<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
LA JOLLA DIAGNOSTICS, INC.
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
LA JOLLA DIAGNOSTICS
7777 FAY AVENUE, SUITE 160
LA JOLLA, CALIFORNIA 92037
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD _____________, 1996
TO THE SHAREHOLDERS OF LA JOLLA DIAGNOSTICS:
Notice is hereby given that the Annual Meeting of Shareholders (the "Meeting")
of LA JOLLA DIAGNOSTICS ("La Jolla") will be held at 7777 Fay Avenue, Suite 160,
La Jolla, California, on ________, ___________, 1996, at 5:30 p.m., for the
following purposes:
1. Election of Board of Directors. To elect a Board of Directors to hold
office for the ensuing year, until the next annual meeting and until their
successors are elected and qualified. The Board will present for election the
following four nominees:
Donald Brucker Robert Hamburger
Stanley Heyman Richard O'Connor
2. Amending Articles of Incorporation . The Board of Directors has approved
and recommends that the stockholders of La Jolla approve an amendment to the
articles of incorporation for the purpose of increasing the authorized Common
Stock of La Jolla from 10,000,000 to 50,000,000 common shares.
The class of Common Stock, consisting of 10,000,000 authorized shares, was
originally enacted by an amendment to La Jolla's articles of incorporation on
April 14, 1995.
If the proposed amendment to La Jolla's Articles of Incorporation is adopted,
no further approval of the holders of Common Stock would be required for the
issuance of shares of Common Stock as authorized by the amendment and, absent
any legal or stock exchange requirements, it is not contemplated that further
approval of the holders of Common Stock would be sought for issuance of shares
authorized by the amendment.
Pursuant to the articles of incorporation, no preemptive rights shall attach
to the additional authorized shares contemplated by this proposal. The terms of
the additional authorized Common Stock, including but not limited to dividend,
conversion prices, voting rights, redemption prices and similar matters will be
determined by the board of directors.
3. Stock Option Plan. To consider an Incentive Stock Bonus and Option Plan.
<PAGE> 3
4. Selection of Auditors. To consider and vote upon the ratification and the
selection of Harlan & Boettger as independent auditors for La Jolla for the
years ending June 30, 1994 and June 30, 1995 and June 30, 1996.
5. Other Business. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on
_________________, as the record date for the determination of shareholders
entitled to notice of, and to vote at, the Annual Meeting or any and all
adjournments thereof.
By order of the
Board of Directors
of La Jolla Diagnostics
Donald Brucker,
Chairman of the Board of Directors
La Jolla, California
___________, 1996
IT IS IMPORTANT THAT ALL SHAREHOLDERS VOTE. WE URGE YOU TO SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, EVEN IF YOU PLAN TO ATTEND THE MEETING
IN PERSON. IF YOU DO ATTEND THE MEETING, YOU THEN MAY WITHDRAW YOUR PROXY AND
VOTE IN PERSON. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE
EITHER IN PERSON OR BY EXECUTING AND GRANTING A LATER-DATED PROXY. SO THAT THE
COMPANY CAN FINALIZE ARRANGEMENTS FOR THE SHAREHOLDERS' MEETING, PLEASE INDICATE
ON THE PROXY WHETHER YOU PLAN TO ATTEND THE MEETING.
<PAGE> 4
LA JOLLA DIAGNOSTICS
7777 FAY AVENUE, SUITE 160
LA JOLLA, CALIFORNIA 92037
(619) 454-6790
PRELIMINARY PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
______________, 1996
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of LA JOLLA DIAGNOSTICS ("La Jolla") for use
at the Annual Meeting of Shareholders (the "Meeting") of La Jolla, to be held at
7777 Fay Avenue, Suite 160, La Jolla, California on _______, 1996 at 5:30 p.m.
and at any and all adjournments thereof. It is anticipated that this Proxy
Statement and the accompanying Notice will be mailed to shareholders on or about
_____________, 1996.
Matters To Be Considered at the Meeting
The Meeting will be held for the following purposes:
1. Election of Board of Directors. To elect a board of four (4) directors to
serve for the ensuing year, until the next annual meeting of shareholders and
until their successors are duly elected and qualified.
2. Amendment of Articles of Incorporation. To amend the Articles of
Incorporation of La Jolla upon a proposal to increase the authorized common
shares of La Jolla from 10,000,000 to 50,000,000, with shareholder approval
pursuant to Section 903 of the Corporations Code.
THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF LA JOLLA UNANIMOUSLY
RECOMMEND A VOTE "FOR" THE PROPOSAL TO APPROVE THE AMENDMENT OF THE ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED COMMON SHARES OF THE COMPANY.
3. Stock Bonus and Option Plan. To consider and vote upon the approval of the
Stock Bonus and Option Plan.
4. Selection of Auditors. To consider and vote upon the ratification and the
selection of Harlan & Boettger as independent auditors for La Jolla for the
years ending June 30, 1994 and June 30, 1995.
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<PAGE> 5
5. Other Business. To transact such other business as may properly come
before the Meeting or any adjournment thereof.
You are urged to sign and return the enclosed proxy as promptly as possible,
whether or not you attend the Meeting in person.
For additional information relating to the Meeting, See "Election of
Directors and "Amendment of Articles."
Persons Making this Solicitation and Costs of Solicitation
This solicitation of proxies is being made by the Board of Directors of La
Jolla. La Jolla will bear the cost of solicitation and the expense of preparing,
assembling, printing and mailing this Proxy Statement and any other material
used in this solicitation of proxies. It is contemplated that proxies will be
solicited through the mail, but directors, officers, and regular employees of La
Jolla may solicit proxies personally or by telephone. Although there is no
formal agreement to do so, La Jolla may reimburse banks, brokerage houses and
other custodians, nominees and fiduciaries for their out-of-pocket expenses in
connection with forwarding these proxy materials to their principals. In
addition, La Jolla may pay for and utilize the services of individuals or
companies not regularly employed by La Jolla in connection with the solicitation
of proxies if the officers of La Jolla determine that this is advisable.
Revocability of the Proxy
The proxy for use at the Meeting is enclosed. Any shareholder who executes
and delivers such proxy has the right to revoke it at any time before it is
executed. A shareholder may revoke a proxy at any time before it is exercised by
filing a written revocation or a duly executed proxy bearing a later date with
the Secretary of La Jolla. The proxy may also be revoked by appearing and voting
in person at the Meeting. Subject to such revocation, all shares represented by
a properly executed proxy received in time for the Meeting will be voted by the
proxyholders in accordance with the instructions on the proxy. It is not
anticipated that any matters will be presented at the Meeting other than as set
forth in the accompanying Notice of the Meeting. If any other matters are
properly presented at the Meeting, the proxy will be voted by the proxyholders
in accordance with the recommendation of the Board of Directors of La Jolla.
Outstanding Securities and Voting Rights
There were issued and outstanding __________ shares of La Jolla Common
Stock, no par value, on ________, 1996, which has been set as the record date
for the purpose of determining the shareholders entitled to notice of and to
vote at the Meeting ("Record Date"). La Jolla's Articles of Incorporation also
authorize the issuance of up to 5,000,000 shares of Preferred Stock, none of
which shares of Preferred Stock are issued or outstanding.
2
<PAGE> 6
Each holder of La Jolla Common Stock will be entitled to one vote, in person
or by proxy, for each share of La Jolla Common Stock held of record on the books
of La Jolla as of the Record Date on any matter submitted for the vote of the
shareholders, except that in connection with the election of directors, the
shares may be voted cumulatively. In connection with the election of directors,
cumulative voting may be in effect if a shareholder present at the Meeting has
given notice at the Meeting prior to the voting of his or her intention to vote
his or her shares cumulatively. If any shareholder has given such notice, all
shareholders may cumulate their votes for candidates whose names properly were
placed in nomination prior to the commencement of voting. Cumulative voting
means that a shareholder has the right to vote the number of shares he or she
owns as of the record date, multiplied by the number of directors to be elected.
This total of votes may be cast for one nominee or it may be distributed on the
same principal among as many nominees as the shareholder sees fit. In the
election of directors, the four (4) nominees receiving the highest number of
votes are elected. Discretionary authority to cumulate votes is hereby solicited
by the Board of Directors.
ELECTION OF DIRECTORS
The Board of Directors' Nominees
La Jolla's Bylaws provide that La Jolla shall have not less than four (4)
nor more than seven (7) directors, the exact number of Directors to be fixed
from time to time, within the limits specified in the Articles of Incorporation
or in this section, by a Bylaw or amendment thereof, duly adopted by
shareholders or by the Board of Directors. Under Article III, Section 2(b), the
number of directors was set at four.
All directors are elected annually and serve until the next annual meeting
of shareholders and until their successors are elected and have qualified.
Officers serve at the discretion of the Board of Directors.
The Board has nominated four (4) candidates for election at the Meeting. The
persons named below will be nominated for election to serve until the next
annual meeting of shareholders and until their successors shall be duly elected
and qualified. Votes will be cast by the management proxyholders in such a way
as to effect the election of all four (4) nominees, or as many thereof as
possible under the rules of cumulative voting. In the event that any of the
nominees should be unable to serve as a director, it is intended that the proxy
will be voted for the election of such substitute nominees, if any, as shall be
designated by the Board of Directors. The Board of Directors has no reason to
believe that any of the nominees shall be unable to serve.
The names of and certain information as of ______, 1996 with respect to, the
persons nominated by the Board of Directors for election as directors and those
persons whose term of office will continue after the Meeting, are as follows:
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<PAGE> 7
Directors and Executive Officers
The name, age and current position(s) of each director and nominee of the
Company are as set forth below:
<TABLE>
<CAPTION>
Name Age Position
- - - ---- --- --------
<S> <C> <C>
Donald Brucker 63 President, Chief Executive
Officer, Chief Financial
Officer and Director
Robert Hamburger 73 Secretary and Director
Stanley Heyman 51 Director
Richard O'Connor 45 Consultant and Director
</TABLE>
DONALD BRUCKER
Donald Brucker serves as a director and as the Company's Chief Executive
Officer and Chief Financial Officer. He is responsible for business development,
marketing and FDA regulatory affairs. The Company will be recruiting a Chief
Financial Officer, but until an appropriate person can be hired, Mr. Brucker's
responsibilities will also include financial and accounting matters. Mr. Brucker
has been in the medical products business for over 30 years. He was a founder
and the Chief Executive Officer of Continuous Curve Contact Lenses, Inc., at one
time the second largest manufacturer of contact lens products. Continuous Curve
was recognized as an innovator in introducing new series of FDA- approved
contact lenses. As Chief Executive Officer of Continuous Curve, Mr. Brucker
administered their public offering in 1977 and its sale to Revlon in 1981 for a
value in excess of $100,000,000. Following the acquisition, Mr. Brucker became
President of Revlon Vision Care. From 1981 to 1982 Mr. Brucker served as Chief
Executive Officer of Immunetech Pharmaceuticals (now known as Dura
Pharmaceuticals).
From 1982 to 1989 Mr. Brucker served as a consultant for several healthcare
and medical device companies. From 1989 to 1993 Mr. Brucker was Chief Executive
Officer of Ariel Life Systems, the former maker of a computerized exercise
system. On June 24, 1994, Ariel filed a bankruptcy petition. As a result of
losses suffered by Mr. Brucker in connection with his investment in Ariel, on
February 3, 1994 Mr. Brucker personally filed a bankruptcy petition.
4
<PAGE> 8
ROBERT N. HAMBURGER, M.D.
Dr. Hamburger serves as a director and as the Company's medical laboratory
director with responsibility for all clinical assays which are reported. Dr.
Hamburger reviews the quality and accuracy of all clinical diagnostic laboratory
results before they are reported to clinicians. Since July 1, 1990, Dr.
Hamburger has been a Professor Emeritus at USCD School of Medicine where from
1970 to 1990 he was Chairman of the Pediatric Allergy and Immunology Division.
Dr. Hamburger has published over 200 articles, is the holder of three patents,
and has achieved national and international recognition for his research in
immunology.
STANLEY V. HEYMAN
Mr. Heyman is the President of Heyman & Associates, Inc., Certified Public
Accountants, which Mr. Heyman founded in 1994. From 1990 to 1994, Mr. Heyman was
a partner of Eisenberg & Heyman and from 1984 through 1990 was a partner in the
San Diego office of Coopers & Lybrand, practicing in the tax department. Mr.
Heyman is also a director of Alternative Entertainment, Inc.
RICHARD O'CONNOR
Dr. O'Connor is responsible for selecting all immunodiagnostic and molecular
immunological assays to be developed for clinical use. He will also be
responsible for all clinical trials of all diagnostic assays. Dr. O'Connor is
Chief of the Department of Asthma, Allergy and Clinical Immunology for Sharp
Rees-Stealy at San Diego, California and as the Director of the Department of
Clinical Research, he has supervised more than 150 pharmaceutical clinical
trials. Dr. O'Connor is a Clinical Professor of Pediatrics at UCSD School of
Medicine and has published nearly one hundred articles in the field of
Immunology and Allergy. He is the former Laboratory Director of the Immunology
and Allergy Laboratory for the Department of Pediatrics at UCSD.
All members of the Board of Directors are elected to serve until their
respective successors have been elected and qualified or until their earlier
death, resignation or removal in the manner specified in the Company's bylaws.
The Board of Directors and Committees.
During 1995, the Board of Directors of La Jolla held __ meetings. During 1995,
each director of La Jolla attended at least 75% of the aggregate number of
meetings of the Board of Directors of La Jolla.
The Board of Directors has a Compensation committee, currently comprised of
Messrs. Hamburger, Heyman and O'Connor, and an Audit Committee, currently
comprised of Messrs. Heyman, Hamburger and O'Connor. The Compensation Committee
makes recommendations concerning salaries and bonuses for executive officers of
the Company. The Audit Committee reviews the results and scope of the audits and
other services provided by the Company's independent auditors.
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<PAGE> 9
Promoters, Consultants, Advisers and Founders
The following individuals have performed and are expected to continue
providing services to the Company as consultants and advisers. These individuals
have devoted varying amounts of time, but are also engaged in the other business
activities not related to the Company. The amount of time individuals may devote
to the Company will depend upon their availability, the success of the projects
they work on, and the directions the Company chooses to devote its resources.
Except as noted below, advisors have been compensated by issuing warrants to
purchase Common Stock of the Company. See "Stock Awards and Performance
Warrants."
ROBERT R. BUCHNER
Mr. Buchner is responsible for all aspects of research and development for
the molecular diagnostic products, including selection of DNA sequences,
managing the production and quality assurance of probes and primers, developing
DPR-based assays, and supervising the validation of the clinical trials of each
assay kit. He will also manage the performance of all assays which are offered
for service to generate revenue while the FDA approval process is in progress.
Mr. Buchner intends to devote substantially all of his efforts to the business
of the Company. Mr. Buchner is also a scientist for the Scripps Research
Institute at La Jolla, California, where he evaluates molecular biological
products and techniques for research applications. He has held this position
since 1992. Mr. Buchner has also been a staff scientist with Stratagene Cloning
Systems since 1991. Mr. Buchner was the founding laboratory manager for the
Presbyterian Cancer Center at Philadelphia and was a former research associate
for both Immunetech Pharmaceuticals and Xitel Corporation in San Diego,
California. Mr. Buchner devotes approximately twenty hours per week to the
Company and receives compensation of $2,000 per month.
ROBERT ZICCARDI, PH.D
Dr. Ziccardi is a protein chemist with the Scripps Research Institute and is
working with the Company in the area of antibody purification. Dr. Ziccardi
received his Ph.D in biochemistry from the University of California at Los
Angeles and is an adjunct professor of chemistry at Palomar College. Dr.
Ziccardi is currently devoting substantially full time to the Company and is
being compensated at the rate of $50,000 per year.
EDWARD MORGAN, PH.D
Dr. Morgan is the Company's senior consultant for immunology, and advises
the Company regarding immunological procedures. A graduate of U.C. Berkeley with
a Ph.D in Immunology, Dr. Morgan has been a member of the Department of
Immunology, Scripps Clinic and Research Foundation, La Jolla, California since
1978. Dr. Morgan also has had experience working in industry with Immunetech
Pharmaceuticals and Tanabe Research Laboratories.
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<PAGE> 10
VINCENT ZUCCARO, O.D., F.A.A.O.
Dr. Zuccaro advises the Company regarding the marketing of its ophthalmic
solutions. Dr. Zuccaro is President of Specialty Ultravision, and Editor in
Chief of "Contemporary Optometry".
DON CHATELAIN,
Don Chatelain is assisting the company in the marketing and selling of
ophthalmic products. Mr Chatelain was the founder of one of the countries
largest plastic spectacle lens companies and has many years experience in health
care marketing.
EXECUTIVE COMPENSATION
Executive Cash Compensation
The following table shows, for the most recent three fiscal years, the cash
compensation paid by the Company, as well as all other compensation paid or
accrued for those years to the Chief Executive Officer and the Company's other
executive officers as of June 30, 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Annual Compensation Compensation
------------------- ------------
Name and Fiscal Stock
Principal Position Year Salary Bonus Other(1) Awards Warrants
- - - ----------------- ---- ------ ----- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Donald Brucker 1995 $49,604 $0 $0 1,361,972.5 190,000
President, 1994 $0 $0 $43,577(2) 0 0
Chief Executive Officer, 1993 $0 $0 $0 0 0
Chief Financial Officer
</TABLE>
1 Includes consultation fees.
2 Mr. Brucker was not an officer of the Company in 1994 and the reported
compensation for 1994 refers to amounts paid to such persons by Unified.
STOCK AWARDS AND PERFORMANCE WARRANTS
As of the date of the Unified Acquisition (April 17, 1995),
each of the following executive officers, directors, consultants, advisers,
promoters and founders was issued Common Stock and granted a Common Stock
performance warrant (collectively, the "Performance Warrants") by the Company to
purchase the number of shares of Common Stock at any time prior to April 17,
2000 at the prices as set forth in the table below. The Common Stock and
Performance Warrants were earned when issued and granted. The Company has
entered into Stock Restriction Agreements with certain of the persons listed
below. Pursuant to the Stock Restriction Agreement the Common Stock may not be
transferred without the consent of the Company for a period of two years and
thereafter shall be subject to the resale restrictions as set
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<PAGE> 11
forth in Paragraph (e)(1) of Rule 144 of the Rules and Regulations of the
Securities and Exchange Commission. Further, pursuant to the Stock Restriction
Agreement such Common Stock is subject to forfeiture in the event the
Shareholder is no longer affiliated with the Company as an officer, director,
consultant or adviser upon payment by the Company to such Shareholder of the sum
of $.01 per Share. The Performance Warrants are nontransferable and under the
terms of certain Stock Restriction Agreements expire unless exercised by the
Warrant holder within 30 days after such holder is no longer affiliated with the
Company as an officer, director, consultant or adviser.
The following table sets forth certain information concerning the Stock
Awards and Performance Warrants at June 30, 1995.
<TABLE>
<CAPTION>
Number of Shares
of Stock
Underlying Value of Unexercised
Common Value of Performance In-the-Money
Stock Common Stock Warrants as of Performance Warrants ($)
Name Awarded Awards(1) June 30, 1995 as of June 30, 1995(1)
---- ------- --------- ------------- ----------------------
<S> <C> <C> <C> <C>
Donald Brucker 1,361,972.5(2) $ 544,789 190,000(3) N/A
Robert Buchner 817,295 326,918 150,000(3) N/A
Robert Hamburger 640,010 256,004 105,000(3) N/A
Richard O'Connor 640,010 256,004 100,000(3) N/A
Stanley V. Heyman 85,000 40,000 130,000(3) N/A
Vincent Zuccaro 25,000 $ 5,000
Edward Morgan 25,000 $ 5,000
All executive officers,
promoters, consultants
and advisers as a group 4,490,750 $1,802,312 955,000 $10,000
</TABLE>
- - - -------------------------
1 For the purposes of determining the value of Common Stock and Performance
Warrants at April 15, 1995, an estimated market value of $.40 per share was
used based upon the cash price received by the Company for Common Stock
issued by the Company in a subsequent private placement.
2 Held in the name of the A.K. Trust of which Mr. Brucker is a beneficiary.
3 Warrants at an exercise price of $.50 per share.
Compensation of Directors.
No director of the Company receives any cash compensation for his service as
a director. Common Stock and Performance Warrants granted to Directors are
listed above. All directors are entitled to be reimbursed for travel and other
expenses incurred in attending meetings of the Board of Directors.
Employment Contracts.
The Company has no employment contracts.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Stockholders.
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<PAGE> 12
The following table sets forth information with respect to the beneficial
ownership of Common Stock as of May 31, 1996 (assuming the exercise of options
and warrants exercisable within 60 days of the date hereof) by (i) each person
known to the Company to beneficially own more than 5% of the outstanding shares
of Common Stock, (ii) each of the Company's directors, (iii) each of the
Company's executive officers named in the Summary Compensation Table above, and
(iv) all directors and officers of the Company as a group. Unless otherwise
indicated below, the persons and entities named in the table have sole voting
and sole investment power with respect to all the shares beneficially owned,
subject to community property laws, where applicable. Percentage ownership
assumes all warrants and options of listed person exercised and all other
warrants and options unexercised.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT PERCENT
---------------- ------ -------
<S> <C> <C>
Donald Brucker(1) 1,551,972.5 24%
2838 Caminito Turnberry
La Jolla, CA 92037
Kenneth Brucker, as Trustee(2)
of the A.K. Trust 1,361,972.5 21%
1706 Torrence St.
San Diego, CA 92103
Robert Buchner(3) 967,295 15%
713 N. Daisy St.
Escondido, CA 92027
Robert Hamburger, M.D.(4) 770,010 12%
9485 La Jolla Shores
La Jolla, CA 92037-1149
Richard O'Connor(5) 740,000 11%
Sharp Rees Stealy
2001 4th Ave.
San Diego, CA 92101
Andrei Vorobiev(6) 740,000 11%
600 N. McClurg Ct. #4208A
Chicago, IL 60611
Jennifer Lee Plummer(7) 592,970 9%
9998 Muffin Ct.
San Diego, CA 92129
all directors and executive officers as a
group (4 individuals) 2,766,982.5 41%
</TABLE>
- - - --------------
1 Includes 1,361,972.5 shares owned of record by the A.K. Trust of which Mr.
Brucker is a beneficiary and 190,000 shares subject to a Performance
Warrant.
2 Held as Trustee only, Kenneth Brucker disclaims any beneficial ownership.
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<PAGE> 13
3 Includes 150,000 shares subject to Performance Warrants.
4 Includes 25,000 shares held by the Hamburger Family Trust, of which Dr.
Hamburger is a trustee and beneficiary, 100,000 shares subject to a
Performance Warrant, and 5,000 shares subject to a Warrant received by Dr.
Hamburger in connection with the acquisition of 25,000 shares of Common
Stock by the Hamburger Family Trust pursuant to a private placement.
5 Includes 100,000 shares subject to Performance Warrants.
6 Includes 100,000 shares subject to Performance Warrants.
7 Includes 60,000 shares subject to Performance Warrants, and 532,970 shares
held as Trustee of the Plummer Family Trust of which she is also a
beneficiary.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
FOR DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS. PROXIES RETURNED TO LA JOLLA
WILL BE VOTED "FOR" THE ELECTION OF THESE NOMINEES UNLESS OTHERWISE INSTRUCTED.
AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
At present, Article IV of the La Jolla Articles of Incorporation
provides that La Jolla is authorized to issue ten million (10,000,000) shares of
La Jolla's common stock without par value ("Common Stock") and five million
(5,000,000) shares of preferred stock.
As of May 9, 1996, La Jolla had 6,811,178 shares of its Common Stock
outstanding, and 2,820,866 reserved for the exercise of outstanding warrants,
leaving 367,956 shares of Common Stock authorized but not issued. No shares of
preferred stock were outstanding.
At the Meeting, management intends to request shareholder approval of
an amendment to its Articles of Incorporation in the form of Exhibit "A"
attached hereto and incorporated herein by this reference. The proposed
amendment shall authorize the issuance of 40,000,000 additional shares of no par
value Common Stock from time to time. Subject to shareholder and regulatory
approval, on ____________, 1996, La Jolla's Board approved a resolution amending
the second sentence of Article IV of La Jolla's Articles of Incorporation to
increase the authorized shares of Common Stock from 10,000,000 to 50,000,000.
The amended second sentence of Article IV shall read as follows:
"The number of shares of Common Stock authorized is 50,000,000."
The principal reason for the proposed increase of authorized shares of
Common Stock is to provide La Jolla with the ability to issue more shares of
Common Stock in the future to raise additional capital for La Jolla. In
addition, La Jolla will need to have additional shares of Common Stock available
for any future issuance in connection with any qualified or non-qualified
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<PAGE> 14
stock bonus and option plans La Jolla may adopt in the future. Other than as
noted above and with respect to the Incentive Stock Bonus and Option Plan
submitted for approval as discussed below, La Jolla has no current plans to
issue additional shares of the Common Stock which will be authorized by this
Amendment. Whether and on what terms La Jolla may issue additional shares of
Common Stock will be at the discretion of the Board of Directors.
By increasing the number of authorized shares of Common Stock, from
10,000,000 to 50,000,000, any future issuance of Common Stock of La Jolla could
potentially dilute the percentage ownership of the current shareholders without
their having an opportunity to vote on such issuance. However, the Board feels
this possible disadvantage is outweighed by the need for La Jolla to have the
ability (i) to raise additional capital through the issuance of Common Stock and
(ii) to provide incentives to its directors, officers and employees through the
issuance of stock bonuses and options under both qualified and/or non-qualified
stock option plans La Jolla may adopt in the future.
Approval of the Amendment by shareholders will require the affirmative
vote of a majority of the outstanding shares of La Jolla's Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL
OF AMENDMENT OF THE ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES.
1996 INCENTIVE BONUS AND STOCK OPTION PLAN
Introduction and Background.
The Board of Directors deems it to be in the best interest of La Jolla,
subject to shareholder approval, that La Jolla adopt an Incentive Stock Bonus
and Option Plan (the "Plan") whereby stock, bonuses and incentive options to
purchase shares of La Jolla's Common Stock may be granted to eligible employees,
directors and consultants of La Jolla.
Subject to shareholder approval, the Board of Directors has approved
the Plan and reserved 3,000,000 shares of La Jolla's Common Stock for issuance
in connection with stock bonuses and options granted under the Plan. A copy of
the Plan is attached hereto as Exhibit "B."
Purpose.
The purpose of the Plan is to advance the interests of La Jolla and its
shareholders by providing employees, directors and consultants who have
substantial responsibility for the direction and management of La Jolla with an
entrepreneurial incentive to (i) provide high levels of performance, (ii)
undertake extraordinary efforts to increase the earnings of La Jolla,
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(iii) increase their proprietary interest in La Jolla, and (iv) remain in the
employ and continue providing services to La Jolla.
The primary reason for adopting the Plan now, is to enhance La Jolla's
ability to attract and retain qualified employees, directors and consultants by
providing an opportunity to acquire a proprietary interest in the success of La
Jolla, or increase such interest.
Administration.
The Plan shall be administered by a committee of the Board of Directors
of La Jolla of not less than two directors (the "Committee").
Subject to the provisions of the Plan, the Committee has the authority
to interpret the Plan and apply its provisions; to prescribe, to adopt, amend or
rescind rules, procedures and forms relating to the Plan, determine persons who
may participate in the Plan, determine the time at which bonuses or options are
granted under the Plan, determine the number of shares of stock to be subject to
each bonus or option and the vesting provisions of such bonuses or options and
to take any other action deemed necessary or advisable for the administration of
the Plan.
Eligibility for the Plan.
As of May 31, 1996 there would be 16 eligible participants under the
Plan, including 2 executive officers, 2 directors and 12 other employees and
consultants.
Following its approval, the Plan will provide for the grant of stock
bonuses and both incentive stock options ("ISO's") intended to qualify as such
under former Section 422A (now Section 422) of the Internal Revenue Code, as
amended, and nonstatutory stock options ("NSO's"). ISO's may be granted only to
salaried officers and full-time employees. Any option granted that does not meet
the required conditions of an ISO (as set forth above) will be deemed an NSO. If
any options granted under the Plan shall for any reason expire or be canceled or
otherwise terminate without having been exercised in full, the shares allocable
to the unexercised portion of such options shall again become available for the
Plan.
Terms, Price and Transferability.
Stock bonuses and options granted pursuant to the Plan will vest at the
time or times determined by the Committee.
The maximum term of each option granted under the Plan is ten years.
Stock options granted under the Plan must be exercised by the optionee during
the earlier of their term or within 3 months after termination of the optionee's
employment or other relationship, except that the period may be extended if so
provided in the agreement pursuant to which the option is granted. During said
period such option may be exercised in accordance with its terms, but only for
the number of shares with respect to its installments as have accrued and vested
as set forth in the
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optionee's option as of the date of termination of employment. Unvested stock
bonuses will be forfeited upon termination of the employment or other
relationship with La Jolla, unless otherwise provided in the Agreement pursuant
to which the bonus was granted.
Unvested bonuses and all options under the Plan are not transferable
except by will or by the laws of descent and distribution as defined in the
Code, and options may be exercised during the lifetime of the person to whom the
option is granted only by such person or by such person's guardian or legal
representative.
The exercise price of shares of Common Stock subject to options
qualifying as ISO's must not be less than the fair market value of the Common
Stock on the date of grant. Under the Plan, the exercise price is payable in
cash, by check or money order, or at the discretion of the Committee by transfer
of previously acquired shares of La Jolla Common Stock.
Adjustments.
The number of shares of Common Stock subject to an option granted under
the Plan will be adjusted for any increase or decrease in the number of issued
shares of La Jolla resulting from the subdivision, combination or consolidation
of shares or other capital adjustment, or the payment of a stock dividend, stock
split or other increase or decrease in the outstanding shares insofar as
effected without receipt of consideration by La Jolla.
In the event of a merger or other reorganization, all outstanding
options granted will immediately prior to, or concurrently with, such
reorganization become exercisable in full, unless the agreements with respect to
the reorganization provide for the assumption of such options, in which case the
surviving corporation shall honor such options in full. Any such adjustment
shall be made by the Committee, whose determination as to what adjustments shall
be made, and the extent thereof, shall be final and conclusive. No fractional
shares of stock will be issued under the Plan on account of any such adjustment.
Federal Income Tax Consequences of Options Under the Employee Option Plan.
The following discussion is only a summary of the principal federal
income tax consequences of the stock bonuses and options to be granted under the
Plan, and is based on existing federal law (including administrative regulations
and rulings) which is subject to change, in some cases retroactively. This
discussion is also qualified by the particular circumstances of individual
optionees, which may substantially alter or modify the federal income tax
consequences herein discussed.
Generally under present law, when an option qualifies as an ISO: (i) an
optionee will not realize taxable income either upon the grant or the exercise
of the option, (ii) any gain or loss upon a qualifying disposition of the shares
acquired upon exercise of the option will be treated as capital gain or loss and
(iii) no deduction will be allowed to La Jolla for federal income tax
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purposes in connection with the grant or exercise of the option or a qualifying
disposition of the shares acquired upon exercise thereof. A disposition by an
optionee of stock acquired upon exercise of an ISO will constitute a qualifying
disposition if it occurs more than two years after the grant of the option and
more than one year after the issuance of the shares to the optionee. La Jolla
obtains no deduction in connection with the grant or exercise of an ISO or a
qualifying disposition of the shares. If such stock is disposed of by the
optionee before the expiration of those time limits, the transfer would be a
"disqualifying disposition" and the optionee, in general, will recognize
ordinary income equal to the lesser of (i) the aggregate fair market value of
the shares as of the date of exercise less the option price or (ii) the amount
realized on the disqualifying disposition less the option price. Ordinary income
from a disqualifying disposition will constitute compensation for which
withholding may be required under federal and state law. Any gain in addition to
the amount reportable as ordinary income from a "disqualifying disposition"
generally will be capital gain.
Upon exercise of an ISO, the difference between the fair market value
of stock on the date of exercise and the option price generally is treated as a
"tax preference" item in that taxable year for alternative minimum tax purposes,
as are a number of other items specified by the Code. Such tax preference items
(with adjustments) form the basis for the alternative minimum tax, which may
apply depending on the amount of the computed "regular tax" of the employee for
that year. Under certain circumstances, the amount of alternative minimum tax is
allowed as a carry forward credit against regular tax liability in subsequent
years.
In the case of NSO's, no income generally is recognized by the optionee
at the time of the grant of the option. The optionee generally will recognize
ordinary income at the time the NSO is exercised equal to the aggregate fair
market value of the shares acquired less the option price. However, if the
shares received upon the exercise of a NSO are subject to certain restrictions,
the taxable event is postponed until the restriction lapse. For example, if a
sale of the shares at a profit would subject an optionee to liability under
Section 16(b) of the 1934 Act, the optionee generally will recognize taxable
income on the date that the optionee is no longer subject to such liability in
an amount equal to the fair market value of the shares on such date less the
option price. Notwithstanding the foregoing, the optionee may make a special
election within thirty days of receiving restricted shares to recognize taxable
income as of the date of exercise. Ordinary income for a NSO will constitute
compensation for which withholding may be required under federal and state law.
Subject to special rules applicable when an optionee uses stock of La
Jolla to exercise an option, shares acquired upon exercise of a NSO will have a
tax basis equal to their fair market value on the exercise date or other
relevant date on which ordinary income is recognized, and the holding period for
the shares generally will begin on the date of exercise or such other relevant
date. Upon subsequent disposition of the shares, the optionee generally will
recognize capital gain or loss. Provided the shares are held by the optionee for
more than one year prior to disposition, such gain or loss will be long-term
capital gain or loss.
In the case of stock bonuses, ordinary income is generally recognized
by the recipient at the time of receipt of the stock bonus unless the stock
received is nontransferable and subject to
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substantial risks of forfeiture. In the case of nontransferable and non-vested
stock bonuses, the recipient will generally recognize ordinary income at the
time of vesting or the lapse of transfer restrictions, whichever is earlier.
La Jolla will generally be entitled to a deduction equal to the
ordinary income (i.e. compensation) recognized by the recipient of a stock bonus
or by the optionee in the case of a "disqualifying disposition" of an ISO or in
connection with the exercise of a NSO provided La Jolla complies with
withholding requirements of federal and state law.
Duration, Amendment and Termination.
The Committee may, from time to time, alter or suspend and at any time
discontinue the Plan. However, no action of the Committee may, without the
approval of the shareholders of La Jolla, materially increase the maximum number
of shares of stock to be issued pursuant to the Plan, modify the provisions of
eligibility under the Plan, reduce the option price at which shares of stock may
be offered pursuant to options granted under the Plan, materially increase the
benefits accruing to participants under the Plan or extend the expiration of the
Plan. Unless sooner terminated by the Committee, the Plan will terminate ten
years after the date of adoption, and no further stock bonuses or options may be
granted pursuant to such Plan following the termination date. Rights and
obligations under any award granted pursuant to the Plan, while it is in effect,
shall not be altered or impaired by suspension or termination of such Plan,
except with the consent of the person to whom the award was granted.
Required Vote.
Approval of the plan, as discussed above, requires the affirmative vote
of a majority of the shares represented and voting at the Meeting and a majority
of the disinterested shares represented and voting at the Meeting. Disinterested
shares means those shares held by shareholders who are not entitled to
participate as optionees under the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE
INCENTIVE STOCK BONUS AND OPTION PLAN OF LA JOLLA.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has appointed Harlan & Boettger as independent auditors
for La Jolla for the fiscal year ending June 30, 1995 and June 30, 1996. The
firm of Harlan & Boettger as independent auditors has examined the financial
statements of La Jolla since 1995 and has no relationship with the La Jolla
except in its capacity as auditors. A representative of Harlan and Boettger is
expected to attend the Meeting and be available to answer questions.
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The selection of Harlan & Boettger as La Jolla's independent auditors
will be approved if ratified by the affirmative vote of a majority of shares
represented and voting at the meeting.
OTHER MATTERS
The Board of Directors has no knowledge of any other matter which may come
before the Meeting, and does not intend to present any other matters. However,
if any other matters shall come before the Meeting or any adjournment thereof
(including the election of any substitute for any of the foregoing nominees who
is unable to, or for good reason will not, serve on the Board of Directors), the
persons named as proxies will have the discretion and authority to vote the
shares represented by a proxy in accordance with their best judgment.
ANNUAL REPORT
La Jolla has distributed to each of its shareholders an annual report
for the fiscal year ended June 30, 1995. The annual report contained
consolidated financial statements of La Jolla thereon of Harlan & Boettger &
Company.
UPON WRITTEN REQUEST OF ANY PERSON ENTITLED TO VOTE AT THE MEETING,
ADDRESSED TO DONALD BRUCKER, LA JOLLA DIAGNOSTICS, 7777 FAY AVENUE, SUITE 160,
LA JOLLA, CALIFORNIA, 92037, THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF
ITS ANNUAL REPORT ON FORM 10-KSB FOR FISCAL YEAR 1995, INCLUDING THE FINANCIAL
STATEMENTS AND THE SCHEDULES THERETO, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934.
By order of the Board of Directors of La Jolla Diagnostics
Donald Brucker, Chairman of the Board of Directors
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EXHIBIT "A"
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Donald Brucker and Robert Hamburger certify that:
1. They are the president and the secretary, respectively, of La Jolla
Diagnostics, Inc., a California corporation (the "Corporation").
2. Article IV of the Articles of Incorporation of the Corporation is
amended and restated to read in full as follows:
"ARTICLE IV
The Corporation is authorized to issue two classes of shares of capital stock to
be designated respectively Common Stock and Preferred Stock. The number of
shares of Common Stock authorized is 50,000,000. The number of shares of
Preferred Stock authorized is 5,000,000. The Preferred Stock may be issued in
one or more series. The Board of Directors is authorized to fix the number of
any such series of Preferred Stock and to determine the designation of any such
series. The Board of Directors is further authorized to determine or alter the
rights, preferences, privileges, and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock, and within the limits and
restrictions stated in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any series, to increase or
decrease (but no below the number of shares of such series then outstanding) the
number of shares of any such series subsequent to the issue of shares of that
series. Upon amendment of Article IV of the Articles of Incorporation to read as
herein set forth, every ten outstanding shares of Common Stock shall be combined
and converted into one share of Common Stock;"
3. The foregoing Amendment of Articles of Incorporation has been duly
approved by the Board of Directors of the Corporation.
4. The foregoing Amendment of Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 903 of
the Corporations Code. The total number of outstanding shares of Common Stock of
the corporation is _____________. No Preferred Stock of the corporation is
outstanding. The number of shares voting in favor of the
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amendment equaled or exceeded the vote required, such required vote being a
majority of the outstanding shares of Common Stock.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Dated: June _____, 1996
------------------------------------------
Donald Brucker, President
------------------------------------------
Robert Hamburger, Secretary
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EXHIBIT "B"
LA JOLLA DIAGNOSTICS, INC.
1996 INCENTIVE STOCK BONUS AND OPTION PLAN
1. PURPOSE OF THE PLAN.
The purpose of this 1996 Incentive Stock Bonus and Option Plan (the "Plan") of
LA JOLLA DIAGNOSTICS, INC., a California corporation (the "Company") is to
provide the Company with a means of attracting and retaining the services of
selected employees, directors and consultants. The Plan is intended to advance
the interests of the Company by affording to selected employees, directors and
consultants, upon whose skill, judgment, initiative and efforts the Company is
largely dependent for the successful conduct of its business, an opportunity for
investment in the Company and the incentives inherent in stock ownership in the
Company. For purposes of this Plan, the term Company shall include subsidiaries,
if any, of the Company.
2. LEGAL COMPLIANCE.
It is the intent of the Plan that options may be granted under it ("Options") as
either "Incentive Stock Options" ("ISOs"), as such term is defined in Section
422 of the Internal Revenue Code of 1986, as amended ("Code"), or non-qualified
stock options ("NQOs"); provided, however, ISOs shall be granted only to
employees of the Company. An option shall be identified as an ISO or an NQO in
writing in the document or documents evidencing the grant of the option. All
options that are not so identified as ISOs are intended to be NQOs. It is the
further intent of the Plan that it conform in all respects with the requirements
of Rule 16b-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"). To the extent that any aspect
of the Plan or its administration shall at any time be viewed as inconsistent
with the requirements of Rule 16b-3 or, in connection with ISOs, the Code, as
the same shall be amended from time to time, such aspect shall be deemed to be
modified, deleted, or otherwise changed as necessary to ensure continued
compliance with such provisions.
3. ADMINISTRATION OF THE PLAN.
3.1 PLAN COMMITTEE.
The Plan shall be administered by a committee (the "Committee"). The members of
the Committee shall be appointed from time to time by the Board of Directors of
the Company (the "Board") and shall consist of not less than two (2) directors.
If required to be in compliance with Rule 16b-3, members of the Committee shall
be disinterested persons. The term "disinterested person," as used in this Plan,
shall mean a director: (i) who was not during the one (1) year prior to service
as an administrator of the Plan granted or awarded equity securities pursuant to
the Plan or any other plan of the Company or any of its Affiliates entitling the
participants therein to acquire equity securities of the Company or any of its
Affiliates except as permitted by Rule 16b- 3(c)(2)(i) ("16-b-3(c)(2)(i)")
promulgated under the Securities Exchange Act of 1934, as amended; or (ii) who
is otherwise considered to be a "disinterested person" in accordance with Rule
16b- 3(c)(2)(i), or any other applicable rules, regulations or interpretations
of the Securities and Exchange Commission. Any such persons shall otherwise
comply with the requirements of Rule 16b-3 promulgated under the Exchange Act.
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3.2 GRANTS OF STOCK BONUSES AND OPTIONS BY THE COMMITTEE.
In accordance with the provisions of the Plan, the Committee, by resolution,
shall select those eligible persons to whom stock bonuses or options shall be
granted ("Optionees"); shall determine the time or times at which each option
shall be granted, whether an option is an ISO or an NQO and the number of shares
to be subject to each bonus or option; and shall fix the time and manner in
which options may be exercised and the terms over which stock bonuses will not
and become nonforfeitable, the option exercise price, and the option period. The
Committee shall determine the form of option agreement to evidence the foregoing
terms and conditions of each option, which need not be identical, in the form
provided for in SECTION 7. Such agreement may include such other provisions as
the Committee may deem necessary or desirable consistent with the Plan, the Code
and Rule 16b-3.
3.3 COMMITTEE PROCEDURES.
The Committee from time to time may adopt such rules and regulations for
carrying out the purposes of the Plan as it may deem proper and in the best
interests of the Company. The Committee shall keep minutes of its meetings and
records of its actions. A majority of the members of the Committee shall
constitute a quorum for the transaction of any business by the Committee. The
Committee may act at any time by an affirmative vote of a majority of these
members voting. Such vote may be taken at a meeting (which may be conducted in
person or by any telecommunication medium) or by written consent of Committee
members without a meeting.
3.4 FINALITY OF COMMITTEE ACTION.
The Committee shall resolve all questions arising under the Plan and agreements
entered into pursuant to the Plan. Each determination, interpretation, or other
action made or taken by the Committee shall be final and conclusive and binding
on all persons, included, without limitation, the Company, its shareholders, the
Committee and each of the members of the Committee, and the directors, officers,
and employees of the Company, including Optionees and their respective
successors in interest.
3.5 NON-LIABILITY OF COMMITTEE MEMBERS.
No Committee member shall be liable for any action or determination made by him
in good faith with respect to the Plan or any bonus or option granted under it.
4. BOARD POWER TO AMEND, SUSPEND, OR TERMINATE THE PLAN.
The Board may from time to time make such changes in or additions to the Plan as
it may deem proper and in the best interests of the Company and its
shareholders. The Board may also suspend or terminate the Plan at any time,
without notice, and in its sole discretion.
Notwithstanding the foregoing, no such change, addition, suspension, or
termination by the Board shall (i) materially impair any right previously
granted under the Plan without the express written consent of the Optionee; or
(ii) materially increase the number of shares subject to the Plan, materially
increase the benefits accruing under the Plan, materially modify the
requirements as to eligibility to participate in the Plan or alter the method of
determining the option exercise price described in SECTION 8, without
shareholder approval.
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5. SHARES SUBJECT TO THE PLAN.
For purposes of the Plan, the Committee is authorized to grant Stock Bonuses and
Options for up to an aggregate of Three Million (3,000,000) shares of the
Company's common stock, no par value per share ("Common Stock"), either treasury
or authorized but unissued shares, or the number and kind of shares of stock or
other securities which, in accordance with SECTION 13, shall be substituted for
such shares of Common Stock or to which such shares shall be adjusted. The
Committee is authorized to grant Stock Bonuses and Options under the Plan with
respect to such shares. Any or all unsold shares subject to an Option which for
any reason expires or otherwise terminates (excluding shares returned to the
Company in payment of the exercise price for additional shares) may again be
made subject to grant under the Plan.
6. PARTICIPANTS.
ISOs shall be granted only to full-time elected or appointed officers or other
full-time key employees of the Company including, without limitation, members of
the Board who are also full-time officers or key employees at the time of grant.
NQOs and Stock Bonuses may be granted to employees (including officers) and
directors of and consultants to the Company. Any Optionee may hold more than one
option to purchase Common Stock, whether such option is an Option held pursuant
to the Plan or otherwise.
7. GRANTS OF BONUSES AND OPTIONS.
The Committee shall have the sole discretion to grant Stock Bonuses and Options
under the Plan and to determine whether any Option shall be an ISO or an NQO.
The terms and conditions of Stock Bonuses and Options granted under the Plan may
differ from one another as the Committee, in its absolute discretion, shall
determine as long as all grants under the Plan satisfy the requirements of the
Plan. Upon determination by the Committee that a Stock Bonus or Option is to be
granted to an Optionee, a written agreement evidencing such Stock Bonus or
Option shall be given to the Optionee, specifying the number of shares subject
to the Stock Bonus or Option, the exercise price, whether an Option is an ISO or
an NQO, and the other individual terms and conditions of such Stock Bonus or
Option. Such agreement may incorporate generally applicable provisions from the
Plan, a copy of which shall be provided to all Optionees at the time of their
initial grants under the Plan. The Stock Bonus or Option shall be deemed granted
as of the date specified in the grant resolution of the Committee, and the
agreement shall be dated as of the date of such resolution.
8. OPTION EXERCISE PRICE.
The price per share to be paid by the Optionee at the time an ISO is exercised
shall not be less than one hundred percent (100%) of the Fair Market Value (as
hereinafter defined) of one share of the optioned Common Stock on the date on
which the Option is granted. No ISO may be granted under the Plan to any person
who, at the time of such grant, owns (within the meaning of Section 424(d) of
the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any parent thereof,
unless the exercise price of such ISO is at least equal to one hundred and ten
percent (110%) of Fair Market Value on the date of grant. The price per share to
be paid by the Optionee at the time an NQO is exercised shall not be less than
eighty-five percent (85%) of the Fair Market Value on the date on which the NQO
is granted, as determined by the Committee.
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For purposes of the Plan, the "Fair Market Value" of a share of the Company's
Common Stock as of a given date shall be: (i) the closing price of a share of
the Company's Common Stock on the principal exchange on which shares of the
Company's Common Stock are then trading, if any, on such date, or, if shares
were not traded on such date, then on the next preceding trading day during
which a sale occurred; or (ii) if the Company's Common Stock is not traded on an
exchange but is quoted on NASDAQ or successor quotation system, (1) the last
sales price (if the Common Stock is then listed as a National Market Issue under
the NASD National Market System) or (2) the mean between the closing
representative bid and asked prices (in all other cases) for the Common Stock on
such date as reported by NASDAQ or such successor quotation system; or (iii) if
the Company's Common Stock is not publicly traded on an exchange and not quoted
on NASDAQ or a successor quotation system, the mean between the closing bid and
asked prices for the Common Stock on such date as determined in good faith by
the Committee; or (iv) if the Company's Common Stock is not publicly traded, the
fair market value established by the Committee acting in good faith. In
addition, with respect to any ISO, the Fair Market Value on any given date shall
be determined in a manner consistent with any regulations issued by the
Secretary of the Treasury for the purpose of determining fair market value of
securities subject to an ISO plan under the Code.
9. DURATION, EXERCISABILITY, AND TERMINATION OF OPTIONS.
9.1 OPTION PERIOD.
The option period shall be determined by the Committee with respect to each
option granted. In no event, however, may the option period exceed ten (10)
years from the date on which the option is granted.
9.2 EXERCISABILITY OF OPTIONS, ACCELERATION OF EXERCISABILITY AND
FORFEITABILITY OF STOCK BONUSES.
Each option shall be exercisable in whole or in consecutive installments,
cumulative or otherwise, during its term, and Stock Bonuses shall vest and
become nonforfeitable, as determined in the discretion of the Committee.
9.3 TERMINATION OF OPTIONS.
An Option shall terminate three (3) months, and unvested Stock Bonuses shall be
forfeited immediately, after termination of the Optionee's employment or
relationship as a consultant or director with the Company, unless the Stock
Bonus or Option Agreement by its terms specifies otherwise.
10. MANNER OF OPTION EXERCISE; RIGHTS AND OBLIGATIONS OF OPTIONEES.
10.1 WRITTEN NOTICE OF EXERCISE.
An Optionee may elect to exercise an Option in whole or in part, from time to
time, subject to the terms and conditions contained in the Plan and in the
agreement evidencing such Option, by giving written notice of exercise to the
Company at its principal executive office.
10.2 CASH PAYMENT FOR OPTIONED SHARES.
If an Option is exercised for cash, such notice shall be accompanied by a
cashier's or personal check, or money order, made payable to the Company for the
full exercise price of the shares purchased.
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10.3 STOCK SWAP FEATURE.
At the time of the Option exercise, and subject to the discretion of the
Committee to accept payment in cash only, the Optionee may determine whether the
total purchase price of the shares to be purchased shall be paid solely in cash
or by transfer from the Optionee to the Company of previously acquired shares of
Common Stock, or by a combination thereof. In the event that the Optionee elects
to pay the total purchase price in whole or in part with previously acquired
shares of Common Stock, the value of such shares shall be equal to their Fair
Market Value on the date of exercise, determined by the Committee in the same
manner used for determining Fair Market Value at the time of grant for purposes
of SECTION 8.
10.4 INVESTMENT REPRESENTATION FOR NON-REGISTERED SHARES AND LEGALITY OF
ISSUANCE.
The receipt of shares of Common Stock in a Stock Bonus or upon the exercise on
an Option shall be conditioned upon the Optionee (or any other person who
exercises the Option on his or her behalf as permitted by SECTION 14) providing
to the Committee a written representation that, at the time of such grantor
exercise, it is the intent of such person(s) to acquire the shares for
investment only and not with a view toward distribution. The certificate for
unregistered shares issued for investment shall be restricted by the Company as
to transfer unless the Company receives an opinion of counsel satisfactory to
the Company to the effect that such restriction is not necessary under then
pertaining law. The providing of such representation and such restrictions on
transfer shall not, however, be required upon any person's receipt of shares of
Common Stock under the Plan if, the shares subject to the Option shall be (i)
covered by an effective and current registration statement under the Securities
Act of 1933, as amended, and (ii) either qualified or exempt from qualification
under applicable state securities laws. The Company shall, however, under no
circumstances be required to sell or issue any shares under the Plan if, in the
opinion of the Committee, (i) the issuance of such shares would constitute a
violation by the Optionee or the Company of any applicable law or regulation of
any governmental authority, or (ii) the consent or approval of any governmental
body is necessary or desirable as a condition of, or in connection with, the
issuance of such shares.
10.5 SHAREHOLDER RIGHTS OF OPTIONEE.
Upon issuance of a Stock Bonus or exercise of an Option, the Optionee (or any
other person who exercises the Option on his or her behalf as permitted by
SECTION 14) shall be recorded on the books of the Company as the owner of the
shares, and the Company shall deliver to such record owner one (1) or more duly
issued stock certificates evidencing such ownership. No person shall have any
rights as a shareholder with respect to any shares of Common Stock covered by
the Plan until such person shall have become the holder of record of such
shares. Except as provided in SECTION 13, no adjustments shall be made for cash
dividends or other distributions or other rights as to which there is a record
date preceding the date such person becomes the holder of record of such shares.
10.6 HOLDING PERIODS FOR TAX PURPOSES.
The Plan does not provide that an Optionee must hold shares of Common Stock
acquired under the Plan for any minimum period of time. Optionees are urged to
consult with their own tax advisors with respect to the tax consequences to them
of their individual participation in the Plan.
23
<PAGE> 27
11. SUCCESSIVE GRANTS.
Successive grants of Options may be made to any Optionee under the Plan.
12. ADJUSTMENTS.
If the outstanding Common Stock shall be hereafter increased or decreased, or
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation, by reason of a
recapitalization, reclassification, reorganization, merger, consolidation, share
exchange, or other business combination in which the Company is the surviving
parent corporation, stock split-up, combination of shares, or dividend or other
distribution payable in capital stock or rights to acquire capital stock,
appropriate adjustment shall be made by the Committee in the number and kind of
shares for which options may be granted under the Plan. In addition, the
Committee shall make appropriate adjustment in the number and kind of shares as
to which outstanding and unexercised options shall be exercisable, to the end
that the proportionate interest of the holder of the Option shall, to the extent
practicable, be maintained as before the occurrence of such event. Such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of the Option but with a
corresponding adjustment in the exercise price per share. In the event of the
dissolution or liquidation of the Company, any outstanding and unexercised
options shall terminate as of a future date to be fixed by the Committee.
In the event of a Reorganization (as hereinafter defined), then,
a. If there is no plan or agreement with respect to the Reorganization
("Reorganization Agreement"), or if the Reorganization Agreement does not
specifically provide for the adjustment, change, conversion, or exchange of the
outstanding and unexercised options for cash or other property or securities of
another corporation, then any outstanding and unexercised options shall
terminate as of a future date to be fixed by the Committee; or
b. If there is a Reorganization Agreement, and the Reorganization Agreement
specifically provides for the adjustment, change, conversion, or exchange of the
outstanding and unexercised options for cash or other property or securities of
another corporation, then the Committee shall adjust the shares under such
outstanding and unexercised options, and shall adjust the shares remaining under
the Plan which are then available for the issuance of options under the Plan if
the Reorganization Agreement makes specific provisions therefor, in a manner not
inconsistent with the provisions of the Reorganization Agreement for the
adjustment, change, conversion, or exchange of such options and shares.
The term "Reorganization" as used in this SECTION 12 shall mean any
reorganization, merger, consolidation, share exchange, or other business
combination pursuant to which the Company is not the surviving parent
corporation after the effective date of the Reorganization, or any sale or lease
of all or substantially all of the assets of the Company. Nothing herein shall
require the Company to adopt a Reorganization Agreement, or to make provision
for the adjustment, change, conversion, or exchange of any options, or the
shares subject thereto, in any Reorganization Agreement which is does adopt.
The Committee shall provide to each Optionee then holding an outstanding and
unexercised Option not less than thirty (30) calendar days' advanced written
notice of any date fixed by the Committee pursuant to this SECTION 12 and of the
terms of any Reorganization Agreement providing for the adjustment, change,
conversion, or exchange of outstanding and unexercised Options. Except as the
Committee may otherwise provide, each Optionee shall have the right during such
period to exercise his or her Option only to the extent that the option was
exercisable on the date such notice was provided to the Optionee.
24
<PAGE> 28
Any adjustment to any outstanding ISO pursuant to this SECTION 12, if made by
reason of a transaction described in Section 424(a) of the Code, shall be made
so as to conform to the requirements of that section and the regulations
thereunder. If any other transaction described in Section 424(a) of the Code
affects the Common Stock subject to any unexercised ISO theretofore granted
under the Plan (hereinafter for purposes of this SECTION 12 referred to as the
"old options"), the Board of Directors of the Company or of any surviving or
acquiring corporation may take such action as it deems appropriate, in
conformity with the requirements of that Code section and the regulations
thereunder, to substitute a new option for the old option, in order to make the
new option, as nearly as may be practicable, equivalent to the old option, or to
assume the old option.
No modification, extension, renewal, or other change in any option granted under
the Plan may be made, after the grant of such option, without the Optionee's
consent, unless the same is permitted by the provisions of the Plan and the
option agreement. In the case of an ISO, Optionees are hereby advised that
certain changes may disqualify the ISO from being considered as such under
Section 422 of the Code, or constitute a modification, extension, or renewal of
the ISO under Section 424(h) of the Code.
All adjustments and determinations under this SECTION 12 shall be made by the
Committee in good faith in its sole discretion.
13. NON-TRANSFERABILITY OF OPTIONS AND UNVESTED BONUSES.
An Option shall be exercisable only by the Optionee, or in the event of his or
her disability, by his or her guardian(s), conservator(s), or other legal
representative(s), during the Optionee's lifetime. In the event of the death of
the Optionee, an Option shall be exercisable by his or her legal
representative(s), legatee(s), or heir(s), as the case may be, or by such
person(s) as he or she may designate as his or her beneficiary or beneficiaries
in a signed statement included as a part of the option agreement.
Unvested Stock Bonuses and all Options shall not be transferable by the
Optionee, either voluntarily or involuntarily, except by Will or the laws of
descent and distribution. Any attempt to exercise, transfer or otherwise dispose
of an interest in an Option in contravention of the terms and conditions of the
Plan, or of the agreement for the Stock Bonus or Option, shall immediately void
the Option and cause the unvested shares of a Stock Bonus to be forfeited.
14. CONTINUED EMPLOYMENT.
Neither the creation of the Plan nor the granting of Stock Bonuses or Option(s)
under it shall be deemed to create a right in an Optionee to continued
employment or other affiliation with the Company, and each such Optionee shall
be and shall remain subject to discharge by the Company as though the Plan had
never come into existence. Except as specifically provided by the Committee in
any particular case, the loss of existing or potential profit in Stock Bonuses
or Options granted under this Plan shall not constitute an element of damages in
the event of termination of the employment of an employee even if the
termination is in violation of an obligation of the Company to the employee by
contract or otherwise.
25
<PAGE> 29
15. TAX WITHHOLDING.
The grant of a Stock Bonus and the exercise of any option granted under the Plan
is subject to the condition that if at any time the Company shall determine, in
its discretion, that the satisfaction of withholding tax or other withholding
liabilities under any federal, state or local law is necessary or desirable as a
condition of, or in connection with, such grantor exercise or a later lapsing of
time or restrictions on or disposition of the shares of Common Stock received
upon such grantor exercise, then in such event, the exercise of the Option shall
not be effective unless such withholding shall have been effected or obtained in
a manner acceptable to the Company.
16. TERM OF PLAN.
16.1 EFFECTIVE DATE.
Subject to shareholder approval, the Plan shall become effective on August 8,
1996.
16.2 TERMINATION DATE.
Except as to Options previously granted and outstanding under the Plan, the Plan
shall terminate at midnight on August 8, 2006, and no Option shall be granted
after that time. Options then outstanding may continue to be exercised in
accordance with their terms. The Plan may be suspended or terminated at any
earlier time by the Board within the limitations set forth in SECTION 4.
17. NON-EXCLUSIVITY OF THE PLAN.
Nothing contained in the Plan is intended to amend, modify, or rescind any
previously approved compensation plans, programs or options entered into by the
Company. This Plan shall be construed to be in addition to an independent of any
and all such other arrangements. Neither the adoption of the Plan by the Board
not the submission of the Plan to the shareholders of the Company for approval
shall be construed as creating any limitations on the power or authority of the
Board to adopt, with or without shareholder approval, such additional or other
compensation arrangements as the Board may from time to time deem desirable.
18. GOVERNING LAW.
The Plan and all rights and obligations under it shall be construed and enforced
in accordance with the laws of the State of California.
26
<PAGE> 30
LA JOLLA DIAGNOSTICS, INC.
7777 FAY AVENUE, SUITE 160
LA JOLLA, CALIFORNIA 92037
619.454.6790
- - - --------------------------------------------------------------------------------
PROXY
FOR THE ANNUAL GENERAL MEETING
_______________, 1996
THIS PROXY IS SOLICITED BY THE MANAGEMENT OF LA JOLLA DIAGNOSTICS, INC.
The undersigned stockholder of LA JOLLA DIAGNOSTICS, INC. (the "Company") hereby
appoints Don Brucker or failing him Richard O'Connor, M.D. or failing him
____________________ as proxy to attend the annual general meeting of the
Company and any adjournment or adjournments thereof and to vote the shares in
the capital of the Company registered in the name of the undersigned as follows:
Item (1) To elect DON BRUCKER as a director.
VOTE FOR ( ) WITHHELD VOTE ( )
----- -----
To elect ROBERT HAMBURGER, M.D. as a director.
VOTE FOR ( ) WITHHELD VOTE ( )
----- -----
To elect RICHARD O'CONNOR, M.D. as a director.
VOTE FOR ( ) WITHHELD VOTE ( )
----- -----
To elect STANLEY V. HEYMAN as a director.
VOTE FOR ( ) WITHHELD VOTE ( )
----- -----
Item (2) To approve an increase in the authorized common share capital
of the Corporation from 10,000,000 common shares to 50,000,000 common
shares and that the Articles of the Corporation be altered accordingly.
VOTE FOR ( ) VOTE AGAINST ( )
----- -----
Item (3) To approve the Company's 1996 Stock Bonus and Option plan.
VOTE FOR ( ) VOTE AGAINST ( )
----- -----
Item (4) To approve the selection of Harlan and Boettger as independent
auditors for the Company.
VOTE FOR ( ) VOTE AGAINST ( )
----- -----
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AND WHERE A CHOICE IS
SPECIFIED WILL BE VOTED AS DIRECTED. WHERE NO CHOICE IS SPECIFIED, THIS PROXY
WILL CONFER DISCRETIONARY AUTHORITY AND WILL BE VOTED IN FAVOR OF THE
RESOLUTIONS REFERRED TO ABOVE. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY
TO VOTE IN RESPECT OF ANY AMENDMENTS OR VARIATIONS TO THE MATTERS IDENTIFIED IN
THE NOTICE OF ANNUAL GENERAL MEETING OR ANY OTHER MATTER WHICH MAY PROPERLY COME
BEFORE THE MEETING AND IN SUCH MANNER AS SUCH NOMINEE IN HIS JUDGMENT MAY
DETERMINE, all in the same manner and to the same extent and with the same power
as the undersigned could do if the undersigned were personally present at the
meeting.
<PAGE> 31
The undersigned hereby revoke any proxy previously given.
AS WITNESS MY HAND this __________ day of ____________________ , 1996.
PRINT NAME ______________________________________
SIGNATURE _______________________________________
NOTE: YOU MUST DATE AND SIGN THE PROXY
NOTES
1. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AND WHERE A CHOICE IS
SPECIFIED WILL BE VOTED AS DIRECTED. WHERE NO CHOICE IS SPECIFIED, THIS PROXY
WILL CONFER DISCRETIONARY AUTHORITY AND WILL BE VOTED IN FAVOR OF THE
RESOLUTIONS REFERRED TO ABOVE. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY
TO VOTE IN RESPECT OF ANY AMENDMENTS OR VARIATIONS TO THE MATTERS IDENTIFIED IN
THE NOTICE OF ANNUAL GENERAL MEETING OR ANY OTHER MATTER WHICH MAY PROPERLY COME
BEFORE THE MEETING AND IN SUCH MANNER AS SUCH NOMINEE IN HIS JUDGMENT MAY
DETERMINE.
2. IF THE STOCKHOLDER DOES NOT WANT TO APPOINT EITHER OF THE PERSONS NAMED IN
THE INSTRUMENT OF PROXY, HE SHOULD STRIKE OUT THEIR NAMES AND INSERT IN THE
BLANK SPACE PROVIDED THE NAME OF THE PERSON HE WISHES TO ACT AS HIS PROXY. SUCH
OTHER PERSON NEED NOT BE A STOCKHOLDER OF THE CORPORATION.
3. THE INSTRUMENT OF PROXY WILL NOT BE VALID UNLESS IT IS DATED AND SIGNED BY
THE STOCKHOLDER OR BY HIS ATTORNEY DULY AUTHORIZED BY HIM IN WRITING, OR IN THE
CASE OF A CORPORATION, IS EXECUTED BY AN OFFICER OR OFFICERS OR ATTORNEY FOR THE
CORPORATION. IF THE INSTRUMENT OF PROXY IS EXECUTED BY AN ATTORNEY FOR AN
INDIVIDUAL STOCKHOLDER OR JOINT STOCKHOLDERS OR BY AN OFFICER OR OFFICERS OR THE
ATTORNEY, AS THE CASE MAY BE, OR A NOTARIAL COPY THEREOF, MUST ACCOMPANY THE
PROXY INSTRUMENT.
4. THE INSTRUMENT OF PROXY TO BE EFFECTIVE MUST BE DEPOSITED WITH:
HARRIS TRUST & SAVINGS BANK
ATTN: TONYA BODDIE
311 W. MONROE, 14TH FLOOR
CHICAGO, IL 60606
NOT LESS THAN FORTY-EIGHT (48) HOURS, EXCLUDING SATURDAYS AND HOLIDAYS,
PRECEDING THE MEETING OR AN ADJOURNMENT OF THE MEETING.
5. IF THIS PROXY IS BEING MAILED FROM OUTSIDE OF THE UNITED STATES ADDITIONAL
POSTAGE MAY BE REQUIRED. GENERALLY, U.S. MAILINGS REQUIRE $0.32 POSTAGE.
