<PAGE> 1
As filed with the Securities and Exchange Commission on January 24, 1997.
Registration Number 33-93132
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FIRST POST EFFECTIVE AMENDMENT TO
FORM S-8 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
La Jolla Diagnostics, Inc.
-------------------------
(Full name of Registrant in Charter)
California 94-2901715
---------- ----------
State of Incorporation IRS EMPLOYER IDENTIFICATION NUMBER
7777 Fay Avenue, Suite 160
La Jolla, California 92037
--------------------------
(Address of Principal Executive Offices)
1996 INCENTIVE STOCK BONUS AND OPTION PLAN
------------------------------------------
(Full title of Plan)
Donald Brucker
7777 Fay Avenue, Suite 160
La Jolla, CA 92037
(619) 454-6790
----------------
(Name, Address and Telephone Number of Agent for Service)
Calculation of Registration Fee
<TABLE>
<CAPTION>
Title of securities to Amount to be Proposed maximum Maximum aggregate Amount of
be registered registered offering Price Per Share registration securities fee (1)
------------- ---------- ------------------------ ------------ ------------------
<S> <C> <C> <C> <C>
Common Stock, 3,000,000 shares 0.31 $ 930,000 $282
No Par Value
</TABLE>
(1) Estimated solely for the purpose of calculating the registration
fee based upon the average bid and asked price of the Common Stock on the OTC
Electronic Bulletin Board on November 26, 1996.
<PAGE> 2
Prospectus
La Jolla Diagnostics, Inc.
3,000,000 Commons Shares
Issuable under the
1996 Incentive Stock Bonus and Option Plan
This Prospectus relates to 3,000,000 shares of common stock, no par
value (the "Common Stock"), of La Jolla Diagnostics, Inc., a California
corporation (the "Company"), issuable pursuant to 1996 Incentive Stock Bonus and
Option Plan described herein.
The delivery of this Prospectus at any time does not imply that the
information contained herein is correct as of any time subsequent to the date
hereof.
No person has been authorized to give any information or to make any
representation other than as contained herein in connection with the offer
contained in this Prospectus, and, if given or made, such information or
representation must not be relied upon.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is January 24, 1997.
<PAGE> 3
DESCRIPTION OF 1996 INCENTIVE STOCK BONUS AND OPTION PLAN
Introduction and Background
The Board of Directors and shareholders of the Company have adopted the
1996 Incentive Stock Bonus and Option Plan (the "Plan") whereby stock, bonuses
and incentive options to purchase shares of the Company's Common Stock may be
granted to eligible employees, directors and consultants of the Company.
The Board of Directors has reserved 3,000,000 shares of the Company's
Common Stock for issuance in connection with stock bonuses and options granted
under the Plan; provided however, at no time shall the total number of shares
issuable upon exercise of all outstanding options and the total number of shares
provided for under any stock bonus or similar plan of the Company exceed the
applicable percentage as calculated in accordance with the conditions and
exclusions set forth in section 260.140.45 of Title 10 of the California Code of
Regulations, based on the number of shares of the Company which are outstanding
at the time the calculation is made. A copy of the Plan is attached hereto as
Exhibit "A." The Plan is not qualified under nor subject to any provisions of
the Employee Retirement Security Acts of 1974 ("ERISA").
Purpose
The purpose of the Plan is to advance the interests of the Company and
its shareholders by providing employees, directors and consultants who have
substantial responsibility for the direction and management of the Company with
an entrepreneurial incentive to (i) provide high levels of performance, (ii)
undertake extraordinary efforts to increase the earnings of the Company, (iii)
increase their proprietary interest in the Company, and (iv) remain in the
employ and continue providing services to the Company.
The primary reason for adopting the Plan now, is to enhance the
Company's ability to attract and retain qualified employees, directors and
consultants by providing an opportunity to acquire a proprietary interest in the
success of the Company, or increase such interest.
Administration
The Plan shall be administered by a committee of the Board of Directors
of the Company 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.
<PAGE> 4
Eligibility for the Plan.
As of October 31, 1996 there were 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 30 days after termination of the optionee's
employment or other relationship, unless such termination is the result of death
or disability, in which event such options may be exercised for the period of
six months after the date of termination. During said period such option may be
exercised in accordance with its terms, but only for the number of shares with
respect to which installments have accrued and vested as set forth in the
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 the Company, 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 the Company 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 the Company resulting from the subdivision, combination or
consolidation of shares or other capital adjustment, or the
<PAGE> 5
payment of a stock dividend, stock split or other increase or decrease in the
outstanding shares insofar as effected without receipt of consideration by the
Company.
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 the Company for federal income tax
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. The Company
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.
<PAGE> 6
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 the
Company 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 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.
The Company 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 the Company 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 the Company, 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.
<PAGE> 7
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-8 (the "Registration Statement") under the Securities Act with respect to
the securities offered by this Prospectus. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted from this Prospectus as permitted by the rules and regulations of
the Commission. Statements made in this Prospectus regarding the contents of any
contract, agreement or other document are not necessarily complete. With respect
to each contract, agreement or other document filed with the Commission as an
exhibit to the Registration Statement, reference is made to the exhibit for
further information regarding the contents thereof, and each such statement is
qualified in its entirety by such reference. The Registration Statement,
including the exhibits and schedules thereto, is available for inspection at,
and copies of such materials may be obtained at prescribed rates from, the
public reference facilities maintained by the Commission at its principal
offices located at Judiciary Plaza, 450 Fifth Street, NW, Washington, DC 20549.
The Company is subject to the informational requirements of the
Exchange Act and in accordance without Exchange Act files reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the principal
office of the Commission set forth above. Incorporated by reference in this
Prospectus, and subject in each case to information contained in this
Prospectus, are following documents filed by the Company with the Commission
pursuant to the Exchange Act: (1) the Company's Annual Report on Form 10-KSB for
the fiscal year ended June 30, 1996, (2) the Company's Proxy Statement dated
September 18, 1996, and the Company's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1996.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this prospectus and prior
to the termination of the Plan shall be deemed to be incorporated by reference
in this Prospectus and to be a part of this Prospectus from the date of filing
of such document. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement as modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of the full Registration Statement and any and all of the documents incorporated
by reference herein (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference in such documents). Such request
should be directed to Donald Brucker, President, La Jolla Diagnostics, Inc.,
7777 Fay Avenue, Suite 160, La Jolla, California 92037, (619) 454-6790,
facsimile (619) 454-7851.
<PAGE> 8
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Information incorporated by reference.
La Jolla Diagnostics, Inc. ("the Company") hereby incorporates by
reference in this registration statement the following documents:
(a)The Company's latest annual report on Form 10-KSB filed pursuant to
Sections 13(a) or 5(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), containing audited financial statements for the Company's
latest fiscal year.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the document referred
to in (a) above.
(c) The Registrant's definitive proxy statement or the information
statement, if any, filed pursuant to Section 14 of the Exchange Act in
connection with the latest annual meeting of its stockholders, and any
definitive proxy or information statements so filed in connection with any
subsequent special meeting of its stockholders.
(d) All documents filed by the Registrant pursuant to Section 13(a),
13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective
amendment which indicates that all shares offered hereby have been sold or which
deregisters all shares then remaining unsold, shall be deemed to be incorporated
in this Registration Statement by reference and to be a part hereof from the
date of filing of such documents.
Item 4. Description of Securities
The registrant hereby registers its common stock to be issued and
options to be granted pursuant to the 1996 Incentive Stock Bonus and Option Plan
of the Company. The common stock to be offered hereby is registered under
Section 12 of the Exchange Act.
Stock bonuses granted pursuant to the Plan will vest at the time or
times determined by the committee administering the Plan. 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 three 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 which installments have been accrued and vested as set
forth in optionee's option as of the date of the termination of employment.
Unvested options under the Plan are not transferable except by will or by law of
descent and distribution as defined in the Internal Revenue Code, and options
may be exercised during the lifetime of the person to whom the option is granted
only by such person or such person's guardian or legal representative. The
exercise of shares of common stock subject to options qualifying as incentive
stock options 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 direction of the Committee by transfer of
previously acquired shares of the Company common stock.
<PAGE> 9
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Section 204 of the General Corporation Law of the State of California
authorizes a corporation to adopt a provision in its articles of incorporation
eliminating the personal liability of directors to corporations and their
shareholders for monetary damages for breach or alleged breach of directors'
"duty of care." Following a California corporation's adoption of such a
provision, its directors are not accountable to corporations and their
shareholders for monetary damages for conduct constituting negligence (or gross
negligence) in the exercise of their fiduciary duties; directors continue to be
subject to equitable remedies such as injunction or rescission. Under California
law, a director also continues to be liable for: (1) a breach of his or her duty
of loyalty; (2) acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law; (3) illegal payments of dividends and
(4) approval of any transaction from which a director derives an improper
personal benefit. The adoption of such a provision in the articles of
incorporation also does not limit directors' liability for violations of the
federal securities laws.
Section 317 of the General Corporation Law of the State of California
makes provision for the indemnification of officers, directors and other
corporate agents in terms sufficiently broad to indemnify such persons, under
certain circumstances, for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933. A recent amendment to
Section 317 provides that the indemnification provided by this section is not
exclusive to the extent additional rights are authorized in a corporation's
articles of incorporation. The Company has adopted provisions in its Bylaws
which authorize the Company to indemnify its officers, directors and other
agents to the full extent permitted by law.
Item 7. Exemption from Registration Claimed
Not Applicable
Item 8. Exhibits
The Exhibit Index immediately preceding the exhibits is attached hereto
and incorporated herein by reference.
Item 9. Undertakings
(a) Rule 415 Offering
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
<PAGE> 10
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
(iii) To include any additional or changed material information on the
plan of distribution.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a posteffective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Filing incorporating subsequent Exchange Act documents by
reference.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Request for acceleration of effective date or filing of
registration statement on Form S-8.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of San Diego, State of California, on January 24,
1997.
La Jolla Diagnostics, Inc.
By: /s/ Don Brucker
President, Chief Executive Officer, Chief Financial Officer
and Director (Principal Executive and Accounting Officer)
<PAGE> 12
POWER OF ATTORNEY
The officers and directors of La Jolla Diagnostics, Inc. whose signatures appear
below, hereby constitute and appoint Donald Brucker and Robert Hamburger, and
each of them, their true and lawful attorneys and agents, with full power of
substitution, each with power to act alone, to sign and execute on behalf of the
undersigned any amendment or amendments to this registration statement on Form
S-8, and each of the undersigned does hereby ratify and confirm all that each of
said attorney and agent, or their or his substitutes, shall do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities indicated on January 24, 1997.
Signature
Title
/s/ Don Brucker
President, Chief Executive Officer, Chief Financial Officer
and Director (Principal Executive and Accounting Officer)
/s/ Robert N. Hamburger, M.D.
Secretary and Director,
/s/ Stanley V. Heyman
Director,
/s/ Richard O'Connor, M.D.
Director,
/s/ Gregory S. Campbell
Director,
<PAGE> 13
EXHIBIT INDEX
4.1 1996 Incentive Stock Bonus and Option.
5. Opinion regarding legality.
23.1 Consent of Counsel (included in Exhibit 5).
23.2 Consent of Auditors
24. Power of Attorney (included in signature pages to this
registration statement).
<PAGE> 1
EXHIBIT 4.1
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.
<PAGE> 2
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.
<PAGE> 3
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; provided
however, at no time shall the total number of shares issuable upon exercise of
all outstanding options and the total number of shares provided for under any
stock bonus or similar plan of the Company exceed the applicable percentage as
calculated in accordance with the conditions and exclusions set forth in section
260.140.45 of Title 10 of the California Code of Regulations, based on the
number of shares of the Company which are outstanding at the time the
calculation is made. 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
<PAGE> 4
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.
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 in accordance with Section
260.140.50 of Title 10 of the California Code of Regulations. 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 30 days, 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 such termination is the result
of death or disability, in which event such options may be exercised for the
period of six (6) months after the date of termination.
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.
<PAGE> 5
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.
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.
<PAGE> 6
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.
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.
<PAGE> 7
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. 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.
<PAGE> 8
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.
The Plan was approved by shareholders on September 18, 1996 and will become
effective with the filing of this document.
16.2 TERMINATION DATE.
Except as to Options previously granted and outstanding under the Plan, the Plan
shall terminate at midnight on November 27, 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.
19. FINANCIAL STATEMENTS.
The Company shall provide to each person under the Plan who is granted an option
or stock bonus the year-end financial statement of the Company, at least
annually as soon as reasonably practicable following the preparation of such
financial statements.
<PAGE> 1
EXHIBIT 5
January 24, 1997
la Jolla Diagnostics, Inc.
7777 Fay Ave., Suite 160
La Jolla, CA 92037
Re: La Diagnostics, Inc.
1996 Stock Option Plan
Registration Statement on Form S-8
Ladies and Gentlemen:
As legal counsel for La Jolla Diagnostics, Inc., a California corporation (the
"Company"), we are rendering this opinion in connection with the registration
under the Securities Act of 1933, as amended, of up to 3,000,000 shares of the
Common Stock of the Company which may be issued pursuant to the La Jolla
Diagnostics, Inc. 1996 Incentive Stock Bonus and Option Plan (the "Plan"). We
have examined all instruments, documents and records which we deemed relevant
and necessary for the basis of our opinion hereinafter expressed. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies.
We are admitted to practice only in the State of California and we express no
opinion concerning any law other than the law of the State of California, and
the federal law of the United States. Based on such examination, we are of the
opinion that the options to be granted and the 3,000,000 shares of Common Stock
which may be issued pursuant to the Plan are duly authorized options and shares
of the Company's Common Stock, respectively, and, when issued against payment of
the consideration therefor in accordance with the provisions of the Plan, will
be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and the use of our name wherever it
appears in said Registration Statement.
Respectfully submitted,
/s/ BLANCHARD KRASNER & FRENCH
BLANCHARD KRASNER & FRENCH
A Professional Corporation
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
La Jolla Diagnostics, Inc. on Form S-8 of our report dated October 11, 1996,
appearing in the Annual Report on Form 10-KSB of La Jolla Diagnostics, Inc. for
the year ended June 30, 1996.
/s/ HARLAN & BOETTGER, CPA's
San Diego, California
January 24, 1997
