of this Section 12,
-----------------------
"Change in Control Price" shall be, as determined by the Board: (i) the highest
Fair Market Value of a Share within the 60-day period immediately preceding the
date of determination of the Change of Control Price by the Board (the "60-Day
Period"); or (ii) the highest price paid or offered per Share, as determined by
the Board, in any bona fide transaction or bona fide offer related to the Change
in Control of the Company, at any time within the 60-Day Period; or (iii) some
lower price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a Share.
13. DATE OF GRANT. The date of grant of an Option shall be, for all
-------------
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
-------------------------------------
A. AMENDMENT AND TERMINATION. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.
B. STOCKHOLDER APPROVAL. The Company shall obtain Stockholder
--------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such Stockholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.
-10-
<PAGE>
C. EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES.
----------------------------------
A. LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable Laws,
and the requirements of any stock exchange or quotation system upon which the
Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
B. INVESTMENT REPRESENTATION. As a condition to the exercise of an
-------------------------
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares, if, in the opinion of counsel for the Company, such a representation is
required.
16. LIABILITY OF COMPANY.
--------------------
A. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
-----------------------------
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
B. GRANTS EXCEEDING ALLOTTED SHARES. If the Option Stock covered by
--------------------------------
an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional Stockholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless Stockholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 14.b. of the Plan.
17. RESERVATION OF SHARES. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. STOCKHOLDER APPROVAL. Continuance of the Plan shall be subject to
--------------------
approval by the Stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such Stockholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
-11-
<PAGE>
EXHIBIT 2
VESTING SCHEDULE
(i) The first 50,000 stock options will vest no earlier than one (1)
year after the Grant Date if for the 1995 fiscal year the Company
achieves sales of $5.0 million or $750,000 in pre-tax earnings and
Optionee is still an employee of the Company on the date of vesting;
(ii) The next 50,000 options will vest no earlier than January 1, 1998,
if prior thereto for any rolling 12 month period the Company achieves $12
million in sales or $2 million in pre-tax earnings and Optionee is still
an employee of the Company on the date of vesting; and
(iii) The final set of 50,000 options will will vest no earlier than
January 1, 1999, if prior thereto for any rolling 12 month period the
Company achieves $18 million in sales or $3 million in pre-tax earnings
and Optionee is still an employee of the Company on the date of vesting.
-9-
<PAGE>
EXHIBIT 3
FORM OF NOTICE OF EXERCISE OF
STOCK OPTION
DATE: _____________________________
TO: _____________________________
FROM: _________________________________________________
("Optionee")
RE: Exercise of Stock Option By Optionee Named Above
In accordance with the terms of my Stock Option Agreement dated
_________________, 19____, I hereby exercise my option to purchase
_______ Shares at $ __________ per share (total exercise price of $
___________), effective today. The option price and vested amount is in
accordance with the provisions of my aforementioned Stock Option
Agreement.
Unless a different form of payment is agreed to by the parties, attached
is a check payable to ________________________ for the total exercise
price of the Shares being purchased. The undersigned confirms the
representations made in Section 4 of the Stock Option Agreement.
Please prepare the stock certificate in the following name(s). (Note, if
the stock is to be registered in a name other than Optionee's name, the
Company's approval for said other person's ownership is required,
_________________________________
_________________________________
_________________________________
Sincerely,
__________________________________
(Signature)
___________________________________
(Print or Type Name)
Letter and consideration received by Company on ________________, 19____.
By: _______________________________
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<PAGE>
EXHIBIT 4
PROMISSORY NOTE AND PLEDGE AGREEMENT
-11-
<PAGE>
(FOR EXERCISE OF PLAN OPTIONS)
Exhibit 4
PROMISSORY NOTE
$__________ Austin, Texas __________, 199_
FOR VALUE RECEIVED, the undersigned, ________________ (the "MAKER"), hereby
promises to pay to CLINICOR, INC., a Nevada corporation, formerly, PEGASUS TAX
AND FINANCIAL PLANNING SERVICES, INC., a Nevada corporation (the "PAYEE"), or
order, in Austin, Texas, or at such other place as PAYEE may from time to time
designate, in United States of America currency, the sum of ____________________
Dollars ($__________), with interest on the unpaid principal balance. Interest
shall accrue from the date of this Note at the rate of __________ percent (___%)
per annum (which interest is no less than that required to avoid the imputation
of interest under the Internal Revenue Code of 1986, as amended).
Accrued interest, if any, shall be payable annually, commencing on the
first anniversary date of this Note. Any unpaid accrued interest and principal
shall be due and payable on, or before, the third anniversary date of this Note.
The MAKER shall have the right to prepay all or any part of the unpaid
principal of this Note from time to time without any penalty or premium,
provided that any such prepayments shall be applied first against any accrued
interest, and then against principal.
The MAKER shall be deemed to be in default if MAKER fails to pay any
installment of interest within thirty (30) days after the due date. In such
event, the total sum of principal and accrued interest shall become immediately
due and payable at the option of PAYEE or other assignee of this Note.
If a party breaches this Note, the breaching party shall pay all costs and
attorneys' fees incurred by the other party in connection with such breach,
whether or not any litigation is commenced.
This Note is secured by a pledge of PAYEE's Common Stock acquired by MAKER
with this Note pursuant to a Pledge Agreement dated of even date herewith.
Consent by PAYEE or other assignee of this Note to waive one default shall
not be deemed to be a waiver of the right to waive future and successive
defaults.
This Note shall be governed as to its construction, interpretation and
enforcement and in all other respects by the laws of the State of Texas.
This Note shall not be modified, amended or cancelled except in accordance
with the terms of that certain Stock Option Agreement to which this Note relates
by and between PAYEE and MAKER.
The MAKER waives demand, presentment, protest, notice of nonpayment, notice
of protest and any and all lack of diligence or delays which may occur in the
collection of this Note.
IN WITNESS WHEREOF, the MAKER has caused this Note to be duly executed at
Austin, Texas.
_____________________
(Signature)
<PAGE>
PLEDGE AGREEMENT
Exhibit 4
(Stock Option Plan Pledge)
THIS PLEDGE AGREEMENT is made and entered into effective as of the date set
forth below by and between ________________________ ("Pledgor") and CLINICOR,
INC., A NEVADA CORPORATION, FORMERLY PEGASUS TAX AND FINANCIAL SERVICES
PLANNING, INC., A NEVADA CORPORATION ("PLEDGEE").
RECITALS
--------
A. Pledgor has purchased ________ shares of Pledgee's common stock (the
"Shares") pursuant to his February ___, 1995 Stock Option Agreement ("Option
Agreement") under Pledgee's 1995 Employee and Consultant Stock Plan.
B. In payment for the Shares, Pledgor has executed and delivered a
promissory note to Pledgee in the form attached hereto as Exhibit A (the
"Note").
C. As security for payment of the indebtedness represented by the Note,
Pledgor has agreed to pledge the Shares with Pledgee to secure payment under the
Note.
AGREEMENT
---------
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. CREATION OF PLEDGE. Pledgor hereby assigns and sets over to Pledgee
------------------
the share certificate(s) evidencing Pledgor's ownership of the Shares, together
with stock powers attached thereto, duly endorsed in blank for transfer pursuant
thereto.
2. ACCEPTANCE BY PLEDGEE. Pledgee accepts the terms of the above pledge
---------------------
and agrees to hold the Shares in pledge during the term of this Agreement,
subject to the terms and conditions below.
3. RIGHT TO VOTE SHARES. So long as Pledgor is not in default in the
--------------------
payment of any installments of interest or principal due under the Note, Pledgor
shall have the right to vote the Shares on all corporate questions, and Pledgee
shall, if necessary, execute due and timely proxies in favor of Pledgor to this
end.
4. STOCK DIVIDENDS. If, during the term of this pledge, any stock
---------------
dividend, reclassification, readjustment or other change in the capital
structure or capital stock of Pledgee is permitted and declared, all new,
substituted and additional shares, or other securities issue with regard to the
Shares by reasons of any such change, shall be promptly turned over by Pledgor
to Pledgee to be held by Pledgee under the terms and conditions of this
Agreement in the same manner as the Shares.
5. WARRANTS, RIGHTS AND OPTIONS. If, during the term of this pledge,
----------------------------
subscription warrants or any other rights or options shall be granted, declared
or issued in connection with the Shares, such warrants, rights and options shall
be exercisable by Pledgor and if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor shall be transferred to Pledgee and become
subject to all of the terms and conditions of this Agreement, in the same manner
as the Shares.
<PAGE>
6. RELEASE OF SHARES FROM PLEDGE. When Pledgor has paid the amount due
-----------------------------
under the Note in full, Pledgee shall transfer to Pledgor all of the Shares, and
the pledge shall then terminate, and the terms thereof shall thereafter have no
force or effect.
7. NOTICE OF DEFAULT; SALE OF SHARES. If Pledgor defaults in the payment
---------------------------------
of any amount due under the Note, Pledgee may, without liability for any
diminution in price which may have occurred, sell the Shares on such terms and
for such consideration as Pledgee may determine, at any public or private sale.
At any such sale, Pledgee shall be free to purchase all or any part of the
deposited Shares for its own account.
8. EXPENSES OF SALE; DISPOSITION OF PROCEEDS. After first reimbursing
-----------------------------------------
itself for its reasonable costs in selling the Shares, from the balance of the
proceeds Pledgee shall next be paid an amount equal to the total balance of
principal and accrued interest due under the Note. The remainder of the
proceeds, if any, shall be paid to Pledgor. If the proceeds of any sale are less
than the balance of principal and accrued interest due on the Note plus the
costs and expenses of sale, Pledgor shall remain liable to Pledgee for such
deficiency.
9. EXECUTION OF DOCUMENTS. Pledgor and Pledgee agree to execute any and
----------------------
all documents necessary to carry out the provisions of this Agreement.
10. PLEDGEE MUST CONSENT TO TRANSFER OF SHARES. During the term of this
------------------------------------------
pledge, none of the Shares may be sold, gifted or otherwise disposed of, without
the written consent of Pledgee.
11. RESTRICTIVE LEGENDS. Pledgee may, in its sole discretion or as
-------------------
required by law, place appropriate restrictive legends on share certificates
evidencing the Shares with respect to this pledge and applicable securities
laws.
12. SUCCESSORS AND ASSIGNS. This Agreement, and all the terms hereof,
----------------------
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors, executors, administrators or assigns.
13. APPLICABLE LAW/ATTORNEYS' FEES. This Agreement shall be governed by
------------------------------
and construed in accordance with the laws of the State of Texas. If a dispute
arises hereunder, the prevailing party shall be entitled to reasonable
attorneys' fees and costs.
14. AMENDMENTS. This Pledge Agreement shall not be modified, amended or
----------
cancelled except in accordance with the terms of Pledgee's Option Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of ___________________.
PLEDGOR: PLEDGEE:
by ______________________
(Signature)
_______________________
(Signature)
_________________________
(Print Name and Title)
-2-
<PAGE>
EXHIBIT 10 (m)
THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAW,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (A) THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS COVERING SUCH
SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS
UNDER APPLICABLE STATE LAW.
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Option Agreement") by and between Clinicor,
Inc., formerly known as Pegasus Tax and Financial Planning Services, Inc., a
Nevada corporation (hereinafter referred to as the "Company") and the "Optionee"
identified below. The terms and conditions of this Option Agreement are subject
to the terms, definitions and provisions of the 1995 Pegasus Employee and
Consultant Stock Option Plan (the "Plan") adopted by the Company. The Plan is
hereby incorporated by reference and attached hereto as Exhibit 1, as may be
amended from time to time in accordance with the provisions of the Plan.
1. PRINCIPAL TERMS. The principal terms and conditions of this Option
---------------
Agreement are summarized below, subject to the more detailed provisions set
forth elsewhere in this Option Agreement:
A. GRANT DATE. The "Grant Date" is February 27, 1995.
---------- --
B. OPTIONEE. The "Optionee" is ROBERT S. SAMMIS.
--------
C. OPTION SHARES. The Company hereby grants to Optionee an Option to
-------------
purchase One Hundred Fifty Thousand (150,000) shares of Common Stock (the
"Shares"), subject to the terms and conditions of this Option Agreement and
the Plan.
D. EXERCISE PRICE. The exercise price is $1.25 for each share of Common
--------------
Stock, which price if an "incentive stock option" is not less than the
fair market value per share of Common Stock on the Grant Date, as
determined by the Board; provided, however, in the event Optionee is an
Employee and owns stock representing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of
its Parent or Subsidiary corporations immediately before the Grant Date,
said exercise price is not less than one hundred ten percent (110%) of the
fair market value per share of Common Stock on the Grant Date as determined
by the Board.
E. TERM/AMENDMENT. The term of this Option commences on the Grant Date
--------------
and shall terminate on the fifth (5th) anniversary date of the Grant Date.
Notwithstanding the foregoing, in no event may this Option be exercised
more than ten (10) years from the Grant Date, and this Option may be
exercised during such term only in accordance with the Plan and the terms
of this Option. However, in the case of an Option granted to an Optionee
who, at the time the Option is granted, is an employee and owns stock
representing more than ten percent (10%) of the voting power of all classes
of stock of the Company or any Parent or Subsidiary, the term of the Option
shall be no more than five (5) years from the Grant Date. The provisions
of this Agreement may be waived, altered, amended or repealed in whole or
in part only upon the written consent of all parties to this Agreement and
either Randy Haag or Arthur Haag so long as either Haag is a shareholder in
the Company.
-1-
<PAGE>
F. VESTING/EXERCISE.
----------------
(I) "Vested" shares are the only Shares that Optionee may purchase
hereunder. As of the Grant Date, no Shares are Vested Shares. The
remaining balance of the Shares shall vest as set forth on Exhibit 2
attached hereto and incorporated herein by reference (provided, however,
that in no event shall all such Option Shares vest at a rate less than
twenty percent (20%) per year; the Option shall be exercised pursuant to
the terms of Section 3 below only as to whole shares; no fractional shares
may be purchased).
(II) In the event of Optionee's termination, disability or death, the
exercise rights of Optionee are also subj ect to Section 7 (termination),
Section 8 (disability) and Section 9 (death).
(III) In no event may this Option as an Incentive Stock Option become
exercisable at a time or times which, when this Option is aggregated with
all other incentive stock options granted to Optionee by the Company or any
Parent or Subsidiary, would result in Shares having an aggregate fair
market value (determined for each Share as of the date of grant of the
option covering such share) in excess of $100,000 becoming first available
for purchase upon exercise of one or more incentive stock options during
any calendar year. All such shares in excess of the $100,000 limit shall
automatically become shares covered by non-statutory stock options.
2. NATURE OF THE OPTION. If Optionee is an Employee of the Company, this
--------------------
Option is intended to qualify as an Incentive Stock Option. If Optionee is
a Consultant of the Company or the provisions of this Option Agreement or
the Plan fail to qualify for Incentive Stock Option treatment under the
Code, this Option shall be deemed a Nonstatutory Stock Option. It is the
intention of the Company, however, that the provisions of this Option
Agreement and the Plan qualify for Incentive Stock Option treatment under
the Code with respect to Optionees who are employees of the Company.
3. METHOD OF EXERCISE. This Option shall be exercisable by written notice in
------------------
the form attached as Exhibit 3. The Notice of Exercise shall state the
election to exercise the Option, the number of Shares in respect of which
the Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such Shares
as may be required by the Company pursuant to the provisions of the Plan.
Such written notice shall be signed by Optionee and shall be delivered in
person or by certified mail to the President, Secretary or Chief Financial
Officer of the Company. The written notice shall be accompanied by payment
of the exercise price. This Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the exercise
price. Until the issuance (as evidenced by the appropriate entry on the
books of the Company or a duly authorized transfer agent of the Company) of
the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to
the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
upon exercise of the Option.
No shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares may then
be listed.
4. INVESTMENT REPRESENTATIONS; RESTRICTIONS ON TRANSFER. By receipt of this
----------------------------------------------------
Option, by its execution, and by its exercise in whole or in part, Optionee
represents to the Company the following:
A. Optionee understands that this Option and any Shares purchased upon
its exercise are securities, the issuance of which requires compliance with
federal and state securities laws.
-2-
<PAGE>
B. Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the securities.
Optionee is acquiring these securities for investment for Optionee's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
C. Optionee acknowledges and understands that the securities constitute
"restricted securities" under the Securities Act and must be held
indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to
register the securities. Optionee understands that the certificate
evidencing the securities will be imprinted with a legend which prohibits
the transfer of the securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company, and any other legend required under applicable state securities
laws.
D. Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof, in a non-public offering subject to
the satisfaction of certain conditions. Rule 701 provides that if the
issuer qualifies under Rule 701 at the time of exercise of the Option by
the Optionee, such exercise will be exempt from registration under the
Securities Act. In the event the Company later becomes subject to the
reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, ninety (90) days thereafter the securities exempt under Rule
701 may be resold, subject to the satisfaction of certain conditions
specified by Rule 144, including among other things: (i) the sale being
made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under
the Securities Exchange Act of 1934); and, in the case of an affiliate,
(ii) the availability of certain public information about the Company, and
the amount of securities being sold during any three month period not
exceeding the limitations specified in Rule 144(e), if applicable.
Notwithstanding this Paragraph 4.(D), the Optionee acknowledges and agrees
to the restrictions set forth in Paragraph 4.(E).
In the event that the Company does not qualify under Rule 701 at the time
of exercise of the Option, then the securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
among other things: (i) the availability of certain public information
about the Company; (ii) the resale occurring not less than two years after
the party has purchased, and made full payment for, within the meaning of
Rule 144, the securities to be sold; and (iii) in the case of an affiliate,
or of a non-affiliate who has held the securities less than three years,
the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term
is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the
specified limitations stated therein, if applicable.
E. In connection with the Company's subsequent underwritten public
offering of the Company's securities, Optionee agrees: (i) not to sell,
make short sale of, loan, grant any options for the purchase of, or
otherwise dispose of any shares of Common Stock of the Company held by
Optionee (except traded shares Optionee purchased in the open market and
those shares included in the registration) without the prior written
consent of the Company or the underwriters managing such underwritten
public offering of the Company's securities for one hundred eighty (180)
days from the effective date of such registration, and (ii) to execute any
agreement reflecting Section 4(E)(i) above as may be requested by the
underwriters at the time of the public offering.
-3-
<PAGE>
5. METHOD OF PAYMENT. Payment of the purchase price shall be made by cash or
-----------------
by delivery of a three year Promissory Note and Pledge Agreement in the
form attached hereto as Exhibit 4.
6. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the issuance
------------------------
of such Shares upon such exercise or the method of payment of consideration
for such shares would constitute a violation of any applicable federal or
state securities or other law or regulation, including any rule under Part
207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise
of this Option, the Company may require Optionee to make any representation
and warranty to the Company as may be required by any applicable law or
regulation.
7. TERMINATION OF STATUS AS AN EMPLOYEE.
------------------------------------
In the event of termination of Optionee's Continuous Status as an employee,
Optionee shall have only three months after such termination date (but not
later than expiration of the option term) to exercise this Option and then
the exercise can be only to the extent that Optionee was entitled to
exercise it at the date of such termination (i.e. vested Options). To the
extent that Optionee was not entitled to exercise this Option at the date
of such termination, this Option shall terminate as to those "non-vested"
Shares and the non-vested Shares, if any, shall be forfeited to the Plan.
To the extent Optionee does not exercise this Option timely, then any
unexercised option shares, if any, shall be forfeited to the Plan.
8. DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 7 above,
----------------------
in the event of termination of Optionee's Continuous Status as an Employee
or Consultant as a result of Optionee's permanent and total disability (as
defined in Section 22(e) (3) of the Code), Optionee may, but only within
twelve (12) months from the date of termination of employment or consulting
relationship (but in no event later than the date of expiration of the Term
of this Option as set forth in Section 1(E) hereof, exercise this Option to
the extent Optionee was entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise this
Option at the date of termination, or if Optionee does not exercise such
Option (which Optionee was entitled to exercise) within the time specified
herein, this Option shall terminate and all unexercised option shares, if
any, shall be forfeited to the Plan.
9. DEATH OF OPTIONEE. In the event of the death of Optionee:
-----------------
A. During the term of this Option while an Employee or Consultant of the
Company and having been in Continuous Status as an Employee or Consultant
since the Grant Date of this Option, this Option may be exercised, at any
time within twelve (12) months following the date of death (but in no event
later than the date of expiration of the term of this Option as set forth
in Section 11 below), by Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the
extent of the right to exercise that would have accrued had Optionee
continued living and remained in Continuous Status as an Employee or
Consultant twelve (12) months after the date of death.
B. Within three months after the termination of Optionee's Continuous
Status as an employee or consultant, this Option may be exercised, at any
time within twelve (12) months following the date of death (but in no event
later than the date of expiration of the term of this Option as set forth
in Section 1(E) hereof, by Optionee's estate or by a person who acquired
the right to exercise this Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the date of
termination.
-4-
<PAGE>
10. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in any
-----------------------------
manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The
terms of this Option shall be binding upon the executors, administrators,
heirs, successors and assigns of Optionee.
11. EARLY DISPOSITION OF STOCK. If Optionee is an employee, Optionee
--------------------------
understands that, if Optionee disposes of any Shares received under this
Option within two (2) years after the date of this Agreement or within one
(1) year after such Shares were transferred to Optionee, Optionee will be
treated for federal income tax purposes as having received ordinary income
at the time of such disposition in an amount generally measured as the
excess of (i) the lower of the fair market value of the Shares at the date
of disposition or the fair market value of the Shares at the Grant Date
over (ii) the price paid for the Shares. The amount of such ordinary
income may be measured differently if Optionee is an officer, director or
10% control person (defined in Section 2(E) hereof) or if the Shares were
subject to a substantial risk of forfeiture at the time they were
transferred. Any gain recognized on such a premature sale of the Shares in
excess of the amount treated as ordinary income will be characterized as
capital gain. Optionee hereby agrees to notify the Company in writing
-------------------------------------------------------
within thirty (30) days after the date of any such disposition. Optionee
--------------------------------------------------------------
understands that if Optionee disposes of such Shares at any time after the
expiration of such two-year and one-year holding periods, any gain on such
sale will generally be treated as long-term capital gain.
12. TAXATION UPON EXERCISE OF OPTION: If Optionee is a consultant, Optionee
--------------------------------
understands that, upon exercise of this Option, Optionee will generally
recognize income for tax purposes in an amount equal to the excess of the
then fair market value of the Shares over the exercise price. If Optionee
is an employee and this Option is an Incentive Stock Option, Optionee
understands that, upon exercise of this Option, Optionee will generally
recognize income for purposes of the alternative minimum tax in amount
equal to the excess of the then fair market value of the Shares over the
exercise price.
13. TAX CONSEQUENCES. The Optionee understands that any of the foregoing
----------------
references to taxation are based on federal income tax laws and regulations
now in effect. The Optionee has reviewed with the Optionee's own tax
advisors the federal, state, local and foreign tax consequences of the
transactions contemplated by this Agreement. The Optionee is relying
solely on such advisors and not on any statements or representations of the
Company or any of its agents. The Optionee understands that the Optionee
(and not the Company) shall be responsible for the Optionee's own tax
liability that may arise as a result of the transactions contemplated by
this Agreement. The Optionee hereby authorizes the company to make
appropriate arrangements for any withholding of tax liability which may be
required under applicable law in connection with the grant or exercise of
this Option.
14. PARTIES' SIGNATURES - DUPLICATE ORIGINALS: This Option Agreement between
-----------------------------------------
the parties identified in Section 1 hereof shall be signed in two duplicate
originals as follows:
A. The Company shall sign two (2) duplicate originals of the "Company's
Signature Page" for this Option Agreement.
B. The Optionee shall sign two (2) duplicate originals of the "Optionee's
Signature Page" for this Option Agreement together, where applicable, with
Optionee's spouse.
C. One complete duplicate original of this Option Agreement, (complete
with one company signature page and one Optionee signature page) will be
given to the Company and the other to Optionee.
-5-
<PAGE>
Executed on behalf of the Company to be effective on the date first set forth
above.
CLINICOR, INC.
By /s/ Thomas P. O'Donnell
-----------------------------------
(Signature)
Thomas P. O'Donnell, President
- -------------------------------------
(Print Name & Title)
LIST OF EXHIBITS:
1. Copy of 1995 Stock Option Plan
2. Vesting Schedule
3. Form of Notice of Exercise
4. Promissory Note and Pledge Agreement
-6-
<PAGE>
ACKNOWLEDGEMENT BY OPTIONEE
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION
1(F) HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE, OR CONSULTANT
AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED
THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND
AGREES THAT THIS OPTION, THE COMPANY'S PLAN WHICH IS INCORPORATED HEREIN BY
REFERENCE, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET
FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS AN EMPLOYEE, OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD,
OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT
TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH
OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan (a copy of which is annexed
hereto as Exhibit 1) represents that Optionee is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee has reviewed the Plan and this Option Agreement
in their entirety, has had an opportunity to obtain the advice of counsel prior
to executing this Option and fully understands all provisions of the Option.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board or of the Committee upon any questions arising
under the Plan. Optionee further agrees to notify the Company upon any change
in the residence address indicated below.
This Acknowledgement is executed by Optionee as of February 27, 1995, to be
considered effective as of the Grant Date of the Option.
OPTIONEE Residence:
/s/ Robert S. Sammis 3709 Gilbert
- -------------------------- -----------------------------
(Signature) (Street)
Robert S. Sammis Austin, TX 78703
- -------------------------- ------------------------------
(Print Name) (City, State, Zip)
Please also complete the following (if applicable):
The undersigned, being the spouse of the above-named Optionee, does hereby
acknowledge that the undersigned has read and is familiar with the provisions of
the Option Agreement (including this page), and the undersigned hereby agrees
thereto and joins therein to the extent, if any, that the agreement and joiner
of the undersigned may be necessary.
OPTIONEE'S SPOUSE
__________________________ __________________________
Signature Print Name
-7-
<PAGE>
EXHIBIT 1
1995 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
-8-
<PAGE>
CLINICOR, INC.
1995 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are:
--------------------
. to attract and retain the best available personnel for positions of
substantial responsibility;
. to provide additional incentive to Employees and Consultants to remain
with the Company; and
. to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.
2. DEFINITIONS. As used herein, the following definitions shall apply:
-----------
A. "ADMINISTRATOR" means the Board or any of its Committees as shall
-------------
be administering the Plan, in accordance with Section 4 of the Plan.
B. "APPLICABLE LAWS" means the legal requirements relating to the
---------------
admin istration of stock option plans under state corporate and securities laws
and the Code.
C. "BOARD" means the Board of Directors of the Company.
-----
D. "CODE" means the Internal Revenue Code of 1986, as amended.
----
E. "COMMITTEE" means a Committee appointed by the Board in
---------
accordance with Section 4 of the Plan.
F. "COMMON STOCK" means the Common Stock of the Company.
------------
G. "COMPANY" means CLINICOR, INC., a Nevada corporation, formerly
-------
Pegasus Tax and Financial Planning Services, Inc., a Nevada corporation.
H. "CONSULTANT" means any person, including an advisor, engaged by
----------
the Company or a Parent or Subsidiary to render services, and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company, or who are not
compensated by the Company for their services as Directors.
I. "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
----------------------------------------------
employment or consulting relationship is not interrupted or terminated by the
Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Company, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless re-employment upon
the expiration of such leave is guaranteed by contract (including certain
Company policies) or statute; provided, further, that on the ninety-first (91st)
day of any such leave (where re-employment is not guaranteed by contract or
statute) the Optionee's Incentive Stock Option shall automatically convert to a
Nonstatutory Stock Option; or (ii) transfers between locations of the Company or
between the Company, its Parent, its Subsidiaries, or its successor.
<PAGE>
J. "DIRECTOR" means a member of the Board.
--------
K. "DISABILITY" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.
L. "EMPLOYEE" means any person, including Officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a Director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
M. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
------------
amended.
N. "FAIR MARKET VALUE" means, as of any date, the value of Common
-----------------
Stock determined as follows:
I) If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no shares were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last market
trading day prior to the date of determination, as reported in The Wall Street
---------------
Journal, or such other source as the Administrator deems reliable;
- -------
II) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market System thereof), or is regularly quoted by a recognized
securities dealer, but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal, or such other source as
-----------------------
the Administrator deems reliable;
III) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
O. "INCENTIVE STOCK OPTION" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
P. "NONSTATUTORY STOCK OPTION" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
Q. "NOTICE OF GRANT" means a written notice evidencing certain terms
---------------
and conditions of an individual Option grant. The Notice of Grant is part of
the Option Agreement.
R. "OFFICER" means a person who is an officer of the Company within
-------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated there under.
S. "OPTION" means a stock option granted pursuant to the Plan.
------
-2-
<PAGE>
T. "OPTION AGREEMENT" means a written agreement between the Company
----------------
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
U. "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
-----------------------
options are surrendered in exchange for options with a lower exercise price.
V. "OPTIONED STOCK" means the Common Stock subject to an Option.
--------------
W. "OPTIONEE" means an Employee or Consultant who holds an
--------
outstanding Option.
X. "PARENT" shall mean a "parent corporation," whether now or
------
hereafter existing, as defined in Section 424(e) of the Code.
Y. "PLAN" shall mean this 1995 Employee and Consultant Stock Option
----
Plan.
Z. "RULE 16B-3" means Rule 16b-3 of the Exchange Act, or any
----------
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
AA. "SHARE" means a share of the Common Stock, as adjusted in
-----
accordance with Section 12 of the Plan.
BB. "SUBSIDIARY" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 2,000,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock. However, should the Company reacquire Shares which
were issued pursuant to the exercise of an Option, such Shares shall not become
available for future grant under the Plan.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has been terminated); provided,
--------
however, that Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. ADMINISTRATION OF THE PLAN.
--------------------------
A. PROCEDURE.
---------
I) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-
------------------------------
3, the Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors nor
Officers.
II) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS
-----------------------------------------------------
SUBJECT TO SECTION 16(B). With respect to Option grants made to Employees who
- ------------------------
are also Officers or Directors subject to Section 16(b) of the Exchange Act, the
Plan shall be administered by (A) the Board, if the Board may administer the
Plan in compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3, or (B) a committee designated by the Board
to administer the Plan, which committee shall be constituted to comply with the
rules
-3-
<PAGE>
governing a plan intended to qualify as a discretionary plan under Rule 16b-3.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time, the Board
may increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the rules governing
a plan intended to qualify as a discretionary plan under Rule 16b-3;
III) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With respect
--------------------------------------------
to Option grants made to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board; or (B)
a committee designated by the Board, which committee shall be constituted to
satisfy Applicable Laws. Once appointed, such Committee shall serve in its
designated capacity and otherwise directed by the Board. The Board may increase
the size of the new Committee and appoint additional members, remove members
(with or without cause), and substitute new members, fill vacancies (however
caused), and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by Applicable Laws.
B. POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
---------------------------
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
I) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
II) to select the Consultants and Employees to whom Options may
be granted hereunder;
III) to determine whether and to what extent Options are granted
hereunder;
IV) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
V) to approve forms of agreement for use under the Plan;
VI) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
VII) to reduce the exercise price of any Option to the then-
current Fair Market Value, if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
VIII) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
IX) to prescribe, amend and rescind rules and regulations
relating to the Plan;
-4-
<PAGE>
X) to modify or amend each Option (subject to Section 16 of
the Plan);
XI) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted by
the Administrator;
XII) to institute an Option Exchange Program;
XIII) to determine the terms and restrictions applicable to
Options; and
XIV) to make all other determinations deemed necessary or
advisable for administering the Plan.
C. EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
----------------------------------
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. ELIGIBILITY. Nonstatutory Stock Options may be granted to Employees
-----------
and Consultants. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option may
be granted additional Options.
6. LIMITATIONS.
-----------
A. Each Option shall be designated in the Notice of Grant as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of Shares subject to an Optionee's incentive stock options granted by the
Company, any Parent or Subsidiary, which become exercisable for the first time
during any calendar year (under all plans of the Company, or any Parent or
Subsidiary), exceeds $100,000, such excess Options shall be treated as Non-
statutory Stock Options. For purposes of this Section 6.a., Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares shall be determined as of the time of grant.
B. Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
7. TERM OF PLAN. Subject to Section 16 of the Plan, the Plan shall
------------
become effective upon the earlier to occur of its adoption by the Board, or its
approval by the stockholders of the Company as described in Section 18 of the
Plan. It shall continue in effect for a term of ten (10) years, (unless
terminated earlier) under Section 14 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Notice
--------------
of Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company, or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
-5-
<PAGE>
9. OPTION EXERCISE PRICE AND CONSIDERATION.
---------------------------------------
A. EXERCISE PRICE. The per Share exercise price for the Shares to
--------------
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
I) In the case of an Incentive Stock Option:
A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company, or any Parent or
Subsidiary, the per Share exercise price shall be no less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant.
B) granted to any Employee, the per Share exercise price
shall be no less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.
II) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.
B. WAITING PERIOD AND EXERCISE DATES. At the time an Option is
---------------------------------
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.
C. FORM OF CONSIDERATION. The Administrator shall determine the
---------------------
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist of:
I) cash;
II) check;
III) promissory note;
IV) other Shares which (a) in the case of Shares acquired upon
exercise of an Option, have been owned by the Optionee for more than six (6)
months on the date of surrender; and (b) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
V) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
VI) any combination of the foregoing methods of payment; or
VII) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
-6-
<PAGE>
10. EXERCISE OF OPTION.
------------------
A. PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms of the Plan, and
at such times and under such conditions as determined by the Administrator and
set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when the Company receives:
(I) written notice of exercise, together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an exercise
of the Option (all in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (II) full payment for the Shares with
respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
Stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 12 of the
Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
B. TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Upon
----------------------------------------------------
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may exercise
his or her Option, but only within such period of time as is determined by the
Administrator, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration of
the term of such Option as set forth in the Notice of Grant). In the case of an
Incentive Stock Option, the Administrator shall determine such period of time
(in no event to exceed ninety (90) days from the date of termination) when the
Option is granted. If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.
C. DISABILITY OF OPTIONEE. In the event that an Optionee's
----------------------
Continuous Status as an Employee or Consultant terminates as a result of
Optionee's Disability, the Optionee may exercise his or her Option at any time
within twelve (12) months from the date of such termination, but only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
-7-
<PAGE>
D. DEATH OF OPTIONEE. In the event of the death of an Optionee, the
-----------------
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death,
the Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate and the Shares covered by such Option shall
revert to the Plan.
E. RULE 16B-3. Options granted to individuals subject to Section 16
----------
of the Exchange Act ("Insiders"), must comply with the applicable provisions of
Rule 16b-3 and shall contain such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption from Section 16 of
the Exchange Act with respect to Plan transactions.
11. NONTRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
-----------------------------
assigned, hypothecated, transferred, or disposed of in any manner, other than by
Will or by the laws of descent or distribution, and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER, ASSET
----------------------------------------------------------------------
SALE OR CHANGE OF CONTROL.
-------------------------
A. CHANGES IN CAPITALIZATION. Subject to any required action by the
-------------------------
Stockholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option, and the number of Shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per Share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued Shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of Shares of Common Stock subject to an Option.
B. DISSOLUTION OR LIQUIDATION. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its
sole discretion in such instances, declare that any Option shall terminate as of
a date fixed by the Board and give each Optionee the right to exercise his or
her Option as to all or any part of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable.
-8-
<PAGE>
C. MERGER OR ASSET SALE. Subject to the provisions of paragraph (d)
--------------------
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option shall be assumed or an equivalent option or right shall be
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, the
Administrator shall, in lieu of such assumption or substitution, provide for the
Optionee to have the right to exercise the Option as to all or a portion of the
Optioned Stock, including Shares as to which it would not otherwise be
exercisable. If the Administrator makes an Option exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option will terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase, for each
Share of Optioned Stock subject to the Option immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per-share consideration received by
holders of Common Stock in the merger or sale of assets.
D. CHANGE IN CONTROL. In the event of a "Change of Control" of the
-----------------
Company, as defined in paragraph (e) below, then the following acceleration and
valuation provisions shall apply:
I) Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control, any Options
outstanding on the date such Change in Control is determined to have occurred
that are not yet exercisable and vested on such date shall become fully
exercisable and vested;
II) Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control, all outstanding
Options, to the extent they are exercisable and vested (including Options that
shall become exercisable and vested pursuant to subparagraph i) above), shall be
terminated in exchange for a cash payment equal to the Change in Control Price
(reduced by the exercise price applicable to such Options). These cash proceeds
shall be paid to the Optionee or, in the event of death of an Optionee, prior to
payment, to the estate of the Optionee or a person who acquired the right to
exercise the Option by bequest or inheritance.
III) Any payment made pursuant to this paragraph (d) shall not
exceed the maximum amount which could be paid to an Optionee without having the
payment treated as an "excess parachute payment" within the meaning of (S)280G
of the Code.
E. DEFINITION OF "CHANGE IN CONTROL". For purposes of this Section
---------------------------------
12, a "Change in Control" means the happening of any of the following:
-9-
<PAGE>
I) When any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee), is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than twenty-five percent (25%) of the combined voting power of the Company's
then-outstanding securities entitled to vote generally in the election of
directors; or
II) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least seventy-five percent
(75%) of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve an agreement for the
sale or disposition by the Company of all or substantially all the Company's
assets; or
III) A change in the composition of the Board of Directors of
the Company occurring within a two (2) year period, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (A) are directors of the Company as of the date
the Plan is approved by the stockholders; or (B) are elected, or nominated for
election, to the Board of Directors of the Company with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of directors to the Company).
F. CHANGE IN CONTROL PRICE. For purposes of this Section 12,
-----------------------
"Change in Control Price" shall be, as determined by the Board: (i) the highest
Fair Market Value of a Share within the 60-day period immediately preceding the
date of determination of the Change of Control Price by the Board (the "60-Day
Period"); or (ii) the highest price paid or offered per Share, as determined by
the Board, in any bona fide transaction or bona fide offer related to the Change
in Control of the Company, at any time within the 60-Day Period; or (iii) some
lower price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a Share.
13. DATE OF GRANT. The date of grant of an Option shall be, for all
-------------
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
-------------------------------------
A. AMENDMENT AND TERMINATION. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.
B. STOCKHOLDER APPROVAL. The Company shall obtain Stockholder
--------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such Stockholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.
-10-
<PAGE>
C. EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES.
----------------------------------
A. LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable Laws,
and the requirements of any stock exchange or quotation system upon which the
Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
B. INVESTMENT REPRESENTATION. As a condition to the exercise of an
-------------------------
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares, if, in the opinion of counsel for the Company, such a representation is
required.
16. LIABILITY OF COMPANY.
--------------------
A. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
-----------------------------
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
B. GRANTS EXCEEDING ALLOTTED SHARES. If the Option Stock covered by
--------------------------------
an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional Stockholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless Stockholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 14.b. of the Plan.
17. RESERVATION OF SHARES. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. STOCKHOLDER APPROVAL. Continuance of the Plan shall be subject to
--------------------
approval by the Stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such Stockholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
-11-
<PAGE>
EXHIBIT 2
VESTING SCHEDULE
(i) The first 50,000 stock options will vest no earlier than one (1) year
after the Grant Date if for the 1995 fiscal year the Company achieves sales
of $5.0 million or $750,000 in pre-tax earnings and Optionee is still an
employee of the Company on the date of vesting;
(ii) The next 50,000 options will vest no earlier than January 1, 1998, if
prior thereto for any rolling 12 month period the Company achieves $12
million in sales or $2 million in pre-tax earnings and Optionee is still an
employee of the Company on the date of vesting; and
(iii) The final set of 50,000 options will will vest no earlier than January
1, 1999, if prior thereto for any rolling 12 month period the Company
achieves $18 million in sales or $3 million in pre-tax earnings and Optionee
is still an employee of the Company on the date of vesting.
-9-
<PAGE>
EXHIBIT 3
FORM OF NOTICE OF EXERCISE OF
STOCK OPTION
DATE: _____________________________
TO: _____________________________
FROM: _________________________________________________
("Optionee")
RE: Exercise of Stock Option By Optionee Named Above
In accordance with the terms of my Stock Option Agreement dated
_________________, 19____, I hereby exercise my option to purchase _______
Shares at $ __________ per share (total exercise price of $ ___________),
effective today. The option price and vested amount is in accordance with
the provisions of my aforementioned Stock Option Agreement.
Unless a different form of payment is agreed to by the parties, attached is
a check payable to ________________________ for the total exercise price of
the Shares being purchased. The undersigned confirms the representations
made in Section 4 of the Stock Option Agreement.
Please prepare the stock certificate in the following name(s). (Note, if
the stock is to be registered in a name other than Optionee's name, the
Company's approval for said other person's ownership is required,
_________________________________
_________________________________
_________________________________
Sincerely,
__________________________________
(Signature)
___________________________________
(Print or Type Name)
Letter and consideration received by Company on ________________, 19____.
By: _______________________________
-10-
<PAGE>
EXHIBIT 4
PROMISSORY NOTE AND PLEDGE AGREEMENT
-11-
<PAGE>
(FOR EXERCISE OF PLAN OPTIONS)
Exhibit 4
PROMISSORY NOTE
$__________ Austin, Texas __________, 199_
FOR VALUE RECEIVED, the undersigned, ________________ (the "MAKER"), hereby
promises to pay to CLINICOR, INC., a Nevada corporation, formerly, PEGASUS TAX
AND FINANCIAL PLANNING SERVICES, INC., a Nevada corporation (the "PAYEE"), or
order, in Austin, Texas, or at such other place as PAYEE may from time to time
designate, in United States of America currency, the sum of ____________________
Dollars ($__________), with interest on the unpaid principal balance. Interest
shall accrue from the date of this Note at the rate of __________ percent (___%)
per annum (which interest is no less than that required to avoid the imputation
of interest under the Internal Revenue Code of 1986, as amended).
Accrued interest, if any, shall be payable annually, commencing on the
first anniversary date of this Note. Any unpaid accrued interest and principal
shall be due and payable on, or before, the third anniversary date of this Note.
The MAKER shall have the right to prepay all or any part of the unpaid
principal of this Note from time to time without any penalty or premium,
provided that any such prepayments shall be applied first against any accrued
interest, and then against principal.
The MAKER shall be deemed to be in default if MAKER fails to pay any
installment of interest within thirty (30) days after the due date. In such
event, the total sum of principal and accrued interest shall become immediately
due and payable at the option of PAYEE or other assignee of this Note.
If a party breaches this Note, the breaching party shall pay all costs and
attorneys' fees incurred by the other party in connection with such breach,
whether or not any litigation is commenced.
This Note is secured by a pledge of PAYEE's Common Stock acquired by MAKER
with this Note pursuant to a Pledge Agreement dated of even date herewith.
Consent by PAYEE or other assignee of this Note to waive one default shall
not be deemed to be a waiver of the right to waive future or successive
defaults.
This Note shall be governed as to its construction, interpretation and
enforcement and in all other respects by the laws of the State of Texas.
This Note shall not be modified, amended or cancelled except in accordance
with the terms of that certain Stock Option Agreement to which this Note relates
by and between PAYEE and MAKER.
The MAKER waives demand, presentment, protest, notice of nonpayment, notice
of protest and any and all lack of diligence or delays which may occur in the
collection of this Note.
IN WITNESS WHEREOF, the MAKER has caused this Note to be duly executed at
Austin, Texas.
_____________________
(Signature)
<PAGE>
PLEDGE AGREEMENT
Exhibit 4
(Stock Option Plan Pledge)
THIS PLEDGE AGREEMENT is made and entered into effective as of the date set
forth below by and between ________________________ ("Pledgor") and CLINICOR,
INC., A NEVADA CORPORATION, FORMERLY PEGASUS TAX AND FINANCIAL SERVICES
PLANNING, INC., A NEVADA CORPORATION ("PLEDGEE").
RECITALS
--------
A. Pledgor has purchased ________ shares of Pledgee's common stock (the
"Shares") pursuant to his February ___, 1995 Stock Option Agreement ("Option
Agreement") under Pledgee's 1995 Employee and Consultant Stock Plan.
B. In payment for the Shares, Pledgor has executed and delivered a
promissory note to Pledgee in the form attached hereto as Exhibit A (the
"Note").
C. As security for payment of the indebtedness represented by the Note,
Pledgor has agreed to pledge the Shares with Pledgee to secure payment under the
Note.
AGREEMENT
---------
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. CREATION OF PLEDGE. Pledgor hereby assigns and sets over to Pledgee
------------------
the share certificate(s) evidencing Pledgor's ownership of the Shares, together
with stock powers attached thereto, duly endorsed in blank for transfer pursuant
thereto.
2. ACCEPTANCE BY PLEDGEE. Pledgee accepts the terms of the above pledge
---------------------
and agrees to hold the Shares in pledge during the term of this Agreement,
subject to the terms and conditions below.
3. RIGHT TO VOTE SHARES. So long as Pledgor is not in default in the
--------------------
payment of any installments of interest or principal due under the Note, Pledgor
shall have the right to vote the Shares on all corporate questions, and Pledgee
shall, if necessary, execute due and timely proxies in favor of Pledgor to this
end.
4. STOCK DIVIDENDS. If, during the term of this pledge, any stock
---------------
dividend, reclassification, readjustment or other change in the capital
structure or capital stock of Pledgee is permitted and declared, all new,
substituted and additional shares, or other securities issue with regard to the
Shares by reasons of any such change, shall be promptly turned over by Pledgor
to Pledgee to be held by Pledgee under the terms and conditions of this
Agreement in the same manner as the Shares.
5. WARRANTS, RIGHTS AND OPTIONS. If, during the term of this pledge,
----------------------------
subscription warrants or any other rights or options shall be granted, declared
or issued in connection with the Shares, such warrants, rights and options shall
be exercisable by Pledgor and if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor shall be transferred to Pledgee and become
subject to all of the terms and conditions of this Agreement, in the same manner
as the Shares.
<PAGE>
6. RELEASE OF SHARES FROM PLEDGE. When Pledgor has paid the amount due
-----------------------------
under the Note in full, Pledgee shall transfer to Pledgor all of the Shares, and
the pledge shall then terminate, and the terms thereof shall thereafter have no
force or effect.
7. NOTICE OF DEFAULT; SALE OF SHARES. If Pledgor defaults in the payment
---------------------------------
of any amount due under the Note, Pledgee may, without liability for any
diminution in price which may have occurred, sell the Shares on such terms and
for such consideration as Pledgee may determine, at any public or private sale.
At any such sale, Pledgee shall be free to purchase all or any part of the
deposited Shares for its own account.
8. EXPENSES OF SALE; DISPOSITION OF PROCEEDS. After first reimbursing
-----------------------------------------
itself for its reasonable costs in selling the Shares, from the balance of the
proceeds Pledgee shall next be paid an amount equal to the total balance of
principal and accrued interest due under the Note. The remainder of the
proceeds, if any, shall be paid to Pledgor. If the proceeds of any sale are less
than the balance of principal and accrued interest due on the Note plus the
costs and expenses of sale, Pledgor shall remain liable to Pledgee for such
deficiency.
9. EXECUTION OF DOCUMENTS. Pledgor and Pledgee agree to execute any and
----------------------
all documents necessary to carry out the provisions of this Agreement.
10. PLEDGEE MUST CONSENT TO TRANSFER OF SHARES. During the term of this
------------------------------------------
pledge, none of the Shares may be sole, gifted or otherwise disposed of, without
the written consent of Pledgee.
11. RESTRICTIVE LEGENDS. Pledgee may, in its sole discretion or as
-------------------
required by law, place appropriate restrictive legends on share certificates
evidencing the Shares with respect to this pledge and applicable securities
laws.
12. SUCCESSORS AND ASSIGNS. This Agreement, and all the terms hereof,
----------------------
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors, executors, administrators or assigns.
13. APPLICABLE LAW/ATTORNEYS' FEES. This Agreement shall be governed by
------------------------------
and construed in accordance with the laws of the State of Texas. If a dispute
arises hereunder, the prevailing party shall be entitled to reasonable
attorneys' fees and costs.
14. AMENDMENTS. This Pledge Agreement shall not be modified, amended or
----------
cancelled except in accordance with the terms of Pledgee's Option Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of ___________________.
PLEDGOR: PLEDGEE:
by ______________________
(Signature)
_______________________
(Signature)
_________________________
(Print Name and Title)
-2-
<PAGE>
EXHIBIT 10(n)
EMPLOYMENT AGREEMENT
THIS AGREEMENT executed this 15th day of July, 1996, between Clinicor,
Inc., a Nevada corporation (the "Corporation"), and Thomas P. O'Donnell (the
"Employee").
W I T N E S S E T H:
-------------------
1. Employment. The Corporation hereby employs the Employee and the
----------
Employee hereby accepts such employment and agrees to perform the services
specified herein upon the terms and conditions hereinafter set forth.
2. Term. Subject only to the provisions for termination as hereinafter
----
set forth, the term of this Agreement shall be for a period of five (5) years
beginning on the effective date hereof.
3. Compensation. For all services rendered by the Employee under this
------------
Agreement, the Corporation shall pay to the Employee a minimum base salary of
One Hundred Fifty Thousand Dollars ($150,000.00) per year, payable in equal bi-
monthly installments. The Employee shall be entitled to receive such further
compensation in the form of bonuses and salary increases as shall be authorized
by the Board of Directors of the Corporation (the "Board") from time to time.
4. Benefits. In addition to the direct remuneration provided for in the
--------
preceding Section 3, the Employee shall be entitled to participate in and to
receive benefits consistent with those of other officers of the Corporation.
<PAGE>
5. Duties. The Employee has been elected President and Chief Executive
------
Officer of the Corporation, and he agrees to perform the duties normally
incidental to that office for as long as he holds that office. The Employee
further agrees to perform for the Corporation such other duties and
responsibilities as may be prescribed from time to time by the Board.
6. Extent of Service. The Employee shall devote his full time, attention
-----------------
and energy to the business of the Corporation and will faithfully,
industriously, and to the best of his ability perform all of the duties that may
be required of him as an Employee. The Employee shall not directly or
indirectly render any services to any other person or organization, whether for
compensation or otherwise, without the prior consent of the Board. The Employee
will not engage in activities, businesses, or investments that would in any way
conflict with the best interests of the Corporation.
7. Disclosures of Information. The Employee recognizes and acknowledges
--------------------------
that he may have access to certain Confidential Information of the Corporation
(as hereinafter defined) and that such information constitutes valuable, special
and unique property of the Corporation. The Employee will not, during or after
the term of his employment, directly or indirectly divulge, disclose or
otherwise communicate or make available any of such Confidential Information to
any person, firm, corporation, association, or other entity for any reason or
purpose whatsoever without the prior
2
<PAGE>
written consent of the Corporation. Confidential Information includes without
limitation each of the following with respect to the Corporation: (i) financial
information; (ii) information concerning marketing plans or strategies; (iii)
information concerning customers, equipment suppliers and other vendors; (iv)
demographic information concerning the Corporation's markets and potential
markets; (v) information concerning business methods and practices; and (vi) any
other information which the Corporation treats as confidential. Confidential
Information shall also include without limitation any information or materials
received by the Corporation from third parties in confidence (or subject to
nondisclosure or similar agreements). The Employee should consider all
information coming into his possession by virtue of his employment relationship
with the Corporation to be Confidential Information unless it is freely
available to the public.
8. Materials. All data, listings, charts, drawings, records, documents,
---------
programs, software, documentation, memoranda, journals, notebooks, records,
files, drafts, specifications and similar items relating to the business of the
Corporation or its customers, whether compiled by the Employee, furnished to the
Employee by the Corporation, its customers or clients or otherwise made
accessible to the Employee or coming into his possession, while the Employee is
in the employ of the Corporation, and copies of any such items, shall be and
remain the sole and exclusive property of the Corporation or its customers or
clients, as the
3
<PAGE>
case may be, and none of such items shall be removed from the Corporation's
business premises by the Employee without the prior consent of the Corporation,
except as required in the course of his employment. All of such items shall be
returned to the Corporation by the Employee upon the termination of his
employment with the Corporation for whatever reason. The provisions of this
Section 8 shall not, however, prohibit the Employee from using any materials
published by the Corporation and made available (without breach of this Section)
to the general public.
9. Termination.
-----------
(a) Death or Disability. In the event of the Employee's death or in
-------------------
the event of his disability for a period in excess of six (6) months during the
term of this Agreement, the Corporation (i) shall pay to the Employee or to his
heirs or personal representatives the amount of compensation accrued under
Section 3 hereof through the date of death or (in case of disability) through
the commencement date of the Employee's long term disability benefits under the
long term disability income plan maintained by the Corporation (or through the
end of the six-month period commencing with the onset of disability, if the
Corporation does not then maintain a long term disability income plan) and (ii)
shall make any other payment required under Section 9(e) of this Agreement. The
Corporation shall thereafter have no further liability under this Agreement to
the Employee or his heirs or personal representatives. "Disability" for
purposes hereof shall
4
<PAGE>
be deemed to have occurred if the Employee because of injury or sickness is
unable to perform each of the material duties of his occupation. In the event
of any dispute as to whether the Employee is disabled, the determination of the
Board shall be final and binding.
(b) Termination with Cause by the Corporation. At any time during the
-----------------------------------------
term hereof, the Corporation shall have the right to terminate for cause the
Employee's employment under this Agreement upon the occurrence of any of the
following events by the Employee:
(i) persistent neglect of his duties hereunder or a willful
violation of any of the provisions of this Agreement or any other
arrangement with the Corporation, which continues after written notice and
thirty (30) days in which to cure;
(ii) fraud, embezzlement, defalcation, or conviction of any
felonious offense; or
(iii) intentionally imparting Confidential Information, as defined
in Section 7, to competitors or to other third parties other than in the
course of carrying out his corporate duties.
Such termination shall be effective immediately upon the delivery to the
Employee by the Corporation of written notice of such termination. In the event
of a termination of the Employee's employment for cause in accordance with the
provisions of this Section 9(b), the Corporation shall pay to the Employee on
the date of termination (i) all compensation accrued under Section 3 of this
Agreement to the date of such termination; and (ii) any payment due
5
<PAGE>
under Section 9(e) of this Agreement. Thereafter, the Corporation shall have no
further obligation to the Employee.
(c) Termination Without Cause by the Corporation. At any time during
--------------------------------------------
the term hereof, the Corporation may, without cause, elect to terminate the
employment of the Employee. Such termination shall be effective immediately
upon the delivery to the Employee by the Corporation of written notice of such
termination. In such event, the Employee shall be entitled to receive a
severance payment equal to two times all compensation paid to or accrued for the
benefit of the Employee during the twelve (12) month period immediately prior to
the date of termination. Unless otherwise agreed to by the Employee, the
severance payment shall be paid to the Employee within ten (10) days after the
date of termination in a lump sum, cash payment. The severance payment shall in
no event be less than Three Hundred Thousand Dollars ($300,000.00). Upon
termination of the Employee without cause, the Corporation shall also pay to the
Employee on the termination date any payment due under Section 9(e) of this
Agreement.
(d) Termination by Employee. At any time during the term hereof, the
-----------------------
Employee may terminate employment with the Corporation. Such termination shall
be effective six (6) months after the Employee gives written notice of such
termination to the Corporation. In the event of such termination hereunder, the
Corporation shall pay to the Employee (i) all compensation accrued under Section
3 of this Agreement to the date of such termination;
6
<PAGE>
(ii) any payment due under Section 9(e) of this Agreement; and (iii) any
discretionary severance payment awarded by the Board. If the Employee
terminates his employment with the Corporation following a material reduction in
the Employee's level of responsibility or employment benefits, then the
termination shall be deemed to be termination without cause by the Corporation
pursuant to Section 9(c) of this Agreement.
(e) Additional Payments Upon Termination. Upon termination of
------------------------------------
employment for any reason, the Corporation shall, within ten (10) days
thereafter, pay in full any and all amounts owed by the Corporation to the
Employee and/or to any affiliate or family member of the Employee.
10. Restrictive Covenant. To induce the Corporation to enter into this
--------------------
Agreement, the Employee agrees that until the earlier of (i) two (2) years after
the termination of his employment, either voluntarily by the Employee or by the
Corporation "for cause," as that term is defined in Section 9(b) of this
Agreement, or (ii) June 30, 1999, he shall not, directly or indirectly, engage
or participate in any activities within the United States, which are the same
as, or competitive with, the activities the Corporation presently performs.
Moreover, in no event shall the Employee, while he is an employee of the
Corporation, directly or indirectly engage in or participate in any activities,
within the United States, which are the same as, or competitive with, the
activities the Corporation presently performs. In the event that the
7
<PAGE>
provisions of this Section 10 should ever be deemed to exceed the time,
geographic, or other limitations permitted by applicable law, then such
provisions shall be reformed to the maximum time, geographic, or other
limitations permitted by such laws.
11. Notices. Any notice required or permitted to be given under this
-------
Agreement shall be sufficient if in writing and if delivered (including delivery
by private courier or facsimile transmittal) or sent by registered or certified
mail, postage prepaid, return receipt requested to the Employee at 307 Camp
Craft Road, #200, Austin, Texas 78746, or to the Corporation at 307 Camp Craft
Road, #200, Austin, Texas 78746, or to such other address as either party shall
designate by written notice to the other. Such notice shall be effective as of
the date received or (if mailed as described above) the date of mailing.
12. Assignment. This Agreement may not be assigned by either party hereto
----------
without the consent of the other party. Subject to the foregoing, the rights
and obligations of the Corporation under this Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of the
Corporation, and the rights of the Employee under this Agreement shall inure to
the benefit of the heirs and personal representatives of the Employee.
13. Miscellaneous.
-------------
(a) This Agreement shall be subject to and governed by the laws of the
State of Texas.
8
<PAGE>
(b) Whenever the context requires, the gender of all words used herein
shall include the masculine, feminine and neuter, and the number of all words
shall include the singular and plural. Titles of sections are for convenience
only and neither limit nor amplify any of the provisions contained herein.
(c) Upon execution of this Agreement, the right, duties and
obligations of the parties hereto with respect to the matters set forth herein
shall be governed solely by the provisions of this Agreement, and all
representations, warranties, terms and conditions with respect to such matters
which may be contained in any prior writing executed by any of the parties
(including without limitation the Covenant Not to Compete dated February 27,
1995 between the Corporation and the Employee and Robert S. Sammis) shall be
null and void and of no further force and effect.
(d) Whenever possible, each provision of this Agreement will be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement, or the application thereof to any party
hereto or under any circumstances, shall be invalid or unenforceable to any
extent under applicable law, such provision shall be deemed severed from this
Agreement with respect to such party or such circumstance, without invalidating
the remainder of this Agreement or the application of such provision to other
persons or circumstances, and a new provision shall be deemed to be substituted
in lieu of the provision so severed which new provision shall, to the extent
9
<PAGE>
possible, accomplish the intent of the parties hereto as evidenced by the
provision so severed.
(e) In the event of a breach or threatened breach by the Employee of
any provision of this Agreement, then in addition to any other available remedy
to which the Corporation may be entitled, including the recovery of damages, the
Corporation shall be entitled to an injunction restraining the Employee from
breaching or attempting to breach, in whole or in part, any of the provisions of
this Agreement. In addition, in the event of a breach by either party of any
provision of this Agreement, the non-breaching or (in the event of litigation)
the prevailing party shall be entitled to recover from the other party all
reasonable costs and attorneys' fees incurred by the non-breaching or prevailing
party in seeking any of such remedies.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date set forth above.
CLINICOR, INC.
By: /s/ ROBERT S. SAMMIS
-----------------------------------
Robert S. Sammis
"CORPORATION"
/s/ THOMAS P. O'DONNELL
----------------------------------------
THOMAS P. O'DONNELL
"EMPLOYEE"
10
<PAGE>
EXHIBIT 10(o)
EMPLOYMENT AGREEMENT
THIS AGREEMENT executed this 15th day of July, 1996, between Clinicor,
Inc., a Nevada corporation (the "Corporation"), and Robert S. Sammis (the
"Employee").
W I T N E S S E T H:
-------------------
1. Employment. The Corporation hereby employs the Employee and the
----------
Employee hereby accepts such employment and agrees to perform the services
specified herein upon the terms and conditions hereinafter set forth.
2. Term. Subject only to the provisions for termination as hereinafter
----
set forth, the term of this Agreement shall be for a period of five (5) years
beginning on the effective date hereof.
3. Compensation. For all services rendered by the Employee under this
------------
Agreement, the Corporation shall pay to the Employee a minimum base salary of
One Hundred Thirty-Five Thousand Dollars ($135,000.00) per year, payable in
equal bi-monthly installments. The Employee shall be entitled to receive such
further compensation in the form of bonuses and salary increases as shall be
authorized by the Board of Directors of the Corporation (the "Board") from time
to time.
4. Benefits. In addition to the direct remuneration provided for in the
--------
preceding Section 3, the Employee shall be entitled to participate in and to
receive benefits consistent with those of other officers of the Corporation.
<PAGE>
5. Duties. The Employee has been elected Executive Vice President and
------
Chief Operating Officer of the Corporation, and he agrees to perform the duties
normally incidental to that office for as long as he holds that office. The
Employee further agrees to perform for the Corporation such other duties and
responsibilities as may be prescribed from time to time by the Board.
6. Extent of Service. The Employee shall devote his full time, attention
-----------------
and energy to the business of the Corporation and will faithfully,
industriously, and to the best of his ability perform all of the duties that may
be required of him as an Employee. The Employee shall not directly or
indirectly render any services to any other person or organization, whether for
compensation or otherwise, without the prior consent of the Board. The Employee
will not engage in activities, businesses, or investments that would in any way
conflict with the best interests of the Corporation.
7. Disclosures of Information. The Employee recognizes and acknowledges
--------------------------
that he may have access to certain Confidential Information of the Corporation
(as hereinafter defined) and that such information constitutes valuable, special
and unique property of the Corporation. The Employee will not, during or after
the term of his employment, directly or indirectly divulge, disclose or
otherwise communicate or make available any of such Confidential Information to
any person, firm, corporation, association, or other entity for any reason or
purpose whatsoever without the prior
2
<PAGE>
written consent of the Corporation. Confidential Information includes without
limitation each of the following with respect to the Corporation: (i) financial
information; (ii) information concerning marketing plans or strategies; (iii)
information concerning customers, equipment suppliers and other vendors; (iv)
demographic information concerning the Corporation's markets and potential
markets; (v) information concerning business methods and practices; and (vi) any
other information which the Corporation treats as confidential. Confidential
Information shall also include without limitation any information or materials
received by the Corporation from third parties in confidence (or subject to
nondisclosure or similar agreements). The Employee should consider all
information coming into his possession by virtue of his employment relationship
with the Corporation to be Confidential Information unless it is freely
available to the public.
8. Materials. All data, listings, charts, drawings, records, documents,
---------
programs, software, documentation, memoranda, journals, notebooks, records,
files, drafts, specifications and similar items relating to the business of the
Corporation or its customers, whether compiled by the Employee, furnished to the
Employee by the Corporation, its customers or clients or otherwise made
accessible to the Employee or coming into his possession, while the Employee is
in the employ of the Corporation, and copies of any such items, shall be and
remain the sole and exclusive property of the Corporation or its customers or
clients, as the
3
<PAGE>
case may be, and none of such items shall be removed from the Corporation's
business premises by the Employee without the prior consent of the Corporation,
except as required in the course of his employment. All of such items shall be
returned to the Corporation by the Employee upon the termination of his
employment with the Corporation for whatever reason. The provisions of this
Section 8 shall not, however, prohibit the Employee from using any materials
published by the Corporation and made available (without breach of this Section)
to the general public.
9. Termination.
-----------
(a) Death or Disability. In the event of the Employee's death or in
-------------------
the event of his disability for a period in excess of six (6) months during the
term of this Agreement, the Corporation (i) shall pay to the Employee or to his
heirs or personal representatives the amount of compensation accrued under
Section 3 hereof through the date of death or (in case of disability) through
the commencement date of the Employee's long term disability benefits under the
long term disability income plan maintained by the Corporation (or through the
end of the six-month period commencing with the onset of disability, if the
Corporation does not then maintain a long term disability income plan) and (ii)
shall make any other payment required under Section 9(e) of this Agreement. The
Corporation shall thereafter have no further liability under this Agreement to
the Employee or his heirs or personal representatives. "Disability" for
purposes hereof shall
4
<PAGE>
be deemed to have occurred if the Employee because of injury or sickness is
unable to perform each of the material duties of his occupation. In the event
of any dispute as to whether the Employee is disabled, the determination of the
Board shall be final and binding.
(b) Termination with Cause by the Corporation. At any time during the
-----------------------------------------
term hereof, the Corporation shall have the right to terminate for cause the
Employee's employment under this Agreement upon the occurrence of any of the
following events by the Employee:
(i) persistent neglect of his duties hereunder or a willful
violation of any of the provisions of this Agreement or any other
arrangement with the Corporation, which continues after written notice and
thirty (30) days in which to cure;
(ii) fraud, embezzlement, defalcation, or conviction of any
felonious offense; or
(iii) intentionally imparting Confidential Information, as defined
in Section 7, to competitors or to other third parties other than in the
course of carrying out his corporate duties.
Such termination shall be effective immediately upon the delivery to the
Employee by the Corporation of written notice of such termination. In the event
of a termination of the Employee's employment for cause in accordance with the
provisions of this Section 9(b), the Corporation shall pay to the Employee on
the date of termination (i) all compensation accrued under Section 3 of this
Agreement to the date of such termination; and (ii) any payment due
5
<PAGE>
under Section 9(e) of this Agreement. Thereafter, the Corporation shall have no
further obligation to the Employee.
(c) Termination Without Cause by the Corporation. At any time during
--------------------------------------------
the term hereof, the Corporation may, without cause, elect to terminate the
employment of the Employee. Such termination shall be effective immediately
upon the delivery to the Employee by the Corporation of written notice of such
termination. In such event, the Employee shall be entitled to receive a
severance payment equal to two times all compensation paid to or accrued for the
benefit of the Employee during the twelve (12) month period immediately prior to
the date of termination. Unless otherwise agreed to by the Employee, the
severance payment shall be paid to the Employee within ten (10) days after the
date of termination in a lump sum, cash payment. The severance payment shall in
no event be less than Two Hundred Seventy Thousand Dollars ($270,000.00). Upon
termination of the Employee without cause, the Corporation shall also pay to the
Employee on the termination date any payment due under Section 9(e) of this
Agreement.
(d) Termination by Employee. At any time during the term hereof, the
-----------------------
Employee may terminate employment with the Corporation. Such termination shall
be effective six (6) months after the Employee gives written notice of such
termination to the Corporation. In the event of such termination hereunder, the
Corporation shall pay to the Employee (i) all compensation accrued under Section
3 of this Agreement to the date of such termination;
6
<PAGE>
(ii) any payment due under Section 9(e) of this Agreement; and
(iii) any discretionary severance payment awarded by the Board. If the Employee
terminates his employment with the Corporation following a material reduction in
the Employee's level of responsibility or employment benefits, then the
termination shall be deemed to be termination without cause by the Corporation
pursuant to Section 9(c) of this Agreement.
(e) Additional Payments Upon Termination. Upon termination of
------------------------------------
employment for any reason, the Corporation shall, within ten (10) days
thereafter, pay in full any and all amounts owed by the Corporation to the
Employee and/or to any affiliate or family member of the Employee.
10. Restrictive Covenant. To induce the Corporation to enter into this
--------------------
Agreement, the Employee agrees that until the earlier of (i) two (2) years after
the termination of his employment, either voluntarily by the Employee or by the
Corporation "for cause," as that term is defined in Section 9(b) of this
Agreement, or (ii) June 30, 1999, he shall not, directly or indirectly, engage
or participate in any activities within the United States, which are the same
as, or competitive with, the activities the Corporation presently performs.
Moreover, in no event shall the Employee, while he is an employee of the
Corporation, directly or indirectly engage in or participate in any activities,
within the United States, which are the same as, or competitive with, the
activities the Corporation presently performs. In the event that the
7
<PAGE>
provisions of this Section 10 should ever be deemed to exceed the time,
geographic, or other limitations permitted by applicable law, then such
provisions shall be reformed to the maximum time, geographic, or other
limitations permitted by such laws.
11. Notices. Any notice required or permitted to be given under this
-------
Agreement shall be sufficient if in writing and if delivered (including delivery
by private courier or facsimile transmittal) or sent by registered or certified
mail, postage prepaid, return receipt requested to the Employee at 307 Camp
Craft Road, #200, Austin, Texas 78746, or to the Corporation at 307 Camp Craft
Road, #200, Austin, Texas 78746, or to such other address as either party shall
designate by written notice to the other. Such notice shall be effective as of
the date received or (if mailed as described above) the date of mailing.
12. Assignment. This Agreement may not be assigned by either party hereto
----------
without the consent of the other party. Subject to the foregoing, the rights
and obligations of the Corporation under this Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of the
Corporation, and the rights of the Employee under this Agreement shall inure to
the benefit of the heirs and personal representatives of the Employee.
13. Miscellaneous.
-------------
(a) This Agreement shall be subject to and governed by the laws of the
State of Texas.
8
<PAGE>
(b) Whenever the context requires, the gender of all words used herein
shall include the masculine, feminine and neuter, and the number of all words
shall include the singular and plural. Titles of sections are for convenience
only and neither limit nor amplify any of the provisions contained herein.
(c) Upon execution of this Agreement, the right, duties and
obligations of the parties hereto with respect to the matters set forth herein
shall be governed solely by the provisions of this Agreement, and all
representations, warranties, terms and conditions with respect to such matters
which may be contained in any prior writing executed by any of the parties
(including without limitation the Covenant Not to Compete dated February 27,
1995 between the Corporation and the Employee and Thomas P. O'Donnell) shall be
null and void and of no further force and effect.
(d) Whenever possible, each provision of this Agreement will be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement, or the application thereof to any party
hereto or under any circumstances, shall be invalid or unenforceable to any
extent under applicable law, such provision shall be deemed severed from this
Agreement with respect to such party or such circumstance, without invalidating
the remainder of this Agreement or the application of such provision to other
persons or circumstances, and a new provision shall be deemed to be substituted
in lieu of the provision so severed which new provision shall, to the extent
9
<PAGE>
possible, accomplish the intent of the parties hereto as evidenced by the
provision so severed.
(e) In the event of a breach or threatened breach by the Employee of
any provision of this Agreement, then in addition to any other available remedy
to which the Corporation may be entitled, including the recovery of damages, the
Corporation shall be entitled to an injunction restraining the Employee from
breaching or attempting to breach, in whole or in part, any of the provisions of
this Agreement. In addition, in the event of a breach by either party of any
provision of this Agreement, the non-breaching or (in the event of litigation)
the prevailing party shall be entitled to recover from the other party all
reasonable costs and attorneys' fees incurred by the non-breaching or prevailing
party in seeking any of such remedies.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date set forth above.
CLINICOR, INC.
By: /s/ THOMAS P. O'DONNELL
-----------------------------
Thomas P. O'Donnell
"CORPORATION"
By: /s/ ROBERT S. SAMMIS
-----------------------------
ROBERT S. SAMMIS
"EMPLOYEE"
10
<PAGE>
EXHIBIT 10(p)
[LETTERHEAD OF CLINICOR(R) APPEARS HERE]
May 1, 1995
Robert M. Day, Ph.D.
25 Barton Hill Rd.
Chelmsford, MA 01824
Dear Dr. Day:
This letter summarizes the terms of your employment at CLINICOR(R). The terms
are as follows:
Initial Salary: $120,000 annually.
Bonus: Unspecified, at the discretion of the Board of
Directors
Stock Options: You will be issued stock options to vest after
one year of employment for 10,000 shares under
CLINICOR(R)'s Employee and Consultants Incentive
Stock Option Plan.
Health Insurance: Coverage for you in the Company's group health
plan will be paid by CLINICOR(R). Coverage is
provided by PCA Health Plans, an affiliate of
Physician Corporation of America. Coverage for
dependents is available based on PCA's standard
rates. Physicians cost only $10 per visit. The
plan provides a prescription card which enables
you to purchase prescriptions for $5 each. We
previously provided you with a brochure which
described the plan and included the simple
enrollment application form. The plan has no
preexisting condition exclusions.
Our health plan, like most such plans, has a 90-
day waiting period following your first day of
employment before coverage begins. Should you
need to pay for any COBRA benefits under your
former employer's plan during the waiting
period, CLINICOR(R) will reimburse you for any
such additional out-of-pocket expense you incur
in excess of your current cost for health
insurance.
Other Benefits: As a CLINICOR(R) executive you will be eligible
for any future benefit plans the Company enacts.
The Board of Directors has approved the
establishment of a 401(k) plan this year,
although the Company may not initially provide
matching funds. You will be issued a corporate
American Express card for your travel
convenience.
<PAGE>
Robert M. Day, Ph.D.
May 1, 1995
Page 2
Vacation/Sick Leave: You may take up to a month's paid vacation
annually. You would not be required to accrue
vacation time prior to using it in the first
year (i.e. if it is more convenient to take a
vacation prior to "earning" it, you may do so).
Paid sick leave is available based on the
Company's standard policies.
Title/Responsibility: Your title will be "Vice President, Regulatory
and Scientific Affairs" (the descriptive portion
after Vice President can be altered to whatever
we mutually feel would be most appropriate to
describe your position to CLINICOR(R) sponsors).
You would be a senior executive at a new
management level for CLINICOR(R) above the
existing four Project Managers, reporting only
to the Company's two founders, Tom O'Donnell and
Robert Sammis. As we discussed, your initial
areas of responsibility would be (1) regulatory,
development and scientific consultation, (2)
interfacing with sponsors, (3) business
development and (4) management of large, multi-
center and highly specialized clinical trials
(with appropriate support from project
management and other support managers to assist
in administration). Other areas could be added
in the future as opportunities and interest
develop.
Meetings: It would be mutually beneficial for you to
maintain your scientific and other professional
accreditation and affiliations. Accordingly,
your attendance at various appropriate
scientific and trade meetings (e.g. American
Academy of Dermatology) would be paid by
CLINICOR(R) as well as your annual membership
costs.
Moving expenses: CLINICOR(R) will reimburse you for the
reasonable out-of-pocket expenses incurred in
connection with moving your family and household
goods to the Austin area, plus reasonable out-
of-pocket expenses incurred in connection with
searching for a new home, plus up to sixty (60)
days of reasonable living expenses prior to
moving into a new home. Such reimbursements
shall be made promptly upon presentation or
submission of written evidence of such expenses
reasonably satisfactory to CLINICOR(R), but
shall not in any event exceed $35,000.
CLINICOR(R) will gross-up these expenses to
assist in offsetting any incremental taxes if
incurred by you as a result of such
reimbursements.
<PAGE>
Robert M. Day, Ph.D.
May 1, 1995
Page 3
Severance: Your initial employment period shall not be less
than two (2) years. Should CLINICOR(R) terminate
your employment, other than for cause, you will
be allowed to continue to draw your full salary
for any unexpired portion of your initial
employment period, but in any event, for a
period of no less than six (6) months.
Termination for cause shall mean any or all of
the following:
(1) serious misconduct during the course of
your employment which is materially injurious to
the Company and which is brought to your
attention promptly after discovery by the
Company, including but not limited to theft or
embezzlement from the Company, the intentional
provision of services to competitors of the
Company, or improper disclosure of proprietary
information, but not including any act or
failure to act by you which you believed in good
faith to be proper conduct not adverse to your
duties as a CLINICOR(R) employee; or
(2) conviction of a fraud or felony or any
criminal offense involving dishonesty, breach of
trust or moral turpitude during your employment.
Starting Date: As soon as practicable. The Company will issue
you a follow-up letter confirming your starting
date as soon as it is set. We assume that this
date will be determined during the next two
weeks in the course of our mutual discussions
with Arcturus representatives.
For CLINICOR(R): Agreed and accepted:
/s/ ROBERT SAMMIS /s/ ROBERT M. DAY
- ---------------------- --------------------------
Robert Sammis Robert M. Day, Ph.D.
Vice President
<PAGE>
EXHIBIT 10(q)
Prepared by the State Bar of Texas for use by lawyers only, Revised 3/1/82.
UNSECURED NOTE
Date: October 1, 1995
Maker: Clinicor, Inc.
Payee: Robert Sammis
Place for Payment (include county): Austin, Travis County, Texas
Principal Amount: $61,000.00
Annual Interest Rate on Unpaid Principal from Date of Funding:Eight Percent(8%)
Terms of Payment (principal and interest): Demand
Annual Interest Rate on Matured, Unpaid Amounts: Eight Percent (8%)
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note, it shall become immediately due at
the election of Payee. Maker and each surety, endorser, and guarantor waive all
demands for payment, presentations for payment, notices of intention to
accelerate maturity, protests, and notices of protest.
If this note is given to an attorney for collection, or if suit is brought
for collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee reasonable attorney's fees in
addition to other amounts due. Reasonable attorney's fees shall be 10% of all
amounts due unless either party pleads otherwise.
Nothing in this note shall authorize the collection of interest in excess
of the highest rate allowed by law.
Each Maker is responsible for the entire amount of this note.
The terms Maker and Payee and other nouns and pronouns include the plural
if more than one. The terms Maker and Payee also include their respective heirs,
personal representatives, and assigns.
Clinicor, Inc.
/s/ Thomas O'Donnell
--------------------------
by: Thomas O'Donnell
President
--------------------------
<PAGE>
EXHIBIT 10(r)
Prepared by the State Bar of Texas for use by lawyers only, Revised 3/1/82.
UNSECURED NOTE
Date: October 1, 1995
Maker: Clinicor, Inc.
Payee: Patricia J. O'Donnell
Place for Payment (include county): Austin, Travis County, Texas
Principal Amount: $120,000.00
Annual Interest Rate on Unpaid Principal from Date of Funding:Eight Percent (8%)
Terms of Payment (principal and interest): Demand
Annual Interest Rate on Matured, Unpaid Amounts: Eight Percent (8%)
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note, it shall become immediately due at
the election of Payee. Maker and each surety, endorser, and guarantor waive all
demands for payment, presentations for payment, notices of intention to
accelerate maturity, protests, and notices of protest.
If this note is given to an attorney for collection, or if suit is brought
for collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee reasonable attorney's fees in
addition to other amounts due. Reasonable attorney's fees shall be 10% of all
amounts due unless either party pleads otherwise.
Nothing in this note shall authorize the collection of interest in excess
of the highest rate allowed by law.
Each Maker is responsible for the entire amount of this note.
The terms Maker and Payee and other nouns and pronouns include the plural
if more than one. The terms Maker and Payee also include their respective heirs,
personal representatives, and assigns.
Clinicor, Inc.
/s/ Thomas O'Donnell
----------------------
by: Thomas O'Donnell
President
--------------------------
<PAGE>
EXHIBIT 10(s)
[LETTERHEAD OF CLINICOR(R) APPEARS HERE]
August 21, 1996
Zola P. Horovitz, Ph.D.
15 East Lee
Harvey Ceders, NJ 08008
Dear Zola:
Pleas accept my apology for not getting this letter to you sooner. I have been
working with a biotechnology firm that is trying to get an IND filed with CEBER,
and the Sponsor seems to operate in a continual crisis mode.
Both Tom O'Donnell and I felt very comfortable about working with you following
our meeting, and we hope you are interested in serving as a member of
CLINICOR(R)'s board of directors. We would like to formally extend this
invitation to you to join our board.
Based on our discussions with you and our review of board member compensation
packages of other publicly held CRO's, we would like to propose the following:
Retainer - You will receive an annual consulting retainer of $18,000 to be
paid in semi-monthly increments. We understand that in addition to your
participation with board matters, you will also be available, on a limited
basis, to consult with CLINICOR(R) regarding business development and drug
development matters.
Stock options - You will receive 5,000 stock options, to be issued under
the Company's Employee and Consultant Stock Option Plan, for every year you
serve on the board.
Meetings - It is our understanding that you will have the option of
attending meetings of the board of directors by telephone when such
meetings are held at locations distant from Princeton. It is our intent to
hold at least part of the board meetings in New York City and New Jersey in
order to facilitate both your and Stu Weisbrod's schedules, and to combine
the timing of such meetings with East Coast marketing and promotional
trips.
If this does not accurately address the issues we discussed or if you have any
suggested modifications to these arrangements, please give Tom or me a call at
800-966-2369. We look forward to having you officially join CLINICOR(R)'s board
of directors as soon as possible.
Best regards,
/s/ ROBERT SAMMIS
Robert Sammis
Executive Vice President
<PAGE>
EXHIBIT 10(t)
OFFICE LEASE AGREEMENT
between
LAKE AUSTIN COMMONS, LTD.
("Landlord")
--------
and
Clinicor, Inc.
("Tenant")
------
for
HARTLAND PLAZA
<PAGE>
ARTICLE 1 1
1.01 Date of Lease.......................................1
-------------
1.02 Landlord............................................1
--------
1.03 Tenant..............................................1
------
1.04 Building............................................1
--------
1.05 Premises............................................1
--------
1.06 Term................................................1
----
1.07 Commencement Date...................................1
-----------------
1.08 Expiration Date.....................................1
---------------
1.09 Base Rent...........................................1
---------
1.10 Tenant's Pro Rata Share.............................1
-----------------------
1.11 Base Operating Expense..............................1
----------------------
1.12 Security Deposit....................................1
----------------
1.13 Prepaid Rent........................................1
------------
1.14 Permitted Use.......................................1
-------------
1.15 Guarantor(s)........................................1
------------
1.16 Tenant's Broker.....................................1
---------------
1.17 Addresses...........................................1
---------
1.18 Tenant Improvement Allowance........................1
----------------------------
1.19 Work Letter.........................................1
-----------
1.20 Service Charges.....................................1
---------------
1.21 Tenant's Minimum Insurance Requirements.............1
---------------------------------------
ARTICLE 2 2
2.01 Premises............................................2
--------
2.02 Term and Commencement...............................2
---------------------
2.03 Early Possession....................................2
----------------
2.04 Late Possession.....................................2
---------------
ARTICLE 3 2
3.01 Base Rent...........................................2
---------
3.02 Rental Adjustment...................................3
-----------------
3.03 Operating Expenses..................................3
------------------
3.04 Service Charges.....................................3
---------------
3.05 Security Deposit....................................3
----------------
3.06 Tenant Improvement Fee..............................3
---------------------
ARTICLE 4 4
4.01 Use.................................................4
---
4.02 Hazardous Substances................................4
--------------------
ARTICLE 5 4
5.01 Landlord's Services.................................4
-------------------
5.02 Additional Service Cost.............................4
-----------------------
5.03 Service Interruption................................4
--------------------
ARTICLE 6 5
6.01 Alterations.........................................5
-----------
6.02 Tenant Repairs......................................5
--------------
6.03 Landlord Repairs....................................5
----------------
6.04 Signage.............................................5
-------
ARTICLE 7 5
7.01 Landlord Insurance..................................5
------------------
7.02 Tenant Insurance....................................5
----------------
7.03 Waiver of Subrogation...............................5
---------------------
7.04 Indemnity...........................................6
---------
ARTICLE 8 6
8.01 Casualty............................................6
--------
ARTICLE 9 6
9.01 Condemnation........................................6
------------
ARTICLE 10 6
10.01 Entry...............................................6
-----
ARTICLE 11 6
11.01 Subordination.......................................6
-------------
11.02 Attornment..........................................6
----------
11.03 Quiet Enjoyment.....................................7
---------------
ARTICLE 12 7
12.01 Assignment and Subletting...........................7
-------------------------
12.02 Continued Liability.................................7
-------------------
12.03 Consent.............................................7
-------
12.04 Proceeds............................................7
--------
ARTICLE 13 7
13.01 Default.............................................7
-------
<PAGE>
13.02 Rights Upon Default.................................7
-------------------
13.03 Costs...............................................9
-----
13.04 Landlord's Lien.....................................9
---------------
13.05 Non-Waiver..........................................9
----------
ARTICLE 14 9
14.01 Organization and Power (Corporation)................9
------------------------------------
14.02 Organization and Power (Partnership or
--------------------------------------
Joint Venture)......................................9
--------------
ARTICLE 15 9
15.01 Amendment...........................................9
---------
15.02 Severability........................................9
------------
15.03 Estoppel Letters....................................9
----------------
15.04 Landlord's Liability and Authority..................9
----------------------------------
15.05 Holdover............................................9
--------
15.06 Surrender..........................................10
---------
15.07 Parties and Successors.............................10
----------------------
15.08 Notice.............................................11
------
15.09 Rules and Regulations..............................11
---------------------
15.10 Captions...........................................11
--------
15.11 Number and Gender..................................11
-----------------
15.12 Governing Law......................................11
-------------
15.13 Inability to Perform...............................11
--------------------
15.14 Broker.............................................11
------
15.15 Memorandum of Lease................................11
-------------------
15.16 Entire Agreement...................................11
----------------
15.17 Time of Essence....................................11
---------------
15.18 Parking............................................11
-------
15.19 Tenant Taxes.......................................11
------------
15.20 Attorney's Fees....................................11
---------------
15.21 Landlord Alterations or Modifications..............11
-------------------------------------
15.22 Name Change........................................10
-----------
15.23 Publication........................................11
-----------
15.24 Substitution of Premises...........................11
------------------------
15.25 DTPA Waiver........................................11
-----------
EXHIBIT A Floor Plans
EXHIBIT A-1 Legal Description
EXHIBIT B Rules and Regulations
EXHIBIT C Parking
EXHIBIT D Commencement Date Declaration
EXHIBIT E Work Letter
EXHIBIT F Renewal Option
EXHIBIT G Right of First Refusal
<PAGE>
OFFICE LEASE AGREEMENT
----------------------
HARTLAND PLAZA
This Office Lease Agreement (this "Lease") is entered into between the
Landlord and the Tenant named below.
ARTICLE I
This Article contains definitions of certain terms used in this Lease,
set forth as follows:
1.01 Date of Lease: October 23, 1996
-------------
1.02 Landlord: LAKE AUSTIN COMMONS, LTD., a Texas limited partnership
--------
1.03 Tenant: Clinicor, Inc.
------
1.04 Building: The building known as Hartland Plaza, 1717 West 6th
--------
Street, Travis County Texas, located on the land more particularly described in
Exhibit A-1 attached hereto, together with Landlord's rights in any present or
- -----------
future associated underground or elevated pedestrian tunnels or walkways (all of
such land, improvements and rights being hereafter collectively referred to as
the "Project").
-------
1.05 Premises: The space cross hatched in Exhibit A attached hereto,
-------- ---------
located on the 4th floor of the Building and containing 15,180 square feet of
net rentable area.
1.06 Term: 5 years, commencing on the Commencement Date and ending at
----
midnight on the Expiration Date.
1.07 Commencement Date: The "Commencement Date" shall be the earlier of
-----------------
the date Tenant begins operating its business in the Premises or 15 days after
the "substantial completion date" as stated in the Work Letter. The Commencement
Date shall constitute the commencement of the Term of this Lease for all
purposes, whether or not Tenant has actually taken possession; provided,
however, if the Commencement Date of the term of this Lease has not occurred by
January 15, 1997 because construction, or improvements being made or to be made
by Landlord are not substantially completed, then (i) Rent shall abate for the
period that possession by Tenant is delayed unless Tenant caused (in whole or in
part) such delay, in which case Rent shall not abate, (ii) for each day that
Landlord is unable to give possession of the Premises to Tenant (except for
delays caused in whole or in part by Tenant), then Landlord shall pay to Tenant
a penalty of six hundred dollars ($600.00) for each day of such delay, and (iii)
if such improvements are not substantially completed by February 15, 1997
(except for delays caused in whole or in part by Tenant), Tenant may terminate
this Lease by delivering written notice of termination to Landlord prior to the
substantial completion of such improvements, but under no circumstances shall
Landlord be responsible for direct or consequential damages because of its
inability to complete such improvements or furnish possession of the Premises to
Tenant by any particular date.
1.08 Expiration Date: 5 years after the Commencement Date.
---------------
1.09 Base Rent: Base Rent for each square foot of net rentable area in
---------
the Premises shall be $13.83 for the first year of the Term of this Lease,$14.33
for the second year of the Term of this Lease, $14.83 for the third year of the
Term of this Lease, $15.33 for the fourth year of the Term of this Lease, $15.83
for the fifth year of the Term of this Lease, payable in advance in equal
monthly installments (the initial monthly installments shall be $18,127.45 each,
subject to adjustment annually thereafter).
1.10 Tenant's Pro Rata Share: 9.07%, which is the proportion, expressed
-----------------------
as a percentage, that the square feet of net rentable area in the Premises bears
to the total number of square feet of net rentable area in the Building.
1.11 Base Operating Expense: An amount per square foot of net rentable
----------------------
area equal to (i) the aggregate Operating Expenses (hereinafter defined) paid or
incurred by Landlord during the 1997 calendar year, divided by (ii) the total
number of square feet of net rentable area in the Building.
1.12 Security Deposit: $0 (See Section 3.05 (b) hereof).
----------------
1.13 Prepaid Rent: $18,127.45
------------
1.14 Permitted Use: Administrative, clerical and other general office
-------------
uses related to Tenant's drug approval business, and for no other use
whatsoever.
1.15 Guarantor(s): N/A.
------------
1.16 Tenant's Broker: Insignial Commercial Group, Inc.
---------------
1.17 Addresses:
---------
Landlord's Address:
Lake Austin Commons, Ltd.
C/O Sage Land Company, Inc.
1717 W. 6th Street
Ste. 390
Austin, TX 78703
Tenant's Address:
Clinicor, Inc.
1717 W. 6th Street
Suite 400
Austin, TX 78703
Manager's Address:
Pyramid Properties, Inc.
1717 W. 6th Street
Ste. 380
Austin, TX 78703
1.18 Tenant Improvement Allowance: $185,955
----------------------------
1.19 Work Letter: If improvements are to be erected upon the Premises,
-----------
the construction shall be performed pursuant to the Work Letter attached hereto
as Exhibit E .
---------
1.20 Service Charges.
---------------
(a) Late Payment Charge: An amount equal to five percent (5%) of any
-------------------
installment of Rent and other charges past due for more than five
(5) days; interest on such past due installment and late payment
charge shall accrue at the rate of eighteen percent (18%) per
annum after the 30th day such installment is past due until paid.
(b) Returned Checks: $35 for each returned check.
---------------
1.21 Tenant's Minimum Insurance Requirements.
---------------------------------------
(a) Personal Property: Full replacement value.
-----------------
(b) Liability: $1,000,000.00 combined single limit.
---------
(c) Worker's Compensation: Statutory amount.
---------------------
(d) Employer's Liability: $500,000.00
--------------------
<PAGE>
Each of the foregoing provisions and defined terms shall be construed
in conjunction with the references thereto contained in the other provisions of
this Lease and shall be limited by such other provisions. Each reference in this
Lease to any of the foregoing provisions and defined terms shall be construed to
incorporate each term set forth above.
ARTICLE 2
2.01 Premises. Subject to and upon the terms, provisions and conditions
--------
set forth herein, and in consideration of the duties, covenants and obligations
of Lessee hereunder, Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, the Premises.
The term "net rentable area", as used herein, shall refer to (i) in the
case of a floor leased to a single tenant, all floor area measured from the
inside surface of the outer glass line of the Building to the inside surface of
the opposite outer glass line, excluding only Service Areas and General Common
Areas (defined below), plus an allocation of the square footage of the General
Common Areas, and (ii) in the case of a floor leased to more than one tenant,
all floor areas within the inside surface of the outer glass line of the
Building enclosing the Premises and measured to the mid-point of demising walls
(i.e., walls separating the premises from areas leased to or held for lease to
other tenants, from On-Floor Common Areas (defined below) and from General
Common Areas), excluding only Service Areas, plus an allocation of the square
footage of the General Common Areas and an allocation of the square footage of
the On-Floor Common Areas. No deductions from net rentable area shall be made
for columns or projections necessary to the Building. It is agreed between the
parties hereto that the square footage of the Premises shall be as stated in
Section 1.05 hereof and shall be considered final for all purposes under this
Lease.
"Service Areas" shall mean the areas within (and measured from the
mid-point of the walls enclosing) Building stairs, fire towers, elevator shafts,
flues, vents, stacks, pipe shafts and vertical ducts. Areas for the specific use
of Tenant and installed at the request of Tenant such as special stairs or
elevators are not included within the definition of Service Areas.
"General Common Areas" shall mean those areas within (and measured from
the mid-point of the walls enclosing) the Building's elevator machine rooms,
main mechanical and electrical rooms, public lobbies, management office and
other areas not leased or held for the proper utilization of the Building or to
provide customary services to the Building. The allocation of the square footage
of the General Common Areas shall be equal to the total General Common Area
within the Building multiplied by a fraction, the numerator of which is the net
rentable area of the Premises (excluding only the allocation of the General
Common Areas) and the denominator of which is the net rentable area (excluding
only the General Common Areas) of all office space leased or held for lease in
the Building.
"On-Floor Common Areas" shall mean all areas within (and measured from
the mid-point of the walls enclosing) public corridors, elevator foyers, rest
rooms, mechanical rooms, janitor closets, telephone and equipment rooms, and
other similar facilities for the use of all tenants on the floor on which the
Premises are located. In the case of a floor leased to more than one tenant, the
allocation of the square footage of the On-Floor Common Areas on said floor
shall be equal to the total On-Floor Common Areas on said floor multiplied by a
fraction, the numerator of which is the net rentable area of the portion of the
Premises (excluding the allocation of the General Common Areas and excluding the
allocation of the On-Floor Common Areas) located on said floor and the
denominator of which is the net rentable area of all office space on said floor
(excluding the allocation of General Common Areas and the allocation of the
On-Floor Common Areas).
By moving into the Premises or taking possession thereof, Tenant
acknowledges that a full and complete inspection of the Premises, the General
Common Areas and the On-Floor Common Areas has been made and Landlord has fully
and adequately disclosed the existence of any defects which would interfere with
Tenant's use of the Premises for their intended purpose. Tenant specifically
acknowledges that as a result of such inspection and disclosure, Tenant has
taken possession of the Premises and has made its own determination to fully
accept the same in their "AS IS" condition, except for latent defects. In
further consideration of such inspection and disclosure, Landlord hereby
disclaims any representation or warranty and Tenant, to the maximum extent
permitted by law, waives all claims for misrepresentation, breach of warranty or
unconscionable acts as to the Premises, the Building and the Project, whether
express or implied, including, without limitation, any implied warranty of
suitability.
2.02 Term and Commencement. Subject to the other provisions hereof,
---------------------
this Lease shall be for the period equal to the Term set forth in Section 1.06
hereof.
Within five (5) days after the Commencement Date and at any time
thereafter upon the request of Landlord, Tenant shall execute and deliver to
Landlord a declaration (in the form attached hereto as Exhibit D) specifying the
---------
date upon which the same occurred.
2.03 Early Possession. In the event Tenant enters the Premises prior to
----------------
the Commencement Date, Tenant shall execute and deliver to Landlord a hold
harmless agreement in a form provided by Landlord whereby Tenant releases
Landlord from all liabilities, claims and causes of action arising out of any
construction or other work performed at the Premises and agrees to pay utility
charges incurred by Tenant during such early possession.
2.04 Late Possession. No delay in the completion of the Premises
---------------
resulting from any delay or failure on the part of Tenant, including delay in
furnishing information, work or other matters required in Exhibit E, shall delay
---------
the Commencement Date or Expiration Date.
ARTICLE 3
3.01 Base Rent. Tenant, in consideration for this Lease, agrees to pay
---------
to Landlord the monthly Base Rent set forth in Section 1.09 hereof, payable in
legal tender of the United States of America at Landlord's address or at such
place or to such agent as Landlord may from time to time designate in writing,
without notice, demand, deduction, counterclaim, set-off or abatement, in
advance on the first day of each calendar month throughout the Term, except that
the amount of prepaid rent set forth in Section 1.13 hereof is due upon the date
of execution of this Lease by Tenant.
3.02 Rental Adjustment. On or before the first day of each calendar
-----------------
year of the Term, Landlord shall provide to Tenant the Estimated Operating
Expense Increase (defined in Section 3.03 hereof) for the upcoming year. In
addition to the Base Rent, Tenant shall pay as a rental adjustment in advance on
the first day of each calendar month during the Term, installments equal to
one-twelfth (1/12) of Tenant's Pro Rata Share of the Estimated Operating Expense
Increase. Within one hundred twenty (120) days, or as soon thereafter as
practicable, after the end of each calendar year during the Term, Landlord shall
furnish to Tenant a statement certified by Landlord of the Actual Operating
Expense Increase (defined in Section 3.03 hereof) for the immediately preceding
calendar year, which statement shall specify the various types of Operating
Expenses and set forth Landlord's calculations of Tenant's Pro Rata Share
thereof. If Tenant's Pro Rata Share of the Estimated Operating Expense Increase
paid to Landlord during the previous calendar year exceeds Tenant's Pro Rata
Share of the Actual Operating Expense Increase, then Landlord shall credit the
difference to Tenant against the next due installment of Tenant's Pro Rata Share
of the Estimated Operating Expense Increase. Otherwise, within thirty (30) days
after Landlord furnishes such statement to Tenant, Tenant shall make a lump sum
payment to Landlord equal to Tenant's Pro Rata Share of the positive difference
between the Actual Operating Expense Increase and the Estimated Operating
Expense Increase theretofore paid by Tenant. As used in this Lease, the term
"Rent" shall refer collectively to the Base Rent and all rental adjustments. If
the Term commences on a day other than the first day of the month or calendar
year, or terminates on a day other than the last day of a month or calendar
year, then Tenant shall be required to pay only a pro rata share of the
installments and adjustment of Rent due for such month or year.
3.03 Operating Expenses. "Operating Expenses" shall mean and include
------------------
all amounts, expenses, and costs of whatever nature paid or incurred by Landlord
because of or in connection with the ownership, management (including management
by a third party under a contract with Landlord), operation, repair, maintenance
or security of the Project, all additional facilities that may be added to the
Project, and Landlord's personal property that may be utilized in connection
therewith. Operating Expenses shall include, without limitation, (i) all general
and special real estate taxes, special assessments and other ad valorem taxes,
levies and assessments payable with respect to any portion of the Project and
all taxes or other charges imposed in lieu of any such taxes (including fees of
counsel and experts which are incurred by, or reimbursable by, Landlord in
seeking any reduction in the assessed valuation of any portion of the Project),
(ii) reasonable management office expenses, (iii) applicable sales and use
taxes, (iv) costs of insurance, (v) trash collection service, janitorial
service, pest control and security service, (vi) salaries, wages, benefits and
other personnel costs of engineers, superintendents, watchpersons and all other
employees of the Project, (vii) charges under any third party maintenance and
service contracts
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<PAGE>
and charges for window cleaning, building and grounds maintenance and parking
lot maintenance, (viii) management fees (not to exceed 4% of the total Rent
payable by all tenants of the Project with respect to such calendar year), (ix)
costs of permits and licenses, (x) all replacement, maintenance and repair
expenses and supplies (including replacement of fluorescent light bulbs and
ballasts in light fixtures), (xi) costs of all utilities to the Project,
including, but not limited to, water, electricity, gas, air conditioning,
heating and lighting, (xii) legal and accounting costs, (xiii) amortization,
depreciation, interest expense and other debt costs with respect to equipment,
systems, installations, alterations or other capital expenditures, which are
made, installed or implemented for the primary purpose of (a) saving labor or
energy in the maintenance or operation of the Project, or (b) complying with any
applicable laws, statutes, regulations or other governmental or quasi-
governmental requirements or directives (such items shall be amortized [with
interest at 10% per annum on the unamortized balance thereof] over the
reasonable life of such capital improvement, with the reasonable life and
amortization schedule to be determined by Landlord in accordance with generally
acceptable accounting principles, but in no event to extend beyond the
reasonable life of the Building and/or the Project), and (xiv) all such other
usual and customary costs and expenses of any kind or nature, whether or not
mentioned in this Lease, deemed by Landlord necessary or desirable in connection
with the management, operation, repair and maintenance of the Project. Operating
Expenses shall be determined on an accrual basis. The Base Operating Expense for
the Project is set forth in Section 1.11 hereof. The "Estimated Operating
Expense Increase" shall equal the positive difference between the Landlord's
estimate of Operating Expenses for the applicable calendar year less the Base
Operating Expense. Landlord's statement of the Estimated Operating Expense
Increase shall control for the year specified in such statement and for each
succeeding year during the Term until Landlord provides a new statement of the
Estimated Operating Expense Increase. The "Actual Operating Expense Increase"
shall equal the positive difference of the actual Operating Expenses for the
applicable calendar year less the Base Operating Expense. Tenant may be billed
for Tenant's Pro Rata Share of the Estimated Operating Expense Increase after
the expiration or termination of this Lease or termination of Tenant's right to
possession of the Premises, and Tenant's obligation to pay such sums shall
survive the expiration or termination of this Lease or termination of Tenant's
right to possession of the Premises. Notwithstanding any provision contained
herein to the contrary, if less than ninety-five percent (95%) of the total
square feet of net rentable area of the Building is fully occupied by tenant(s)
during the 1997 calendar year or Landlord is not supplying services to at least
ninety-five percent (95%) of the total square feet of net rentable area of the
Building at any time during the 1997 calendar year, Operating Expenses for such
calendar year shall be determined to be an amount equal to the expense that
would normally be expected to be incurred had such occupancy been ninety-five
percent (95%) of the total square feet of net rentable area of the Building
during such year and had Landlord been supplying services to ninety-five percent
(95%) of the total square feet of net rentable area of the Building during such
calendar year. Not withstanding anything contained herein to the contrary,
Tenant's Pro Rata Share of the Estimated Operating Expense Increase (exclusive
of any increase in Operating Expenses attributable to items described in items
(i), (iv) and (xi) of this Section 3.03) shall in no event increase by more than
eight percent (8%) with respect to any calendar year throughout the term.
3.04 Service Charges. It is understood that the Rent and Tenant's Pro
---------------
Rata Share of the Estimated Operating Expense Increase is payable on or before
the first day of each month, without offset or deduction of any nature. In the
event such rentals are not received when due or any check is tendered to
Landlord is returned to Landlord as uncollectible Tenant shall pay the
applicable service charges set forth in Section 1.20 hereof, which Landlord and
Tenant agree as a fair and reasonable estimate of the costs to be incurred by
Landlord by reason of such late payment. In no event shall the aggregate of the
interest to be paid by Tenant, plus any other amounts paid in connection with
the transaction evidenced hereby which would under applicable law be deemed
"interest", ever exceed the maximum amount of interest which, under applicable
law, could be lawfully charged to Tenant hereunder. Landlord and Tenant
specifically intend and agree to limit contractually the interest payable
hereunder to not more than the amount determined at the maximum lawful
nonusurious rate of interest (if any) which under applicable law is permitted to
be charged from time to time (the "Maximum Rate"). Therefore, none of the terms
------------
of this Lease shall ever be construed to create a contract to pay interest at a
rate in excess of the Maximum Rate, and Tenant shall not be liable for interest
in excess of that determined at the Maximum Rate, and the provisions of this
Section shall control all other provisions of this Lease. If any amount of
interest taken or received by Landlord shall be in excess of the maximum amount
of interest which, under applicable law, could lawfully have been collected
under this Lease, then the excess shall be deemed to have been the result of a
mathematical error by Landlord and Tenant and shall be refunded promptly to
Tenant. If Tenant fails in two (2) consecutive months to make rental payments
within ten (10) days after due, Landlord in order to reduce its administrative
costs, may require, by giving notice to Lessee (and in addition to any service
charges accruing pursuant to Section 1.20 hereof, as well as any other rights
and remedies accruing pursuant to Section 13.02 hereof, or any other term
provision or covenant of this Lease or available to Landlord at law or equity),
that Base Rent be payable quarterly in advance instead of monthly and that all
future rental payments are to be made on or before the due date by certified or
cashier's check or money order, and that the delivery of Tenant's personal or
corporate check will no longer constitute the payment of rental as provided in
this Lease. Any acceptance of a monthly rental payment or of a personal or
corporate check thereafter by Landlord shall not be construed as a subsequent
waiver of said rights.
3.05 Security Deposit. (a) To the extent required in Section 1.12
----------------
hereof, Tenant shall deposit the Security Deposit with Landlord on the date
Tenant executes this Lease on the understanding: (a) that the Security Deposit
or any portion thereof may be applied to the curing of any default, without
prejudice to any other remedy or remedies which the Landlord may have on account
thereof, and upon such application Tenant shall pay Landlord on demand the
amount so applied which shall be added to the Security Deposit so the same will
be restored to its original amount; (b) that Landlord shall hold the Security
Deposit in a separate, interest-bearing account, with all interest being a part
of the Security Deposit; and (c) that if Tenant is not in default, the remaining
balance of the Security Deposit shall be returned to Tenant, including interest,
within thirty (30) days after the expiration of the Term provided, however,
Landlord shall have the right to retain and expend such remaining balance for
cleaning and repairing the Premises if Tenant shall fail to deliver the Premises
at the termination of this Lease in a neat and clean condition and in as good a
condition as existed at the date of possession of same by Tenant, except for
ordinary wear and tear.
(b) Within forty-five (45) days after each calendar quarter during the
Term of this Lease, Tenant shall deliver to Landlord a statement of the current
financial condition of Tenant (hereinafter referred to individually as a
"Financial Statement" collectively as the "Financial Statements") dated as of
------------------- --------------------
the last day of such immediately preceding calendar quarter, which Financial
Statements shall be certified by an independent certified public accountant to
be true and correct. If, at any time after the second (2nd) anniversary of the
Commencement Date, the most recent Financial Statement of Tenant reflects that
the shareholders' equity of Tenant is less than Two Million Dollars
($2,000,000.00) then Tenant shall, until such time as the most recent Financial
Statement of Tenant reflects that Tenant's shareholders' equity is at least
$2,000,000.00, increase the Security Deposit by $5,277.85 per month by paying
such additional monthly sum to Landlord concurrent with the payment of each
monthly installment of Base Rent.
3.06 Tenant Improvements Fee. In consideration of and as compensation
-----------------------
for Landlord's construction of the Tenant Improvements (as such term is defined
in the Work Letter attached hereto as Exhibit E), Tenant shall pay to Landlord,
upon the complete execution of this Lease, as cash fee (the "Construction Fee")
----------------
in the amount of Two Hundred Seventy-Three Thousand Dollars $273,000.00). Except
in the event that Tenant terminates this Lease pursuant to Section 1.07, Section
11.01 or Exhibit C hereof, the Construction Fee shall be non-refundable to
Tenant in all events.
ARTICLE 4
4.01 Use. Tenant shall use and occupy the Premises only for the
---
purposes set forth in Section 1.14 hereof and for no other purposes. Tenant
shall not do or permit anything to be done in or about the Premises nor bring or
keep anything therein that will in any way increase the existing rate of or
affect any fire or other insurance upon the Project or any of its contents, or
cause cancellation of any insurance policy covering the Project or any part
thereof or any of its contents. Tenant shall not do or permit anything to be
done in or about the Premises that will in any way obstruct or interfere with
the rights of other tenants or occupants of the Project or injure or annoy them
or create unreasonable elevator loads or otherwise interfere with standard
Building operations. Tenant shall not permit any nuisance in, on or about the
Premises. Tenant shall not commit or suffer to be committed any waste in or upon
the Premises. Tenant shall comply (and shall operate the Premises and its
business thereon in a manner which causes the Premises to comply), at its sole
cost and expense, with Landlord's Rules and Regulations attached hereto as
Exhibit B, and with all laws, rules, orders, ordinances, directions, regulations
- ---------
and requirements of any federal, state, county, municipal, governmental or quasi
governmental authority affecting the Project now in force or that may hereafter
be enacted or promulgated.
4.02 Hazardous Substances, Tenant shall not cause or permit any
--------------------
Hazardous Substance to be used, stored, generated, or disposed of on or in the
Project by Tenant, Tenant's agents, employees, contractors, or invitees without
first obtaining Landlord's written consent. If Hazardous Substances are used,
stored, generated or disposed of on or in the Project except as permitted above,
or if the Project becomes contaminated in any manner for which Tenant is legally
liable, Tenant shall indemnify, defend and hold Landlord harmless from any and
all claims, damages, fires, judgments, penalties, costs, liabilities, or losses
(including, without limitation, a decrease in value of the Project, damages
caused by loss or restriction of rentable or usable space, or any damages caused
by adverse impact on marketing of the space, and any and all sums paid for
settlement of claims, attorneys' fees, consultant and expert fees) arising
during or after the Term and arising as a result of that contamination by
Tenant. This
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<PAGE>
indemnification includes, without limitation, any and all costs incurred because
of any investigation of the site or any cleanup, removal, or restoration
mandated by a federal, state, or local agency or political subdivision. Without
limitation of the foregoing, if Tenant causes or permits the presence of any
Hazardous Substance on the Project and that results in contamination, Tenant
shall promptly, at its sole expense, take any and all necessary actions to
return the Project to the condition existing prior to the presence of any such
Hazardous Substance on the Project. Tenant shall first obtain Landlord's
approval for any such remedial action.
As used herein, "Hazardous Substance" means any substance that is
toxic, ignitable, reactive, or corrosive and that is regulated by any local
government, the state of Texas, or the United States Government. "Hazardous
Substance" include any and all material or substances that are defined as
"hazardous waste," "extremely hazardous waste," or a "hazardous substance"
pursuant to state, federal, or local government law. "Hazardous Substance"
includes but is not restricted to asbestos, polychlorobiphenyls ("PCBs"), and
----
petroleum.
ARTICLE 5
5.01 Landlord's Services. Provided Tenant is not in default hereunder,
-------------------
Landlord shall, at Landlord's expense, except as provided to the contrary in
this Lease, furnish to Tenant while Tenant is occupying the Premises, the
following services:
(a) Subject to curtailment as required by governmental laws, rules or
regulations, air conditioning and central heat, in season, at such
temperatures and in such amounts reasonably deemed by Landlord to be
standard for buildings of similar size, location and quality during normal
Building hours, which are to be 7:00 a.m. through 7:00 p.m. on weekdays
(excluding state and federal holidays) and 8:00 a.m. through 1:00 p.m. on
Saturdays.
(b) Janitorial services in the Premises and public portions of the Building
for all days except Saturdays, Sundays, and normal business holidays.
(c) Cold water at those points of supply provided for drinking,
toilet, and lavatory purposes.
(d) Normal and customary routine maintenance for all public,
structural, and exterior portions of the Project.
(e) Electric lighting service for all public portions of the Project.
(f) Non-exclusive automatic passenger elevator service at all times for
access to and egress from the Premises. Freight elevator service, in common
with other tenants, shall be provided during reasonable business hours as
prescribed by Landlord, exclusive of Saturdays, Sundays, and normal
business holidays.
(g) Electric energy that Tenant shall require for normal office equipment
such as typewriters, dictation machines, calculators, copiers, word
processing equipment, personal computers, other machines of a similar low
electrical consumption, and Building Standard Lighting in the Premises.
(h) Replacement of fluorescent light bulbs in any fluorescent light
fixtures which are located in the Premises and which contain the Building
standard light fixture.
(i) Landlord shall maintain the Project in substantially the same manner as
buildings of similar size, location and quality are being maintained.
5.02 Additional Service Cost. Air conditioning, heating and electricity
-----------------------
in excess of the quantities described above shall be provided to Tenant after
Tenant delivers a written request therefor within the time period prescribed
from time to time by Landlord. Tenant shall pay Landlord, upon demand, monthly
as billed charges for providing off-hour and nonstandard air conditioning,
heating and electricity; provided, however, that Tenant's excessive use or
consumption of heating, air conditioning and/or electrical services in violation
of Section 5.01 hereof, without Landlord's prior written consent, shall
constitute a default under this Lease. Tenant shall notify Landlord if Tenant
has installed or intends to install any equipment in the Premises which shall
consume heating, air conditioning or electrical services in excess of the
quantities described in Section 5.01 hereof, whereupon Landlord shall have the
right, at Tenant's expense, to install a separate meter to record Tenant's use
or consumption of such services.
5.03 Service Interruption. To the extent any of the services described
--------------------
above require electricity, gas, water or other services supplied by public
utilities, Landlord's covenants hereunder shall impose on Landlord only the
obligation to use its good faith efforts to cause the applicable public
utilities to furnish the same. Any failure or defect in the services described
above shall not be construed as an eviction of Tenant nor entitle Tenant to any
reduction, abatement, offset, or refund of Rent or to any damages from Landlord.
Landlord shall not be in breach or default under this Lease, provided Landlord
uses reasonable diligence during normal business hours to restore any such
failure or defect after Landlord receives written notice thereof. Not
withstanding the foregoing, if (i) any portion of the Premises is rendered
untenantable for a period of ten (10) consecutive business days due to a failure
or defect in utility services including HVAC that is not the result of a
negligent or wrongful act or omission of Tenant, then Tenant shall, with respect
to such portion of the Premises that is so rendered untenantable, be entitled to
an abatement of Rent payable hereunder for the period beginning on the day that
such portion of the Premises is rendered untenantable until such utility
services are restored.
ARTICLE 6
6.01 Alterations. Tenant shall not make or allow to be made any
-----------
alterations, installations, additions or improvements in or to the Premises, or
place safes, vaults or other heavy furniture or equipment within the Premises,
without Landlord's prior written consent. All alterations, installations,
additions or improvements, other than movable furniture and movable trade
fixtures, made by Tenant to the Premises shall remain upon and be surrendered
with the Premises and become the property of Landlord at the expiration or
termination of this Lease or the termination of Tenant's right to possession of
the Premises; provided, however, that Landlord may require Tenant, at Tenant's
cost, to remove any or all of such items that are not Building standard upon the
expiration or termination of this Lease or termination of Tenant's right to
possession of the Premises. Tenant, at its sole cost and prior to the expiration
or termination of this Lease, shall remove all of Tenant's property from the
Premises. All work shall be completed promptly and in a good and workmanlike
manner and shall be performed in such a manner that no mechanic's, materialman's
or other similar liens shall attach to Tenant's leasehold estate, and in no
event shall Tenant permit, or be authorized to permit, any such liens or other
claims to be asserted against Landlord or Landlord's rights, estate and
interests with respect to the Project or this Lease.
6.02 Tenant Repairs. By taking possession of the Premises, Tenant shall
--------------
be deemed to have accepted the Premises as being in good, sanitary order,
condition and repair and suitable for the conduct of Tenant's business (except
for latent defects).. Tenant shall, at Tenant's sole cost and expense, keep the
Premises in good condition and repair. Any injury or damage to the Premises or
Project or the appurtenances or fixtures thereof, caused by or resulting from
the act, omission or neglect of Tenant or Tenant's employees, servants, agents,
invitees, assignees, or subtenants shall be repaired or replaced by Tenant, or
at Landlord's option by Landlord, at the expense of Tenant. If Tenant fails to
maintain the Premises or fails to repair or replace any damage to the Premises
or Project resulting from the negligence or intentional act of Tenant, its
employees, servants, agents, invitees, assignees or subtenants, Landlord may,
but shall not be obligated to, cause such maintenance, repair or replacement to
be done, as Landlord deems necessary, and Tenant shall immediately pay to
Landlord all costs related thereto plus a reasonable charge for overhead.
Landlord's approval of any plans, specifications or working drawings for
Tenant's alterations shall not impose or create any responsibility or liability
on Landlord for their completeness, design sufficiency or compliance with all
applicable laws, rules and regulations of governmental agencies or authorities.
6.03 Landlord Repairs. Unless otherwise stipulated herein, Landlord
----------------
shall not be required to make any improvements to or repairs of any kind or
character to the Premises during the Term of this Lease. Notwithstanding any
provisions of this Lease to the contrary, all repairs, alterations or additions
to the base Building or its systems (as opposed to those involving only Tenant's
leasehold improvements), and all repairs, alterations or additions to Tenant's
leasehold improvements which affect the Building's structural components or
major mechanical, electrical or
-4-
<PAGE>
plumbing systems, made for or on behalf of Tenant and any other Tenants in the
Building shall be made by Landlord or its contractor only, and, if for or on
behalf of Tenant, shall be paid for by Tenant in an amount equal to Landlord's
costs plus a reasonable charge for overhead.
6.04 Signage. With the prior written approval of Landlord as to
-------
quantity, design, size, character and location, Tenant may, at Tenant's sole
cost and expense, erect certain signs identifying Tenant as a tenant of the
Building on the door to the Premises and on the exterior of the Building above
the balcony on level four (4) of the Building. All such signage shall comply in
all respects with all applicable laws, rules and regulations. Tenant shall not
erect or install any sign or other type display whatsoever upon the exterior of
the Building, upon or in any window, or in any lobby, hallway or door therein
located, without the express written consent of Landlord. All signs or lettering
shall conform to the sign and lettering criteria established by Landlord.
ARTICLE 7
7.01 Landlord Insurance. Landlord shall insure the Project and shall
------------------
maintain liability and property insurance in commercially reasonable amounts.
The cost of such insurance shall be an "Operating Expense" as defined in Section
3.03 hereof. Such insurance shall be for the sole benefit of Landlord and, if
required, Landlord's mortgagee. If the annual premiums to be paid by Landlord
exceed the standard rates because of Tenant's operations within or contents of
the Premises or because improvements to the Premises are beyond Building
Standard, Tenant shall promptly pay the excess amount of the premium upon
request by Landlord (and if necessary, Landlord may allocate the insurance costs
of the Building to give effect to this sentence).
7.02 Tenant Insurance. Tenant shall, at all times during the Term, at its
----------------
sole cost and expense, obtain and continue to keep in force the following
insurance in the amounts required in Section 1.21 hereof:
(a) Fire insurance, including extended coverage, vandalism, and malicious
mischief, upon property of every description and kind owned by Tenant and
located in the Project or for which Tenant is legally liable or which is
installed by or on behalf of Tenant including, without limitation,
furniture, fittings, installations, fixtures and any other personal
property, leasehold improvements and alterations.
(b) Comprehensive General Liability Insurance coverage to include personal
injury, bodily injury, broad form property damage, operations hazard,
owner's protective coverage and contractual liability.
(c) Workers Compensation and Employer's Liability insurance.
(d) Any other form or forms of insurance as Tenant may reasonably require
from time to time in form, in amounts and for insurance risks against which
a prudent Tenant of a comparable size and in a comparable business would
protect itself.
All policies shall be taken out with insurers that are reasonably acceptable to
Landlord and in form reasonably satisfactory from time to time to Landlord.
Tenant agrees that certificates of insurance in form acceptable to Landlord will
be delivered to Landlord as soon as practicable after the placing of the
required insurance, but not later than ten (10) days prior to Tenant's occupancy
of all or any part of the Premises. All policies shall contain an undertaking by
the insurers to notify Landlord (and, if specifically requested by Landlord, the
mortgagees of Landlord) in writing not less than thirty (30) days before any
material change, reduction in coverage, cancellation, or other termination
thereof. If Tenant fails to procure and maintain said insurance, Landlord may,
but shall not be obligated to, procure and maintain same, but at the expense of
Tenant. Landlord makes no representation or warranty that the insurance carried
by Tenant pursuant to the terms hereof shall be adequate or sufficient for any
particular purpose.
7.03 Waiver of Subrogation. Whenever (a) any loss, cost, damage or
---------------------
expense resulting from fire, explosion or any other casualty or occurrence is
incurred by either of the parties to this Lease in connection with the Premises
or the Project, and (b) such party is then covered (or is required under this
Lease to be covered) in whole or in part by insurance with respect to such loss,
cost, damage or expense, then the party so insured hereby releases the other
party from any liability it may have on account of such loss, cost, damage or
expense to the extent of any amount recovered by reason of such insurance, and
waives any right of subrogation which might otherwise exist on account thereof,
provided that such release of liability and waiver of the right to subrogation
shall not be operative in any case where the effect thereof is to invalidate
such insurance coverage or increase the cost thereof (provided, that in the case
of increased cost, the other party shall have the right, within thirty (30) days
following written notice, to pay such increased costs, thereupon keeping such
release and waiver in full force and effect). Landlord and Tenant shall use
their respective best efforts to obtain such a release and waiver of subrogation
from their respective insurance carriers and shall obtain any special
endorsements, if required by their insurer, to evidence compliance with the
aforementioned waiver. The failure by Tenant to carry property insurance
required to be carried by Tenant hereunder shall be a defense against any claim
by Tenant against Landlord for property damage caused by Tenant.
7.04 Indemnity. Tenant hereby indemnifies and holds Landlord harmless
---------
from and against any and all claims arising from Tenant's use of the Premises,
for the conduct of its business or from any activity, work or other thing done,
permitted or suffered by Tenant on or about the Project and shall further
indemnify and hold harmless Landlord from and against any and all claims arising
from any breach or default in the performance of any obligation on Tenant's part
to be performed under the terms of this Lease, or arising from any act or
omission of, or due to the negligence of, the Tenant, or any officer, agent,
employee, guest or invitee of Tenant, and from and against all costs, attorney's
fees, expenses and liabilities incurred in or related to any such claim or any
action or proceeding brought thereon. Landlord shall indemnify and hold Tenant
harmless from and against any and all claims arising out of (i) breach or
default by Landlord with respect to any of its obligations under this Lease,
(ii) negligent act of Landlord or any of its agents, employees, contractors or
officers within the Premises, and (iii) Landlord's gross negligence or willful
misconduct.
ARTICLE 8
8.01 Casualty. If the Premises or Project, or any portion of either,
--------
shall be damaged by fire or other casualty covered by the insurance carried by
Landlord hereunder and the cost of repairing such damage shall not be greater
than ten percent (10%) of the then full replacement cost thereof, then, subject
to the following provisions of this Article, Landlord shall repair the Premises
and/or Project. If the Premises or Project shall be damaged (a) by fire or other
casualty not covered by insurance carried by Landlord hereunder, (b) by fire or
other casualty covered by insurance carried by Landlord hereunder and Landlord's
mortgagee requires that such insurance proceeds be used to retire the mortgage
debt, (c) to an extent greater than ten percent (10%) of the then full
replacement cost thereof, or (d) during the last twelve (12) months of the Term
or any renewal term hereof, then Landlord shall have the option (i) to repair or
reconstruct the portion of the damaged Premises or Project covered by Landlord's
insurance, or (ii) to terminate this Lease by so notifying Tenant within sixty
(60) days after the date of such fire or other casualty, such termination to be
effective as of the date of such fire or other casualty. The Rent required to be
paid hereunder shall be abated in proportion to the portion of the Premises, if
any, which is rendered untenantable by fire or other casualty hereunder until
repairs of the Premises are completed, or if the Premises are not repaired,
until the Expiration Date hereunder. Other than such rental abatement, no
damages, compensation or claims shall be payable by Landlord for loss of the use
of the whole or any part of the Premises, Tenant's personal property, or any
inconvenience, loss of business or profit, or annoyance arising from any such
repair and reconstruction. If the damage results from the fault or negligence of
Tenant, its agents, employees, licensees or invitees, Tenant shall not be
entitled to any abatement or reduction of any Rent or other sums due hereunder,
and such damage shall be repaired by Tenant, or at Landlord's option by
Landlord, at Tenant's expense. If this Lease is terminated as provided in (ii)
above, all Rent shall be apportioned and paid up to the date of such
termination. Landlord shall not be required to repair or replace any furniture,
furnishings, or other personal property that Tenant may be entitled to remove
from the Premises or any property constructed and installed by or for Tenant
pursuant to Section 6.01 hereof or any installations in excess of Building
Standard.
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<PAGE>
ARTICLE 9
9.01 Condemnation. If more than twenty percent (20%) of the Premises
------------
should be taken for any public or quasi-public use, by right of eminent domain
or otherwise, or should be sold in lieu of condemnation, then either party
hereof shall have the right, at its option, to terminate this Lease as of the
date when physical possession of the Premises is taken by the condemning
authority. If twenty percent (20%) or less of the Premises is so taken or sold
or if this Lease is not terminated upon any taking or sale of greater than
twenty percent (20%) of the Premises, the Rent payable hereunder shall be abated
in proportion to the portion of the Premises which is rendered untenantable by
such condemnation, and Landlord shall, to the extent Landlord deems feasible,
restore the Premises to substantially its former condition, but Landlord shall
not in any event be required to spend for such work an amount in excess of the
amount received by Landlord as compensation for such taking. If any part of the
Project other than the Premises may be so taken or sold, Landlord shall have the
right at its option to terminate this Lease as of the date when physical
possession of such part of the Project is taken by the condemning authority. All
amounts awarded upon taking of any part or all of the Project or the Premises
shall belong to Landlord and Tenant shall not be entitled to, and expressly
assigns all claims, rights and interests to, any such compensation to Landlord.
ARTICLE 10
10.01 Entry. Landlord, its agents, employees and representatives, shall
-----
have the right to enter the Premises at any time upon reasonable notice to
Tenant under the circumstances (which notice may be oral and not in compliance
with Section 15.08 hereof, but no notice shall be required in the case of
routine maintenance or an emergency) to show the Premises to prospective Tenants
or purchasers or for any purpose that Landlord may reasonably deem necessary for
the operation and maintenance of the Project. For each of the aforesaid
purposes, Landlord shall at all times have and retain a key with which to unlock
all of the doors in, upon and about the Premises, excluding Tenant's vaults,
safes and files. Landlord shall have the right to use any and all means which
Landlord may deem proper to open the doors in, upon and about the Premises in an
emergency in order to obtain entry to the Premises without liability to Tenant,
except for any failure to exercise due care for Tenant's property.
ARTICLE 11
11.01 Subordination. Tenant accepts this Lease subject and subordinate
-------------
to any mortgage, deed of trust or other lien presently existing or hereafter
placed upon the Premises or the real property upon which the Premises are
located, and to any renewals and extensions thereof; provided, however, within
one hundred twenty (120) days after the effective date of this Lease, Landlord
shall obtain and deliver to Tenant the written agreement (the "Non-Disturbance
---------------
Agreement") of the existing mortgagee of the Project (on the form issued by such
- ---------
mortgagee) stating that Tenant's occupancy of the Premises and its rights
hereunder shall not be disturbed so long as Tenant is not in default hereunder;
further provided, however, that any such mortgagee shall have the right at any
time to subordinate such mortgage, deed of trust or other lien to this Lease.
Notwithstanding that this Lease may be (or made to be) superior to such
mortgage, deed of trust or other lien, the provisions of such mortgage, deed of
trust or other lien relative to the rights of the mortgagee with respect to
proceeds arising from an eminent domain taking (including a voluntary conveyance
by Landlord) and/or arising from insurance payable by reason of damage to or
destruction of the Premises shall be prior and superior to any contrary
provisions contained herein with respect to the payment or usage thereof. Tenant
agrees upon demand to execute such further instruments subordinating this Lease
as Landlord may request, provided such subordination agreements shall expressly
provide that Tenants occupancy of the Premises and its rights hereunder shall
not be disturbed so long as Tenant performs all of its covenants and obligations
hereunder. In the event that the Non-Disturbance Agreement is not delivered to
Tenant within one hundred twenty (120) days after the effective date of this
Lease, Tenant may terminate this Lease by written notice to Landlord, in which
event the Construction Fee shall be refunded to Tenant.
11.02 Attornment. If any ground or similar such lease, mortgage, deed
----------
of trust or security agreement is enforced by the ground lessor, the mortgagee,
the trustee, or the secured party, Tenant shall, upon request, attorn to the
Lessor under such lease or the mortgagee or purchaser at such foreclosure sale,
or any person or party succeeding to the interest of Landlord as a result of
such enforcement, as the case may be, and execute instrument(s) confirming such
attornment. In the event of such enforcement and upon Tenant's attornment as
aforesaid, Tenant will automatically become the tenant of the successor to
Landlord's interest without change in the terms or provisions of this Lease;
provided, however, that such successor to Landlord's interest shall not be bound
by (a) any payment of Rent for more than one month in advance (except
prepayments for security deposits, if any), or (b) any amendments or
modifications of this Lease made without the prior written consent of such
Lessor or mortgagee.
11.03 Quiet Enjoyment. Tenant, on paying the Rent and keeping and
---------------
performing the conditions and covenants herein contained, shall and may
peaceably and quietly enjoy the Premises for the Term, subject to the aforesaid
underlying leases, mortgages, deeds of trust and security agreements, all
applicable laws and other governmental and legal requirements, applicable
insurance requirements and regulations, and the provisions of this Lease. It is
understood and agreed that this covenant and any and all other covenants of
Landlord contained in this Lease shall be binding upon Landlord and its
successors only with respect to breaches occurring during its and their
respective ownership of the Landlord's interest hereunder.
ARTICLE 12
12.01 Assignment and Subletting. Tenant shall not, voluntarily, by
-------------------------
operation of law, or otherwise, assign, transfer, mortgage, pledge, or encumber
this Lease or sublease the Premises or any part thereof, or suffer any person
other than Tenant, its employees, agents, servants and invitees to occupy or use
the Premises or any portion thereof, without the express prior written consent
of Landlord. Any attempt to do any of the foregoing without such written consent
shall be null and void and of no effect, and shall further constitute a Default
under this Lease. Notwithstanding the foregoing, Landlord shall not unreasonably
withhold its consent to a proposed assignment or sublease so long as (i) the
proposed assignee or sublessee satisfies Landlords customary financial
requirements for prospective tenants of the Building and (ii) the proposed use
of such tenant or sublessee would not, in Landlord's reasonable judgment, be
detrimental to the Building or other tenants therein. If Tenant so requests
Landlord's consent, said request shall be in writing specifying the duration of
said desired sublease or assignment, the date same is to occur, the exact
location of the space affected thereby and the proposed rentals on a square foot
basis chargeable thereunder, and shall be submitted to Landlord at least fifteen
(15) days in advance of the date on which Tenant desires to make such assignment
or sublease or allow such occupancy or use. Upon such request Landlord may,
based on the standards described above, either (a) grant such consent subject to
Landlord's approval of the assignee, transferee, subtenant, or mortgagee, or
(b)not grant such consent. In no event may Tenant assign this Lease or sublease
the Premises or any portion thereof to any party whose operations in the Project
would not be in keeping with, or would detract from, the operations of other
tenants in the Project or whose use of the Premises would be inconsistent with
the use described in Section 1.14 hereof. Tenant shall promptly reimburse
Landlord for all reasonable expenses incurred by Landlord in connection with any
such proposed assignment or sublease, whether or not Landlord consents to such
action.
12.02 Continued Liability. Except as provided hereinafter, Tenant
-------------------
shall, despite any permitted assignment or sublease, remain directly and
primarily liable for the performance of all of the covenants, duties, and
obligations of Tenant hereunder, and Landlord shall be permitted to enforce the
provisions of this Lease against Tenant or any assignee or sublessee without
demand upon or proceeding in any way against any other person.
12.03 Consent. Consent by Landlord to a particular assignment or
-------
sublease shall not be deemed a consent to any other or subsequent transaction.
If this Lease is assigned or if the Premises are subleased without the
permission of Landlord, then Landlord may nevertheless collect Rent from the
assignee or sublessee and apply the rent amount collected to the Rent payable
hereunder, but no such transaction or collection of Rent or application thereof
by Landlord shall be deemed a waiver of any provision hereof or a release of
Tenant from the performance of the obligations of the Tenant hereunder.
12.04 Proceeds. To the extent monthly cash or other proceeds of any
--------
assignment, sale or sublease of Tenant's interest in this Lease, whether
consented to by Landlord or not, exceed the monthly Rent called for hereunder
(the "Excess Proceeds"), the first $5,277.85 of such monthly Excess Proceeds
shall be paid to Tenant, and any additional Excess Proceeds over and above such
amount shall be shared equally by Tenant and Landlord.
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<PAGE>
ARTICLE 13
13.01 Default. Each of the following shall constitute a default by Tenant
-------
(hereinafter referred to as a "Default"):
-------
(a) The failure of Tenant to pay when due the Rent or any part thereof or
any other sum of money payable hereunder, and the continuance of such
failure for a period of ten (10) days after written notice thereof has been
given by Landlord to Tenant; provided, however, Landlord shall not be
required to give such written notice, and Tenant shall not be entitled to
same more than two (2) times during any calendar year, and any such
subsequent failure shall be a Default upon the occurrence thereof without
any notice whatsoever to Tenant;
(b) Tenant or any Guarantor takes any action to, or notifies Landlord that
Tenant or Guarantor intends to, file a petition under any section or
chapter of the United States Bankruptcy Code, as amended from time to time,
or under any similar law or statute of the United States or any state
thereof; or a petition shall be filed against Tenant under any such statute
or Tenant or any Guarantor notifies Landlord that it knows such a petition
will be filed; or the appointment of a receiver or trustee to take
possession of substantially all of Tenant's assets located at the Premises
or of Tenant's interest in this Lease; or the attachment, execution or
other judicial seizure of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease;
(c) The failure of Tenant to fulfill or perform, in whole or in part, any
of its obligations under this Lease (other than the payment of Rent) and
such failure or nonperformance shall continue for a period of thirty (30)
days after written notice thereof has been given by Landlord to Tenant;
provided, however, Landlord shall not be required to give such thirty (30)
day notice with respect to any particular failure or default by Tenant, and
Tenant shall not be entitled to same, more than two (2) times during any
calendar year, and any such subsequent failure by Tenant to perform such
obligation shall be a Default upon the occurrence thereof without any
notice whatsoever to Tenant;
(d) Tenant shall have assigned or sublet the Premises without the prior
written consent of Landlord; or
(e) Tenant shall fail to move into or take possession of the Premises
within fifteen (15) days after the Commencement Date (except as otherwise
provided in Section 1.07 hereof).
13.02 Rights upon Default.
-------------------
(a) If a Default by Tenant shall have occurred, Landlord shall have the
right, at its election, then or at any time thereafter to pursue any one
(1) or more of the following remedies without any demand or notice
whatsoever, in addition to all other rights or remedies provided herein or
at law or in equity, it being understood that all of such remedies shall be
cumulative:
(i) Landlord may elect to terminate this Lease and Tenant's right to
the Premises or, without terminating this Lease, forthwith
terminate Tenant's right to possession of the Premises. Upon any
termination of this Lease, whether by lapse of time or
otherwise, or upon any termination of Tenant's right to
possession without termination of this Lease, Lessee shall
surrender possession and vacate the Premises and deliver
possession thereof to Landlord, and Tenant hereby grants to
Landlord full and free license to enter into and upon the
Premises with or without process of law in the event of any such
termination of lease or right to possession, and to repossess
Landlord of the Premises as of Landlord's former estate and to
expel or remove Tenant and any others who may be occupying or be
within the Premises or any part thereof and to remove any and
all property therefrom using such force as may be necessary
without being deemed in any manner guilty of trespass, eviction
or forcible entry or detainer, without being liable for
prosecution or any claim for damages therefor hereunder without
relinquishing Landlord's rights to rent or any other right given
to Landlord hereunder or by operation of law.
(ii) If Tenant voluntarily abandons the Premises or otherwise
entitles Landlord to elect to terminate Tenant's right to
possession only without terminating this Lease, and Landlord
does so elect, Landlord may, at Landlord's option, enter into
the Premises, remove Tenant's signs and other evidences of
tenancy and take and hold possession thereof as described in
subparagraph (i) of this Section 13.02, without such entry and
possession terminating this Lease or releasing Tenant, in whole
or in part, from Tenant's obligation to pay the Rent hereunder
for the full Term. Upon and after entry into possession without
termination of this Lease, subject to Landlord's right to first
rent other vacant areas in the Building and/or the Project,
Landlord may elect to relet the Premises or any part thereof to
any person, firm or corporation other than Tenant for such rent,
for such time and upon such terms as Landlord in Landlord's sole
discretion shall deem advisable and receive the rent therefor.
Any proceeds from any such reletting of the Premises by Landlord
shall first be applied against the cost and expenses of
reletting the Premises including, but not limited to, all
brokerage, advertising, legal, alteration and other expenses
incurred to secure a new tenant for the Premises. If the
consideration collected by Landlord upon any such reletting,
after payment of the expenses of reletting the Premises, is not
sufficient to pay monthly the full amount of the rent reserved
in this Lease, Tenant shall pay to Landlord the amount of each
monthly deficiency as it becomes due upon demand. If the
consideration collected by Landlord upon any such reletting for
Tenant's account is, after payment of the expenses of reletting
the Premises, greater than the amount necessary to pay the full
amount of the rent reserved in this Lease, the full amount of
such excess shall be retained by Landlord and in no event
payable to Tenant.
(iii) Should Landlord decide to terminate this Lease, Landlord, at its
sole option, shall be entitled to recover from Tenant, in lieu
of any amounts due under subparagraph (ii) only of this Section
13.02, and Tenant shall pay to Landlord, on demand, as and for
liquidated and agreed final damages, a sum equal to the amount
of Landlord's reasonable estimate of the aggregate amount of
Rent for the period from the date of such termination through
the termination date set forth herein, increased annually for
CPI as set forth herein, and including but not limited to,
Actual Operating Expense Increase and other amounts payable as
rent hereunder, reduced by the then reasonable rental value of
the Premises discounted to present value at a rate equal to the
rate of interest which is allowable by law in the State of
Texas, when the parties to a contract have not agreed on any
particular rate of interest or, in the absence of such law, at
the rate of six percent (6%) per annum. If, before presentation
of proof of such liquidated damages to any court, commission or
tribunal, the Premises, or any part thereof, shall have been
relet by Landlord to an unrelated third party, for such period,
or any part thereof, the amount of rent payable upon such
reletting shall be deemed to be the reasonable rental value for
the part or the whole of the Premises relet during the term of
the reletting.
(iv) Landlord may enter upon the Premises by force if necessary,
without being liable for prosecution or any claim for damages
thereon, and do whatever Tenant is obligated to do under the
terms of this Lease; and Tenant agrees to reimburse Landlord on
demand for any expenses which Landlord may incur in thus
effecting compliance with Tenant's obligations under this Lease,
such amounts to constitute additional rent payable hereunder,
and Tenant further agrees that Landlord shall not be liable for
any damages resulting to Tenant from any such action.
(v) Notwithstanding anything in this Lease to the contrary, any and
all remedies set forth in this Lease (A) shall be in addition to
any and all other remedies Landlord may have at law or in equity
and (B) shall be cumulative. The waiver by Landlord of any
breach of any term, covenant or condition herein contained shall
not be deemed to be a waiver of such term, covenant or
condition. The acceptance of rent hereunder shall not be
construed to be a waiver of any breach by Tenant of any term,
covenant or condition of this Lease. The acceptance by Landlord
at any time
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<PAGE>
or from time to time of rent in an amount less than that to
which Landlord is entitled hereunder shall not be construed as a
waiver of Landlord's right to demand the full amount nor a
release of Tenant's liability for the full amount of rent
payable hereunder.
(vi) No re-entry or taking possession of the Premises by Landlord
shall be construed as an election on its part to terminate this
Lease, unless a written notice of such intention be given to
Tenant. Notwithstanding any such reletting or entry or taking
possession, Landlord may at any time thereafter elect to
terminate this Lease for a previous Default. Pursuit of any of
the foregoing remedies shall not preclude pursuit of any of the
other remedies herein provided or any other remedies provided by
law, nor shall pursuit of any remedy herein provided constitute
a forfeiture or waiver of any rent due to Lessor hereunder or of
any damages accruing to lessor by reason of the violation by
Tenant of any of the terms, provisions and covenants herein
contained. Landlord's acceptance of rent following Tenant's
Default hereunder shall not be construed as Landlord's waiver of
such Default. No waiver by Landlord of any failure, violation or
breach of any of the terms, provisions and covenants herein
contained shall be deemed or construed to constitute a waiver of
any other failure, violation or default. The loss or damage that
Landlord may suffer by reason of termination of this Lease or
the deficiency from any reletting as provided for above shall
include the expense of repossession and any repairs or
remodeling undertaken by Landlord following possession. Should
Landlord at any time terminate this Lease for any event of
default, in addition to any other remedy Landlord may have,
Landlord may recover from Tenant all damages Landlord may incur
by reason of such Default, including the cost of recovering the
Premises and the loss of rental for the remainder of the Term.
(b) Without limiting or waiving any rights of Landlord as set forth
in 13.02 (a) above, if there exists a Default under 13.01 above,
Landlord may, without judicial process, prevent Tenant from entering
the Premises by changing the door locks. If Landlord changes the door
locks, Landlord shall place a written notice, on the front door of the
Premises, stating the name and address or telephone number of an
individual or company from which a new key may be obtained by Tenant;
provided, however, that (i) the new key needs to be provided only
during tenant's regular business hours, and (ii) Landlord may
condition delivery of the new key upon Tenant's payment of all rent
then due. Costs and expenses incurred by Landlord in exercise of its
right pursuant to this subsection (b) shall be deemed to be damages
and/or costs recoverable by Landlord pursuant to 13.02 (a) above.
13.03 Costs. If a Default by Tenant occurs, then Tenant shall reimburse
-----
Landlord on dem and for all costs reasonably incurred by Landlord in connection
therewith including, but not limited to, reasonable attorney's fees and court
costs.
13.04 Non-Waiver. The failure of Landlord to seek redress for violation
----------
of, or to insist upon the strict performance of, any covenant or condition of
this Lease shall not prevent a subsequent act or omission that would have
originally constituted a violation of this Lease from having all the force and
effect of an original violation. The receipt by Landlord of Rent with or without
knowledge of the breach of any provision of this Lease shall not be deemed a
waiver of such breach, shall not reinstate this Lease or Tenant's right of
possession if either or both have been terminated, and shall not otherwise
affect any notice, election, action, or suit by Landlord. No provision of this
Lease shall be deemed to have been waived by Landlord unless such waiver is in
writing signed by Landlord. No act or thing done by Landlord during the Term
shall be deemed on acceptance of a surrender of the Premises and no agreement to
accept such surrender shall be valid, unless express and in writing signed by
Landlord.
ARTICLE 14
14.01 Organization and Power (Corporation). This Section is applicable
------------------------------------
if Tenant is a corporation. Tenant represents and warrants to Landlord that
Tenant (a) is a corporation duly organized, validly existing under the laws of
the state of its incorporation and in good standing under the laws of the state
of its incorporation and the laws of the State of Texas, (b) has paid all
franchise and other taxes, if any, required to maintain the corporate existence
of Tenant, and (c) is not the subject of voluntary or involuntary proceedings
for the forfeiture of the Certificate of Incorporation of Tenant for its
dissolution.
14.02 Organization and Power (Partnership or Joint Venture). This
-----------------------------------------------------
section is applicable if Tenant is a partnership or joint venture. Tenant is
duly organized and validly existing under applicable state laws, and this Lease
is within Tenant's powers, has been duly authorized by all requisite action and
is not in contravention of law or the powers of Tenant's partnership or joint
venture agreement, as the case may be.
ARTICLE 15
15.01 Amendment. Any agreement hereafter made between Landlord and
---------
Tenant shall be ineffective to modify, release, or otherwise affect this Lease,
in whole or in part, unless such agreement is in writing and signed by the party
to be bound thereby.
15.02 Severability. If any term or provision of this Lease shall, to any
------------
extent, be held invalid or unenforceable by a final judgment of a court of
competent jurisdiction, the remainder of this Lease shall not be affected
thereby.
15.03 Estoppel Letters. Tenant shall execute and acknowledge a
----------------
certificate containing such information as may be reasonably requested for the
benefit of Landlord, any prospective purchaser or any current or prospective
mortgagee of all or any portion of the Project within ten (10) days of receipt
of same (so long as such information is accurate). In the event Tenant fails to
deliver such certificate to Landlord, Tenant irrevocably appoints Landlord as
Tenant's attorney-in-fact to execute same. Furthermore, within fifteen (15) days
after Landlord's request, Tenant shall furnish to Landlord the most recent
audited financial statement of Tenant (including any notes thereto), or if no
such audited statements have been prepared, such other financial statements (and
notes thereto) as may have been prepared by an independent certified public
accountant or officer of Tenant. Landlord will not disclose any aspect of such
financial statements that Tenant designates to Landlord as confidential, except
(a) to Landlord's lender or prospective purchasers of the Project, (b) in
litigation between Landlord and Tenant, and (c) as may be required by court
order or other judicial process.
15.04 Landlord's Liability and Authority. All obligations of Landlord
----------------------------------
under this Lease are, and shall hereafter be deemed and construed as, covenants
(and not conditions to Tenant's performance hereunder). The liability of
Landlord to Tenant for any default by Landlord under the terms of this Lease
shall be limited to the interest of Landlord in the Project, it being intended
that Landlord, its officers, directors, partners, joint venturers, and/or
employees shall not be personally liable for any judgment or deficiency. It is
the intention of the parties hereto that the obligations of Tenant hereunder
shall be separate and independent covenants and agreements, that the Base Rent
and all other sums payable by Tenant hereunder shall continue to be payable in
all events and that the obligations of Tenant hereunder shall continue
unaffected, unless the requirement to pay or perform the same shall have been
abated, terminated or modified pursuant to an express provision of this Lease.
15.05 Holdover. If Tenant shall remain in possession of the Premises
--------
after the Expiration Date or earlier termination of this Lease, then Tenant
shall be deemed a tenant-at-will whose tenancy is terminable at any time. In
such event, Tenant shall pay Rent at one hundred fifty percent (150%) of the
greater of (a) the Rent or (b) the fair market rental rate for the Premises on
the date of such termination or expiration, but otherwise shall be subject to
all of the obligations of Tenant under this Lease. Additionally, Tenant shall
pay to Landlord all damages sustained by Landlord on account of such holding
over by Tenant.
15.06 Surrender. Upon the expiration or earlier termination of the
---------
Term, Tenant shall peaceably quit and surrender the Premises in good order and
condition, excepting ordinary wear and tear, but subject to Sections 6.01 and
6.02 hereof. All obligations of Tenant for the period of time prior to the
expiration or earlier termination of the Term shall survive such expiration or
termination.
15.07 Parties and Successors. Subject to the limitations and conditions
----------------------
set forth elsewhere herein, this Lease shall bind and inure to the benefit of
the respective heirs, legal representatives, successors, and permitted assigns
and/or sublessees of the parties hereto. The term "Landlord",
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<PAGE>
as used in this Lease, so far as the performance of any covenants or obligations
on the part of Landlord under this Lease are concerned, shall mean only the
owner of the Project at the time in question, so that in the event of any
transfer of title to the Project, the party by whom any such transfer is made
shall be relieved of all liability and obligations of the Landlord arising under
this Lease from and after the date of such transfer, so long as the new owner of
the Project assumes the obligations of Landlord under this Lease that arise from
and after the date of such transfer.
15.08 Notice. Except as otherwise provided herein, any statement,
------
notice, or other communication that Landlord or Tenant may desire or be required
to give to the other shall be deemed sufficiently given or rendered if hand
delivered, or if sent by registered or certified mail, return receipt requested,
addressed at the address(Es) set forth in Section 1.16 hereof, or at such other
address(es) as the other party shall designate from time to time by prior
written notice, and such notice shall be effective when the same is received or
mailed as herein provided. Manager shall be a co-addressee with Landlord on all
notices given to Landlord by Tenant hereunder.
15.09 Rules and Regulations. Tenant, its servants, employees, agents,
---------------------
visitors, invitees, and licensees, shall observe faithfully and comply strictly
with the Rules and Regulations set forth in Exhibit B attached hereto and made a
---------
part hereof for all purposes, and shall abide by and conform to such further
rules and regulations as Landlord may from time to time reasonably make, amend
or adopt, after Tenant receives a copy thereof.
15.10 Captions. The captions in this Lease are inserted only as a
--------
matter of convenience and for reference and they in no way define, limit, or
describe the scope of this Lease or the intent or any provision hereof.
15.11 Number and Gender. All genders used in this Lease shall include
-----------------
the other genders, the singular shall include the plural, and the plural shall
include the singular, whenever and as often as may be appropriate.
15.12 Governing Law. This Lease shall be governed by and construed in
-------------
accordance with the laws of the State of Texas.
15.13 Inability to Perform. Notwithstanding Section 15.17 hereof,
--------------------
whenever a period of time is herein prescribed for the taking of any action by
any party hereto (but excluding Tenant's obligations to pay any Rent when due
hereunder), such party shall not be liable or responsible for, and there shall
be excluded from the computation of such period of time, any delays due to
strikes, riots, acts of God, shortages of labor or materials, war, governmental
laws, regulations or restrictions, or any other cause whatsoever beyond the
control of such party, and such nonperformance or delay in performance by such
party shall not constitute a breach or default by such party under this Lease
nor give rise to any claim against such party for damages or constitute a total
or partial eviction, constructive or otherwise.
15.14 Broker. Tenant represents and warrants that Tenant has dealt
------
with, and only with Tenant's Broker named in Section 1.16 hereof as broker in
connection with this Lease and that, insofar as Tenant knows, no other broker
negotiated this Lease or is entitled to any commission in connection herewith.
Tenant shall indemnify, defend and hold Landlord harmless from and against all
claims (and costs of defending against and investigating such claims) of any
broker or similar parties claiming under Tenant in connection with this Lease.
15.15 Memorandum of Lease. Tenant shall not record this Lease or a
-------------------
memorandum or other instrument with respect to this Lease.
15.16 Entire Agreement. This Lease, including all Exhibits attached
----------------
hereto (which Exhibits are hereby incorporated herein and shall constitute a
portion hereof), contains the entire agreement between Landlord and Tenant with
respect to the subject matter hereof. Tenant hereby acknowledges and agrees that
neither Landlord nor Landlord's agents or representatives have made any
representations, warranties, or promises with respect to the Project, the
Premises, Landlord's services, or any other matter or thing except as herein
expressly set forth, and no rights, easements, or licenses are acquired by
Tenant by implication or otherwise except as expressly set forth in this Lease.
The taking of possession of the Premises by Tenant shall be conclusive evidence,
as against Tenant, that Tenant accepts the Premises and the Project, and that
same were in good and satisfactory condition at the time such possession was so
taken. Further, the terms and provisions of this Lease shall not be construed
against or in favor of a party hereto merely because such party is the
"Landlord" or the "Tenant" hereunder or such party or its counsel is the
draftsman of this Lease.
15.17 Time of Essence. Time is of the essence of this Lease and each and
---------------
all of its provisions in which performance is a factor.
15.18 Parking. Tenant shall have the right to use the parking facilities of
-------
the Building, subject to the rules and regulations of Landlord for such parking
facilities, all as more particularly set forth on Exhibit C attached hereto and
made a part hereof for all purposes.
15.19 Tenant Taxes. Tenant shall pay, or cause to be paid, before
------------
delinquency, any and all taxes levied or assessed and which become payable
during the Term upon all of Tenant's equipment, furniture, fixtures and personal
property located in the Premises, except that which has been paid for by
Landlord and is the standard of the Building. If the assessed value of the
Project is increased by inclusion of personal property, furniture, fixtures or
equipment placed by Tenant in the Premises and Landlord elects to pay such
taxes, charges and other assessments based on such increase, Tenant shall pay
Landlord upon demand that part of the taxes, charges and other assessments for
which Tenant is primarily liable hereunder.
15.20 Attorney's Fees. In the event either party to this Lease commences
---------------
legal action of any kind to enforce the terms and conditions of this Lease, the
prevailing party in such litigation shall be entitled to collect from the other
party all reasonable costs, expenses and attorney's fees incurred in connection
with such action.
15.21 Landlord Alterations or Modifications. Notwithstanding anything
-------------------------------------
herein to the contrary, Landlord expressly reserves the right in its sole
discretion to temporarily or permanently change the location of, close, block or
otherwise alter any entrances, corridors skywalks, tunnels, doorways, or
walkways leading to or providing access to the Building or any part thereof or
otherwise restrict the use of same provided such acts do not unreasonably impair
Tenant's access to the Premises. Landlord shall not incur any liability
whatsoever to Tenant as a consequence thereof and such acts shall not be deemed
to be a breach of any of Landlord's obligations hereunder.
15.22 Name Change. Landlord and Tenant covenant and agree that Landlord
-----------
hereby reserves and shall have the right at any time and from time to time to
change the name of the Building as Landlord may deem advisable, and Landlord
shall not incur any liability whatsoever to Tenant as a consequence thereof.
15.23 Publication. Tenant hereby agrees that Landlord shall have the
-----------
right, but not the obligation, at no cost to Tenant, to publicize and/or
advertise the execution of this Lease and the related transaction.
15.24 Waiver of Consumer Rights. Tenant hereby waives its rights under
-------------------------
the Deceptive Trade Practices - Consumer Protection Act, Section 17.41 et seq.,
-- ---
Business & Commerce Code, a law that gives consumers special rights and
protections. After consultation with an attorney/legal counsel of its own
selection, Tenant voluntarily consents to the waiver. Tenant covenants,
represents and warrants that such attorney/legal counsel was not directly or
indirectly identified, suggested, or selected by Landlord or an agent of
Landlord.
-9-
<PAGE>
EXECUTED effective as of the date hereinabove first set forth.
LANDLORD:
--------
LAKE AUSTIN COMMONS, LTD., a Texas
limited partnership
By: Sage Land Company, Inc., its General Partner
By:/s/ WM. BURROW
-----------------------------------------
Name: Wm. Burrow
---------------------------------------
Title: President
--------------------------------------
TENANT:
------
Clinicor, Inc.
By:/s/ SUSAN M. GEORGEN-SAAD
-----------------------------------------
Name: Susan M. Georgen-Saad
---------------------------------------
Title: Vice President, CFO
--------------------------------------
-10-
<PAGE>
EXHIBIT "A"
FLOOR PLANS
-----------
HARTLAND PLAZA - FOURTH FLOOR PLAN
[FLOOR PLAN APPEARS HERE]
-11-
<PAGE>
EXHIBIT "A-1"
LEGAL DESCRIPTION
-----------------
Lots 1 and 2, Lake Austin Commons PUD, according to Map or Plat of
Record in Plat Book 83, Page 58C of the Plat Records of Travis County, Texas.
-12-
<PAGE>
EXHIBIT "B"
LEASE DATED October 23, 1996 BETWEEN
LAKE AUSTIN COMMONS, LTD.
as LANDLORD
and
Clinicor, Inc.
as TENANT
RULES AND REGULATIONS
---------------------
1. Landlord shall have the right to prescribe the weight, position and
manner of installation of safes or other heavy equipment which shall, if
considered necessary by Landlord, be installed in a manner which shall insure
satisfactory weight distribution. The time, routing and manner of moving safes
or other heavy equipment shall be subject to prior approval by Landlord.
2. Tenant, or the employees, agents, servants, visitors or licensees of
Tenant shall not at any time, place, leave or discard any rubbish, paper,
articles or objects of any kind whatsoever outside the doors of the Leased
Premises or the Project. No animals or birds shall be brought or kept in or
about the Leased Premises or the Project.
3. Canvassing, soliciting or peddling in and around the Leased Premises
or the Project is prohibited and Tenant shall cooperate to prevent same.
4. Landlord shall have the right to exclude any person from the Leased
Premises or the Project other than during customary business hours as set forth
in the Leased Premises or the Lease, and any person in the Project will be
subject to identification by employees and agents of Landlord. All persons in or
entering the Leased Premises or the Project shall be required to comply with the
security policies of the Project. If Tenant desires any additional security
service for the Premises, Tenant shall have the right (with the prior written
consent of Landlord) to obtain such additional service at Tenant's sole cost and
expense. Tenant shall keep doors to unattended areas locked and shall otherwise
exercise reasonable precautions to protect property from theft, loss or damage.
Landlord shall not be responsible for the theft, loss or damage of any property
or for any error with regard to the exclusion from or admission to the Project
of any person. In case of invasion, mob, riot or public excitement, the Landlord
reserves the right to prevent access to the Project during the continuance of
same by closing the doors or taking other measures for the safety of the Tenants
and protection of the Project and property or persons therein.
5. Only workmen employed, designated or approved by Landlord may be
employed for repairs, installations, alterations, painting, material moving and
other similar work that may be done in or on the Premises.
6. Tenant shall not do any cooking (except with a microwave oven) or
conduct any restaurant, luncheonette, or cafeteria for the sale or service of
food or beverages to its employees or to others, or permit the delivery of any
food or beverage to the Premises (except for coke or snack machines), except by
such persons delivering the same as shall be approved by Landlord and only under
regulations filed by Landlord. Tenant may, however, operate a coffee bar and
allow the use of a microwave oven for its employees.
7. Tenant shall not bring or permit to be brought or kept in or on the
Premises or Project any flammable, combustible, corrosive, caustic, poisonous or
explosive substance, or cause or permit any odors to permeate in or emanate from
the Premises, or permit or suffer the Premises to be occupied or used in a
manner offensive or objectionable to Landlord or other occupants of the Project
by reason of light, radiation, magnetism, noise, odors and/or vibrations, or
interfere in any way with other tenants of those having business in the Project.
8. Tenant shall not mark, paint, drill into or in way deface any part
of the Project or the Premises. Tenant shall not install any resilient tile or
similar floor covering in the Premises except with the prior approval of
Landlord. The use of cement or other similar adhesive material is expressly
prohibited.
9. No additional locks or bolts of any kind shall be place on any door
in the Project or the Premises and no lock on any door therein shall be changed
or altered in any respect. Landlord shall furnish two keys for each lock on
exterior doors to the Premises and shall, on Tenant's request and at Tenant's
expense, provide additional duplicate keys. All keys shall be returned to
Landlord upon the termination of this Lease and Tenant shall give to Landlord
the explanations of the combinations of all safes, vaults and combination locks
remaining with the Premises. Landlord may at all times keep a pass key to the
Premises. All entrance doors to the Premises shall be left closed at all times
and left locked when the Premises are not in use. Tenant shall not be obligated
to provide Landlord with a key to Tenant's Drug Room in the Premises.
10. Tenant shall give immediate notice to Landlord in case of theft,
unauthorized solicitation or accident in the Premises or in the Project or of
defects therein or in any fixtures or equipment or of any known emergency in the
Project.
11. Tenant shall not allow the Premises to be used for photographic
multilith or multigraph reproductions, except in connection with its own
business and not as a service for others without Landlord's prior written
consent.
12. Tenant shall not advertise for laborers giving the Premises as an
address, nor pay such laborers at a location in the Premises.
13. The requirements of Tenant will be attended to only upon
application at the office of Landlord in the Building or at such other address
as may be designated by Landlord in the Lease. Employees of Landlord shall not
perform any work or do anything outside of their regular duties unless under
special instructions from the office of Landlord.
14. Tenants shall not place a load upon any floor of the Premises that
exceeds the load per square foot that such floor was designed to carry and that
is allowed by law. Business machines and mechanical and electrical equipment
belonging to Tenant that cause noise, vibration electrical or magnetic
interference, or any other nuisance that may be transmitted to the structure or
other portions of the Project or to the Premises to such a degree as to be
objectionable to Landlord or that interfere with the use or enjoyment by other
tenants of their premises or the public portions of the Project shall be placed
and maintained by Tenant, at Tenant's expense, in settings of cork, rubber,
spring type, or other vibration eliminators sufficient to eliminate noise or
vibration.
15. Except with the prior written consent of Landlord, awnings,
draperies, shutters or other interior or exterior window coverings that are
visible from the exterior of the Building or from the exterior of the Premises
within the Building may be installed by Tenant.
16. Tenant shall not place, install or operate within the Premises or
any other part of the Project any engine, stove, or machinery, or conduct
mechanical operations therein, without the written consent of Landlord.
17. No portion of the Premises or any other part of the Project shall
at any time be used or occupied as sleeping or lodging quarters.
-13-
<PAGE>
18. For purposes of the Lease, holidays shall be deemed to mean and
include, without limitation, the following: (a) New Year's Day; (b) Good Friday;
(c) Memorial Day; (d) Independence Day; (e) Labor Day; (f) Thanksgiving Day; (g)
the Friday following Thanksgiving Day; (h) Christmas Day; and (i) any other
holiday generally recognized by buildings of similar size, location and quality.
19. Tenant shall at all times keep any portions of the Premises that
are visible from public areas neat and orderly.
20. The toilet rooms, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein and the expense
of any breakage, stoppage or damage resulting from the violation of this rule
shall be borne by the Tenant who or whose employees or invitees shall have
caused it.
21. Landlord reserves the right to exclude or expel from the Project
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of the Rules and Regulations of the Project.
22. Landlord reserves the right, without the approval of Tenant, to
rescind, add to and amend any rules or regulations, to add new rules or
regulations, and to waive any rules or regulations with respect to any tenant or
tenants, but only so long as such new rules or amendments to rules do not
materially affect Tenant's use and enjoyment of the Premises for the Permitted
Use.
-14-
<PAGE>
EXHIBIT C
TO
LEASE DATED October 23, 1996 BETWEEN
LAKE AUSTIN COMMONS, LTD.
as LANDLORD
and
Clinicor, Inc.
as TENANT
PARKING
-------
(a) At all times during the term of this Lease (as same may be
extended), Landlord agrees to lease to Tenant and Tenant agrees to lease from
Landlord (i) seventeen (17) parking spaces in the uncovered parking lot (the
"West Lot") located immediately to the west of the Building, (ii) sixteen (16)
--------
parking spaces in the uncovered parking lot (the "South Lot") located across
---------
Fifth Street from the Building, and (ii) Seventeen (17) parking spaces in the
structured parking facility (the "Structured Facility") located appurtenant to
-------------------
the Building. Five of the spaces in the Structured Facility shall be marked as
reserved for Tenant near the elevator located on level G3 of the Structured
Facility; provided however, if more than forty percent (40%) of the parking
spaces in the Structured Facility are reserved for tenants of the Building, then
a like percentage of Tenant's spaces in the Structured Facility shall be
designated as reserved. Unless otherwise provided in this Exhibit, no specific
spaces in the Outdoor Facility or the Structured Facility are to be assigned to
Tenant. Landlord may designate the area within which each such vehicle may be
parked, and may change such designations from time to time. Landlord may make,
modify and enforce rules and regulations relating to the parking of automobiles,
and Tenant will abide by such rules and regulations so long as such rules and
regulations do not materially and adversely affect Tenant's use of such parking
spaces. Landlord also reserves the right to increase the size of the Structured
Facility or to construct a new building or structured parking facility on all or
any part of the West Lot or the South Lot, provided that Tenant at all times
remains entitled to parking spaces at the rates and quantities described above
in the West Lot, the South Lot, the Structured Facility, the New Lot (as
hereinafter defined) and/or any other available alternative lot.
(b) Tenant covenants and agrees to pay to Landlord during the term of
this Lease, as additional rent hereunder, the sum of $20.00 per month for each
parking space in the Structured Facility and the sum of $0.00 per month for each
parking space in the West Lot or the South Lot, such sums (collectively the
"Basic Parking Charge") to be payable monthly in advance on the first day of
--------------------
each and every calendar month during the term of this Lease, and a pro rata
portion of such sums shall be payable for the first partial calendar month in
the event the term of this Lease commences on a date other than the first day of
a calendar month. Tenant's obligation to pay the Basic Parking Charge shall be
considered an obligation to pay rent for all purposes hereunder, and any default
in the payment of the Basic Parking Charge shall be deemed a default in the
payment of rent hereunder.
(c) Subject to obtaining the necessary permits and approvals of the
City of Austin, Landlord shall use its good faith efforts to construct a new
parking lot (the "New Lot") on the site that is south and east of the South Lot
-------
within one (1) year after the date hereof. Upon the completion of the New Lot,
Tenant may, at its option, lease up to eleven (11) parking spaces in the New Lot
at the monthly rate of $20.00 per space. If a New Lot has not been completed by
March 1, 1997, then Landlord shall lease to Tenant at the rate of $20.00 per
space per month, until the completion of the New Lot, six (6) additional
unreserved parking spaces in the South Lot.
(d) Tenant agrees to furnish to Landlord the state automobile license
numbers assigned to automobiles of Tenant and its employees within seven (7)
days from its receipt of written notice from Landlord requesting such
information. Landlord shall not be liable or responsible for any loss of or to
any car or vehicle or equipment or other property therein or damage to property
or personal injuries (fatal or nonfatal), except if caused by Landlord's gross
negligence or willful misconduct.
(e) In the event any of the above parking spaces are or become permanently
unavailable at any time or from time to time throughout the Term, whether due to
condemnation, casualty or any other cause beyond the reasonable control of
Landlord, the Lease shall continue in full force and effect, it being expressly
agreed and understood that Landlord's only duty shall be to make a good faith
effort to provide substitute parking spaces for those spaces rendered
unavailable in the New Lot, the West Lot, the South Lot, the Structured Facility
and/or any other available alternative lot, provided, however, in the event that
any of the above parking spaces become permanently unavailable and Landlord is
unable to provide substitute parking spaces in the lots described above such
that Tenant has at least forty-four (44) parking spaces at the rates described
above, Tenant shall be entitled to terminate this Lease by delivering written
notice to Landlord within ten (10) business days after the number of parking
spaces available to Tenant falls below forty-four (44). In the event that Tenant
so terminates this Lease, Landlord shall refund to Tenant an amount of the
Construction Fee equal to (i) $5,227.85, times (ii) the number of months
remaining in the initial Term of this Lease as of the date of termination. If
Tenant does not terminate this Lease within such ten (10) business day period,
Tenant shall have no further right to terminate this Lease pursuant to this
Exhibit C.
-15-
<PAGE>
EXHIBIT D
TO
LEASE DATED October 23, 1996 BETWEEN
LAKE AUSTIN COMMONS, LTD.
as LANDLORD
and
Clinicor, Inc.
as TENANT
COMMENCEMENT DATE DECLARATION
-----------------------------
With respect to that certain Office Lease Agreement (the "Lease") dated
-----
October 23, 1996, by and between LAKE AUSTIN COMMONS, LTD. ("Landlord") and
--------
Clinicor, Inc. ("Tenant"), covering approximately 15,180 square feet of the net
------
rentable area on 4th floor of HARTLAND PLAZA (the "Building"), by their
--------
respective execution below, Landlord and Tenant each hereby stipulates and
agrees that the Commencement Date (as defined in Section 1.06 of the Lease)
occurred on _____________, 19__ . This declaration may be relied upon by any
person having or acquiring an interest in the Lease or the Building, without
notice to or consent of Landlord or Tenant.
LAKE AUSTIN COMMONS LTD., a Texas limited
partnership
By: Sage Land Company, Inc., its General Partner
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
TENANT:
------
Clinicor, Inc.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-16-
<PAGE>
EXHIBIT E
TO
LEASE DATED October 23, 1996 BETWEEN
LAKE AUSTIN COMMONS, LTD.
as LANDLORD
and
Clinicor, Inc.
as Tenant
WORK LETTER
-----------
1. Completion Schedule.
Within ten (10) days after the execution of the Lease, Landlord shall
deliver to Tenant, for Tenant's review and approval, a schedule (the "Work
----
Schedule") setting forth a timetable for the planning and completion of the
- --------
installation of the Tenant Improvements (as defined in Paragraph 2 below) to be
constructed in the Premises. The Work Schedule shall set forth each of the
various items of work to be done by or approval to be given by Landlord and
Tenant in connection with the completion of the Tenant Improvements. The Work
Schedule shall be submitted to Tenant for its approval and, upon approval by
both Landlord and Tenant, such Work Schedule shall become the basis for
completing the Tenant Improvements. If Tenant shall fail to approve the Work
Schedule, as it may be modified after discussions between Landlord and Tenant,
within five (5) business days after the date the Work Schedule is first received
by Tenant, Landlord may, at its option, terminate the Lease and all of its
obligations thereunder.
2. Tenant Improvements.
Reference herein to "Tenant Improvements" shall include all work to be
done in the Premises pursuant to the Tenant Improvement Plans (defined in
Paragraph 3 below), including, but not limited to, partitioning, doors,
ceilings, floor coverings, wall finishes (including paint and all covering),
electrical (including lighting, switching, telephones, outlets, etc.), plumbing,
heating, ventilating and air conditioning, fire protection, cabinets, and other
millwork.
3. Tenant Improvement Plans.
Immediately after the execution of the Lease, Tenant agrees to meet
with Landlord's architect and/or space planner for the purpose of promptly
preparing a space plan for the layout of the Premises. Based upon such space
plan, Landlord's architect shall prepare final working drawings and
specifications for the Tenant Improvements. Such final working drawings and
specifications are referred to herein as the "Tenant Improvements Plans". The
Tenant Improvement Plans must be consistent with Landlord's standard
specifications (herein referred to as the "Standards" or "Building Standards")
for tenant improvements for the Building as the same may be changed from time to
time by Landlord. Landlord's approval of the Tenant Improvements Plans shall
create or impose no liability or responsibility on Landlord for their
completeness, design sufficiency or compliance with all applicable laws, rules
and regulations of governmental agencies or authorities.
4. Non-Standard Tenant Improvements.
Landlord shall permit Tenant to deviate from the Standards for the
Tenant Improvements (the "Non-Standards"), provided that (a) the deviations
-------------
shall not be of a lesser quality than the Standards; (b) the deviations conform
to applicable governmental regulations and necessary governmental permits and
approvals have been secured, (c) the deviations do not require building service
beyond the level normally provided to other tenants in the Building and do not
overload the floors; and (d) Landlord has determined in its sole discretion that
the deviations are of a nature and quality that are consistent with the overall
objectives of the Landlord for the Building.
5. Final Pricing and Drawing Schedule.
After the preparation of the space plan and after Tenant's written
approval thereof, in accordance with the Work Schedule. Landlord shall cause its
architect to prepare and submit to Tenant the Tenant Improvement Plans. The
Tenant Improvement Plans shall be approved by Landlord and Tenant in accordance
with the Work Schedule and shall thereafter be submitted to the appropriate
governmental body by Landlord's architect for plan checking and the issuance of
a building permit. Landlord, with Tenant's cooperation, shall cause to be made
to the Tenant Improvement Plans any changes necessary to obtain the building
permit. Concurrent with the plan checking, Landlord shall have prepared a final
pricing for Tenant's approval, in accordance with the Work Schedule, taking into
account any modifications which may be required to reflect changes in the Tenant
Improvement Plans required by the city or county in which the Premises are
located. After final approval of the Tenant Improvement Plans, no further
changes may be made thereto without the prior written approval from both
Landlord and Tenant, and then only after agreement by Tenant to pay any excess
costs resulting from the design and/or construction of such changes. Tenant
hereby acknowledges that any such changes shall be subject to the terms of
Paragraph 8 below.
6. Construction of Tenant Improvements.
After the Tenant Improvement Plans have been prepared and approved, the
final pricing has been approved and a building permit for the Tenant
Improvements has been issued, Landlord shall cause its contractor to begin
installation of the Tenant Improvements in accordance with the Tenant
Improvement Plans. Landlord shall supervise the completion of such work and
shall use its best efforts to secure substantial completion of the work in
accordance with the Work Schedule. The cost of such work shall be paid as
provided in Paragraph 7 below. Landlord shall not be liable for any direct or
indirect damages as a result of delays in construction beyond Landlord's
reasonable control, including, but not limited to, acts of God, inability to
secure governmental approvals or permits, governmental restrictions, strikes,
availability of materials or labor, or delays by Tenant (or its architect or
anyone performing services on behalf of Tenant).
-17-
<PAGE>
7. Payment for the Tenant Improvements.
(a) Landlord hereby grants to Tenant the "Tenant Improvement
Allowances" set forth in Section 1.18 of the Lease. The Tenant Improvement
Allowance shall be used only for:
(i) Except as otherwise agreed to in writing by Landlord and
Tenant, payment of the cost of preparing the space plan and the Tenant
Improvement Plans, including mechanical, electrical, plumbing and
structural drawings, and of all other aspects necessary to complete the
Tenant Improvement Plans. The Tenant Improvement Allowance will not be
used for the payment of extraordinary design work not included within
the scope of Landlord's Standards.
(ii) Payment of plan check, permit, and license fees relating
to construction of the Tenant Improvements.
(iii) Construction of the Tenant Improvements, including, but not
limited to, the following:
(aa) Installation within the Premises of all partitioning,
doors, floor coverings, ceiling, wall coverings and painting,
millwork, and similar items;
(bb) All electrical wiring, lighting fixtures, outlets and
switches, and other electrical work to be installed within the
Premises;
(cc) The furnishing and installation of all duct work,
terminal boxes, diffusers, and accessories required for the
completion of the heating, ventilation and air conditioning systems
within the Premises, including the cost of electrical consumption
meters and card key controls for after-hour air conditioning;
(dd) Any additional Tenant requirements, including, but not
limited to, odor control, special heating, ventilation and air
conditioning, noise or vibration control, or other Special systems;
(ee) All fire and life safety control systems such as fire
walls, halon, fire alarms, including piping, wiring and accessories
installed within the Premises;
(ff) All plumbing, fixtures, pipes and accessories to be
installed within the Premises;
(gg) Testing and inspection costs; and
(hh) Contractors' fees, including but not limited to any fees
based on general conditions, but excluding supervisory fees owed by
Landlord to the Building property management company.
(iv) All other reasonable costs to be expended by Landlord in
the construction of the Tenant Improvements.
(b) The cost of each item referenced in Paragraph 7(a) above shall be
charged against the Tenant Improvement Allowance. In the event that the cost of
installing the Tenant Improvements, as established by Landlord's final pricing
schedule, shall exceed the Tenant Improvement Allowance, or if any of the Tenant
Improvements are not to be paid out of the Tenant Improvement Allowance as
provided in Paragraph 7(a) above, the excess shall be paid by Tenant to Landlord
after the commencement of construction of the Tenant Improvements.
(c) In the event that, after the Tenant Improvement Plans have been
prepared and a price therefor established by Landlord, Tenant shall require any
changes or substitutions to the Tenant Improvement Plans, any additional costs
related thereto shall be paid by Tenant to Landlord after the commencement of
construction of the Tenant Improvements. Landlord shall have the right to
decline Tenant's request for change to the Tenant Improvement Plans if such
changes are inconsistent with the provisions of Paragraphs 3 and 4 above, or if
the change would, in Landlord's opinion, unreasonably delay construction of the
Tenant Improvements.
(d) In the event that increases in the cost of the Tenant Improvements
as set forth in Landlord's final pricing are due to the requirements of any
governmental agency, Tenant shall pay Landlord the amount of such increase
within five (5) days of Landlord's written notice; provided, however, that
Landlord shall first apply toward such increase any remaining balance in the
Tenant Improvement Allowance.
(e) Any unused portion of the Tenant Improvement Allowance upon
completion of the Tenant Improvements shall be refunded to Tenant or available
to Tenant as a credit against any obligations of Tenant under the Lease.
8. Completion Date.
The "substantial completion date" for work described herein shall occur
on the date when all of the work described in the Tenant Improvement Plans is
complete, as evidenced by the issuance of a temporary Certificate of Occupancy
with respect to the Premises, or the date such work would be substantially
complete but for (a) Tenant's failure to approve any items or perform any other
obligation in accordance with and by the date specified in the Work Schedule;
(b) Tenant's request for materials, finishes or installations other than those
readily available; (c) Tenant's changes in the Tenant Improvement Plans after
the approval by Tenant; or (d) Tenant's request to deviate from the Standards
for Tenant Improvements. So long as a temporary Certificate of Occupancy has
been issued, the Tenant Improvements shall be deemed substantially complete
notwithstanding the fact that minor details of construction, mechanical
adjustments or decorations which do not materially interfere with Tenant's use
of the Premises remain to be performed (items normally referred to as "punch
list" items). Landlord and Tenant shall complete one punch list inspection and
Landlord shall complete and/or correct such punch list items within a reasonable
period of time.
-18-
<PAGE>
EXHIBIT F
TO
LEASE DATED October 23, 1996 BETWEEN
LAKE AUSTIN COMMONS, LTD.
as LANDLORD
and
Clinicor, Inc.
as TENANT
RENEWAL OPTION
--------------
Provided (i) that a Default by Tenant has not occurred and is
continuing, and (ii) Tenant's shareholders' equity (as reflected in Tenant's
Financial Statements) has at all times during the term of this Lease been in
excess of $2,000,000, Tenant shall have the right to renew and extend this Lease
with respect to all, but not less than all, of the Premises for one (1) renewal
term of 3 years, such renewal term commencing upon the expiration of the initial
Term. Such renewal option must be exercised, if at all, by Tenant giving
Landlord written notice thereof at least six (6) months prior to the expiration
of the initial Term. In the event that Tenant fails to give such notice in the
manner provided herein, such renewal option shall terminate. In the event of
such renewal, the "Term" shall include such renewal term and such renewal shall
be upon the same provisions as for the initial Term except that:
1. Tenant shall pay additional Base Rent to Landlord in monthly
installments in an amount equal to the rate (the "Renewal Rate") then being
------------
generally quoted by Landlord for comparable space in the Building as of the
commencement of the renewal Term, but in no event less than the rate of Base
Rent in effect at the expiration of the initial Term. In addition, during such
renewal term, Tenant shall pay all other Rent and other amounts due under the
Lease, including without limitation, all rental adjustments pursuant to Article
3 of the Lease. Landlord shall notify Tenant of the Renewal Rate within fifteen
(15) business days after Landlord receives Tenant's renewal notice. If Tenant
does not approve of the Renewal Rate for the renewal term, then Tenant, as its
sole remedy, may revoke its election to renew by giving written notice thereof
to Landlord within five (5) days after Landlord has notified Tenant of the
Renewal Rate for the renewal term, but otherwise Tenant may not revoke its
election to renew after such election has been made.
2. Landlord shall not be obligated to make any alterations or
improvements to the Premises.
3. Except for the renewal option described above, Tenant shall have no
further right to renew this Lease.
-19-
<PAGE>
EXHIBIT G
TO
LEASE DATED October 23, 1996 BETWEEN
LAKE AUSTIN COMONS, LTD.
as LANDLORD
and
Clinicor, Inc.
as TENANT
FIRST RIGHT OF REFUSAL
----------------------
(a) From and after the Commencement Date, but only so long as (i) at
least three (3) years remain in the Term of this Lease (as such Term may have
been theretofore extended), and (ii) a Default by Tenant has not occurred and is
continuing, Tenant shall have, and is hereby granted, a right of first refusal
with respect to that certain space located adjacent to the Premises, identified
as Suite 410, as shown on Addendum A attached hereto (such space being referred
----------
to as the "Additional Space"). If Landlord receives an offer to lease the
----------------
Additional Space or any portion thereof that is acceptable to Landlord
(hereinafter referred to as the "Offer"), Landlord will give written notice to
-----
Tenant of the pertinent business terms and conditions of the offer (the
"Notice"). Tenant will thereafter have the option, exercisable by written notice
------
delivered to Landlord within ten (10) business days after receipt by Tenant of
the Notice, to lease such portion of the Additional Space covered by the Offer,
upon the terms and conditions set forth in the Notice; provided, however, (x)
Tenant shall be entitled to only a pro rata portion of any tenant improvements
allowance provided for in the Offer, and (y) the term of Tenant's lease of such
portion of the Additional Space shall be coterminous with the Term of the Lease.
Failure by Tenant to deliver to Landlord written notice of Tenant's acceptance
of the offer set forth in the Notice will be deemed to be an election by Tenant
not to exercise such option.
(b) If Tenant exercises Tenant's option to lease such portion of the
Additional Space, Tenant and Landlord will enter into a mutually acceptable
lease or lease amendment with respect to such space upon the business terms and
conditions contained in the Notice as set forth above. If Tenant elects, or is
deemed to have elected, not to exercise such option, or if Landlord and Tenant
fail to agree upon a mutually acceptable lease or lease amendment with respect
to such space with ten (10) business days after receipt by Landlord of Tenant's
exercise of such option, Landlord will be free to lease such portion of the
Additional Space described in the Offer to any prospective lessee upon
substantially the same terms and conditions as were presented to Tenant in the
Notice and upon which Tenant elected or was deemed to have elected not to
exercise its option.
(c) The rights granted by this paragraph shall not be severable from
this Lease, nor may such rights be assigned or otherwise conveyed by Tenant to a
sublessee of the Premises or assignee of Tenant's interest in the Lease or any
other party.
-20-
<PAGE>
ADDENDUM A
TO
LEASE DATED October 23, 1996 BETWEEN
LAKE AUSTIN COMONS, LTD.
as LANDLORD
and
Clinicor, Inc.
as TENANT
HARTLAND PLAZA - FOURTH FLOOR PLAN
[FLOOR PLAN APPEARS HERE}
-21-
<PAGE>
EXHIBIT 11
Clinicor, Inc.
Computation of Earnings Per Share
For the Six Months Ended June 30, 1995
(Treasury Stock Method)
<TABLE>
<CAPTION>
Primary Fully Diluted
Earnings Earnings
Per Share Per Share
------------- -------------
<S> <C> <C>
Weighted average number of shares under options
outstanding 452,720 452,720
Weighted average option price per share 0.49 0.49
------------- -------------
Proceeds upon exercise of options $222,507 $222,507
============= =============
Market price of common stock
Average $3.56
Average (or closing price, if higher) $3.56
Treasury shares that could be repurchased
with proceeds
222,507.00 / 3.56 62,502
=============
222,507.00 / 3.56 62,502
=============
Excess of shares under option over treasury
shares that could be repurchased
452,720 - 62,502 390,218
=============
452,720 - 62,502 390,218
=============
Common stock equivalent shares
(incremental shares) 390,218 390,218
Weighted average number of common shares
outstanding 2,946,790 2,946,790
------------- -------------
Total average number of common and CSE 3,337,008 3,337,008
============= =============
Net income/loss for the six months
ending June 30, 1995 ($327,626) ($327,626)
============= =============
------------- -------------
Earnings per share | ($0.10)| | ($0.10)|
------------- -------------
</TABLE>
<PAGE>
Clinicor, Inc.
Computation of Earnings Per Share
For the Twelve Months Ended December 31, 1995
(Treasury Stock Method)
<TABLE>
<CAPTION>
Primary Fully Diluted
Earnings Earnings
Per Share Per Share
------------- -------------
<S> <C> <C>
Weighted average number of shares under 400,896 400,896
options and warrants outstanding
Weighted average option/warrant price per share 1.15 1.15
------------- -------------
Proceeds upon exercise of options/warrants $461,008 $461,008
============= =============
Market price of common stock
Average $3.01
Average (or closing price, if higher) $3.01
Treasury shares that could be repurchased
with proceeds
461,008.00 / 3.01 153,159
=============
461,008.00 / 3.01 153,159
=============
Excess of shares under option/warrant over
treasury shares that could be repurchased
400,896 - 153,159 247,737
=============
400,896 - 153,159 247,737
=============
Common stock equivalent shares
(incremental shares) 247,737 247,737
Weighted average number of common shares
outstanding 3,248,095 3,248,095
------------- -------------
Total average number of common and CSE 3,495,832 3,495,832
============= =============
Net income/loss for the twelve months
ending December 31, 1995 ($1,177,226) ($1,177,226)
============= =============
------------- -------------
Earnings per share | ($0.34)| | ($0.34)|
------------- -------------
</TABLE>
<PAGE>
Clinicor, Inc.
Computation of Earnings Per Share
For the Six Months Ended June 30, 1996
(Treasury Stock Method)
<TABLE>
<CAPTION>
Primary Fully Diluted
Earnings Earnings
Per Share Per Share
------------- -------------
<S> <C> <C>
Weighted average number of shares under options
and warrants outstanding 1,151,536 1,151,536
Weighted average option/warrant price per share 1.24 1.24
------------- -------------
Proceeds upon exercise of options/warrants $1,429,168 $1,429,168
============= =============
Market price of common stock
Average $2.71
Average (or closing price, if higher) $3.75
Treasury shares that could be repurchased
with proceeds
1,429,168.00 / 2.71 527,368
=============
1,429,168.00 / 3.75 381,111
=============
Excess of shares under option/warrant
over treasury shares that could be repurchased
1,151,536 - 527,368 624,168
=============
1,151,536 - 381,111 770,425
=============
Common stock equivalent shares
(incremental shares) 624,168 770,425
Weighted average number of common shares
outstanding 3,986,403 3,986,403
------------- -------------
Total average number of common and CSE 4,610,571 4,756,828
============= =============
Net income/loss for the six months
ending June 30, 1996 ($197,416) ($197,416)
============= =============
------------- -------------
Earnings per share | ($0.04)| | ($0.04)|
------------- -------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> JUN-30-1996 DEC-31-1995
<CASH> 161,977 267,281
<SECURITIES> 0 0
<RECEIVABLES> 559,487 633,540
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 730,229 908,391<F1>
<PP&E> 424,054 309,385
<DEPRECIATION> 161,473 116,488
<TOTAL-ASSETS> 1,094,454 1,107,733
<CURRENT-LIABILITIES> 920,459 1,049,281<F2>
<BONDS> 26,276 35,167<F3>
0 0
0 0
<COMMON> 4,086 3,939<F4>
<OTHER-SE> 143,633 19,346<F5>
<TOTAL-LIABILITY-AND-EQUITY> 1,094,454 1,107,733
<SALES> 1,557,534 2,005,582
<TOTAL-REVENUES> 1,557,534 2,005,582
<CGS> 643,957 1,221,701
<TOTAL-COSTS> 1,736,039 3,154,515
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 18,911 28,293
<INCOME-PRETAX> (197,416) (1,177,226)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (197,416) (1,177,226)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (197,416) (1,177,226)
<EPS-PRIMARY> (0.04) (0.34)
<EPS-DILUTED> (0.04) (0.34)
<FN>
<F1>OTHER ASSETS AT JUNE 30, 1996, INCLUDE $97,040 IN CAPITALIZED ISSUANCE COSTS
FOR THE PREFERRED STOCK OFFERING WHICH OCCURRED IN JULY 1996.
<F2>OTHER CURRENT LIABILITIES INCLUDE $181,000 IN NOTES TO SHAREHOLDERS UNDER THE
TERMS OF UNSECURED DEMAND NOTES PAYABLE BEARING 8% INTEREST.
<F3>CAPITALIZED LEASE OBLIGATIONS AT JUNE 30, 1996, TOTALED $41,478 (INCLUDING
CURRENT PORTION) FOR FIVE (5) REMAINING CAPITAL LEASES FOR COMPUTERS AND
FURNITURE WITH IMPLICIT INTEREST RATES RANGING FROM 12.0% TO 16.8%. CAPITALIZED
LEASE OBLIGATIONS AT DECEMBER 31, 1995, TOTALED $60,918 FOR TEN (10) CAPITAL
LEASES WITH IMPLICIT INTEREST RATES RANGING FROM 12.0% TO 34.5%.
<F4>AT JUNE 30, 1996, THE COMPANY HAD 4,086,400 SHARES OF COMMON STOCK ISSUED
AND OUTSTANDING; AT DECEMBER 31, 1995, THE COMPANY HAD 3,939,000 SHARES OF
COMMON STOCK ISSUED AND OUTSTANDING.
<F5>OTHER STOCKHOLDERS' EQUITY AT JUNE 30, 1996, INCLUDED $2,110,202 IN
ADDITIONAL PAID-IN CAPITAL AND ($1,966,569) IN RETAINED EARNINGS; OTHER
STOCKHOLDERS' EQUITY AT DECEMBER 31, 1995, INCLUDED $1,788,499 IN ADDITIONAL
PAID-IN CAPITAL AND ($1,769,153) IN RETAINED EARNINGS.
</FN>
</TABLE>
