As filed with the Securities and Exchange Commission on May 10, 2000
Registration Number 33-93132
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
La Jolla Diagnostics, Inc.
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(Full name of Registrant in Charter)
California 94-2901715
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State of Incorporation IRS EMPLOYER IDENTIFICATION NUMBER
7855 Ivanhoe Avenue, Suite 322
La Jolla, California 92037
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(Address of Principal Executive Offices)
2000 INCENTIVE STOCK BONUS AND OPTION PLAN
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(Full title of Plan)
Donald Brucker
7855 Ivanhoe Avenue, Suite 322
La Jolla, California 92037
(858) 454-6790
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(Name, Address and Telephone Number of Agent for Service)
Calculation of Registration Fee
Title of Proposed Maximum Amount of
securities to Amount to be maximum offering aggregate securities
be registered registered Price Per Share registration fee (1)
Common Stock, 5,000,000 shares .445 2,225,000 587.40
(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 Bulletin
Board on May 04, 2000.
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Prospectus
La Jolla Diagnostics, Inc.
5,000,000 Common Shares
Issuable under the
2000 Incentive Stock Bonus and Option Plan
This Prospectus relates to 5,000,000 shares of common stock, no par value
(the "Common Stock"), of La Jolla Diagnostics, Inc., a California corporation
(the "Company"), issuable pursuant to the 2000 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 May 10, 2000.
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<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
DESCRIPTION OF 2000 INCENTIVE STOCK BONUS AND OPTION PLAN
Introduction and Background.
The Board of Directors and shareholders of the Company have adopted the
2000 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 5,000,000 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 compensating employees, directors and consultants 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, compensate and retain qualified employees, directors and
consultants by providing an opportunity to acquire a proprietary interest in
the success of the Company.
Administration.
The Plan shall be administered by the Board of Directors or 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, adopt and amend or
rescind rules, procedures and forms relating to the Plan; to determine persons
who may participate in the Plan; to determine the time at which bonuses or
options are granted under the Plan; to 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 10, 2000 there were nineteen (19) eligible participants under
the Plan, including three (3) executive officers, four (4) directors and
fifteen (15) other employees and consultants.
Subject to shareholder approval, the Plan will provide for the grant of stock
bonuses and both incentive stock options ("ISOs"), intended to qualify as such
under former section 422A (now Section 422) of the Internal Revenue Code, as
amended, and nonstatutory stock options ("NSOs"). ISOs 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 option 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 Stock bonuses and options shall
not vest prior to shareholder approval of 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 30 days after termination of the optionee's
employment or other relationship, unless otherwise agreed or 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, unvested NSOs and all ISOs under the Plan are not
transferable except by will or by the laws of descent and distribution as
defined in the Code, and ISOs 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 ISOs 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 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.
In the case of NSOs, 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 restrictions 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 or 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 an 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.
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ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement of
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 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 with the 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 the
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, 1999; (2) the Company's Quarterly Report on Form 10-QSB for
quarterly period ended September 30, 1999; (3) the Company's Quarterly Report
on Form 10-QSB for quarterly period ended December 31, 1999; and (4) the
Company's Preliminary Proxy Statement dated May 2, 2000.
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.
Item 2. Registrant Information and Employee Plan Annual Information.
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, Chief Executive Officer,
La Jolla Diagnostics, Inc., 7855 Ivanhoe Avenue, Suite 322, La Jolla,
California 92037, (858) 454-7851.
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
fiscal year ended June 30, 1999.
(b) The Company's Quarterly Reports on Form 10-QSB for quarterly periods
ended September 30, 1999 and December 31, 1999.
(c) 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.
(d) The Registrant's preliminary proxy statement or the information
statement, if any, filed pursuant to Section 14 of the Exchange Act in
connection with the annual meeting of its stockholders to be held on
June 29, 2000.
(e) All documents filed by the Registrant pursuant to Section 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Registration
Statement is filed with the SEC and prior to the filing of a post-effective
amendment which indicates that all shares offered hereby have been sold or
which deregisters all shares the 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 2000 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 30 days 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 and all ISOs under the Plan are not transferable except by
will or by law of descent and distribution as defined in the Internal Revenue
Code, and ISOs 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.
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 it 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;
(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 post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) 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.
(c) 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 settlement 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.
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
May 10, 2000.
La Jolla Diagnostics, Inc.
By: /S/ DONALD BRUCKER
--------------
Donald Brucker
Chief Executive Officer, Chief Financial Officer
and Director (Principal Executive and Accounting Officer)
POWER OF ATTORNEY
The officers and directors of La Jolla Diagnostics, Inc., whose signatures
appear below, hereby constitute and appoint Donald Brucker, Stephen Roberts,
Thomas Cajka and Greg Caton, 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 the 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 May 10, 2000.
/S/ DONALD BRUCKER
----------------------------------
Donald Brucker
Chief Executive Officer, Chief Financial Officer
and Director (Principal Executive and Accounting Officer)
/S/ STEPHEN ROBERTS
----------------------------------
Stephen Roberts, M.D.
President, Secretary and Director
/S/ THOMAS CAJKA
----------------------------------
Thomas Cajka
Director
/S/ GREG CATON
----------------------------------
Greg Caton
Director
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EXHIBIT INDEX
4.1* Registrant's Articles of Incorporation (under its former name,
Women's Healthcare Centers of America, Inc.).
4.2* Certificate of Amendment of the Articles of Incorporation of
Women's Healthcare Centers of America, Inc.
4.3* Certificate of Amendment of the Articles of Incorporation of
Chemical Dependency Healthcare, Inc.
4.4* Registrant's Bylaws.
4.5* Specimen Stock Certificate.
5.1 Opinion of Blanchard, Krasner & French regarding legality.
23.1 Consent of Blanchard, Krasner & French (included in Exhibit 5.1).
23.2 Consent of Logan Throop and Co.
24.1 Power of Attorney (included in signature pages to this Registration
Statement).
99.1* 2000 Incentive Stock Bonus and Option Plan
99.2* Form of Stock Option Agreement
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* Previously filed as an exhibit to the Registration Statement on Form SB-2
filed by the Registrant on May 18, 1995, as amended through October 12, 1995,
and incorporated herein by reference.
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<PAGE>
EXHIBIT 5.1
May 5, 2000
La Jolla Diagnostics, Inc.
7855 Ivanhoe Ave., Suite 322
La Jolla, CA 92037
Re: La Jolla Diagnostics, Inc.
2000 Incentive Stock Bonus and 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 5,000,000 shares of the
Common Stock of the Company which may be issued pursuant to the Company's 2000
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 5,000,000 shares of Common Stock which may be issued pursuant to the
Plan when issued against payment of the consideration therefor in accordance
with the provisions of the Plan, will be validly issued, fully paid and non-
assessable.
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
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<PAGE>
EXHIBIT 23.2
May 8, 2000
La Jolla Diagnostics, Inc.
7855 Ivanhoe Avenue, Suite 322
La Jolla, CA 92037
Ladies and Gentlemen:
We consent to the incorporation by reference in this Registration Statement
of La Jolla Diagnostics, Inc. ("The Company") on Form S-8 of our report dated
October 12, 1999, appearing in the Annual Report on Form 10-KSB of the Company
for the year ended June 30, 1999.
/s/ LOGAN THROOP & CO., LLP
-----------------------
Logan Throop & Co., LLP
San Diego, California
May 8, 2000
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<PAGE>
EXHIBIT 99.1
LA JOLLA DIAGNOSTICS, INC.
2000 INCENTIVE STOCK BONUS AND OPTION PLAN
1. PURPOSE OF THE PLAN.
The purpose of this 2000 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, compensating, 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, 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 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 as defined in Rule 16b-3.
3.2 GRANTS OF STOCK BONUSES AND OPTIONS BY THE COMMITTEE
In accordance with the provisions of the Plan, the Committee, by resolutions,
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 referred to below in Section 7. Such agreement may include such
other provisions as the Committee may deem necessary or desirable and
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, including, 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.
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 Five Million (5,000,000) 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.
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.
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 form 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 acquires 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 of
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.
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 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 it does
adopt.
The Committee shall provide to each Optionee then holding an outstanding and
unexercised Option no 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 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 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.
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
July 1, 2000.
16.2 TERMINATION DATE.
Except as to Options previously granted and outstanding under the Plan, the
Plan shall terminate at midnight on July 1, 2010 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 and independent of
any and all such other arrangements. Neither the adoption of the Plan by the
Board nor 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.
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<PAGE>
EXHIBIT 99.2
LA JOLLA DIAGNOSTICS, INC.
STOCK OPTION AGREEMENT
RECITALS
A. The Board of Directors of La Jolla Diagnostics, Inc. (the
"Company") has adopted the Company's 2000 Incentive Stock Bonus and Option Plan
(the "Plan") for the purpose of attracting, compensating and retaining the
services of selected key employees, directors and consultants who contribute to
the financial success of the Company.
B. Optionee is an individual who is to render or has rendered
valuable services to the Company, and this Agreement is executed pursuant to,
and is intended to carry out the purposes of, the Plan in connection with the
Company's grant of a stock option to Optionee.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and conditions
set forth in this Agreement, the Company hereby grants to Optionee, as of the
grant date (the "GRANT DATE") specified in the accompanying Notice of Grant of
Stock Option or other employment or similar agreement notifying Optionee of the
grant of a stock option by the Company to Optionee (the "GRANT NOTICE"), an
option to purchase up to that number of shares of the Company's Common Stock
(the "OPTION SHARES") as is specified in the Grant Notice. The Grant Notice
shall also specify whether the option granted is an incentive stock option or a
nonstatutory stock option, as such terms are defined below. The Option Shares
shall be purchasable from time to time during the option term at the option
price per share (the "OPTION PRICE") specified in the Grant Notice.
1.1 Incentive stock options ("ISOs"), intended to qualify
as such under former section 422A (now Section 422) of the Internal Revenue
Code, as amended (the "Code"), shall be granted only to the Company's salaried
officers and full-time employees.
1.2 Any option granted that does not meet the required
conditions of an ISO as set forth above in subparagraph 1.1 shall be deemed a
nonstatutory stock option ("NSO").
2. OPTION TERM. This Option shall expire at the close of
business on the expiration date (the "EXPIRATION DATE") specified in the Grant
Notice, unless sooner terminated in accordance with Sections 5, 6 or 18.
3. CERTAIN OPTIONS NONTRANSFERABLE; EXCEPTION. If the
accompanying Grant Notice specifies that this Option is an ISO, or an NSO,
which has not yet vested, this Option shall be neither transferable nor
assignable by Optionee other than by will or by the laws of descent and
distribution. If this Option is an ISO, it may be exercised, during Optionee's
lifetime, only by Optionee.
4. DATES OF EXERCISE. This Option may not vest and may not be
exercised in whole or in part at any time prior to the time the Plan is
approved by the Company's shareholders in accordance with Section 18. Provided
such shareholder approval is obtained, this Option shall thereupon vest as is
specified in the Grant Notice.
5. ACCELERATED TERMINATION OF OPTION TERM. The option term
specified in Section 2 shall terminate (and this Option shall cease to be
exercisable) prior to the Expiration Date should one of the following
provisions become applicable:
5.1 Except as otherwise provided in subparagraph 5.2.
below, should Optionee's employment or other relationship terminate with the
Company ("TERMINATION"), as shall be determined by the Company's Board of
Directors or a committee designated by the Board of Directors to administer the
Plan (the "COMMITTEE"), while this Option is outstanding, then all unvested
Options shall immediately terminate and the period for exercising any vested
Option shall be reduced to a thirty (30) day period commencing on the date of
Termination. Upon the expiration of such thirty (30) day period or (if
earlier) upon the Expiration Date, this Option shall terminate and cease to be
outstanding.
5.2 Should the Termination be a result of the death or
disability of Optionee, then the personal representative of the Optionee's
estate or the person or persons to whom the Option is transferred pursuant to
the Optionee's will or in accordance with the law of descent and distribution
shall have the right to exercise any vested Option within six (6) months after
the date of the Termination. Upon the expiration of such six (6) month period
or (if earlier) upon the Expiration Date, this Option shall terminate and cease
to be outstanding.
5.3 During the limited period of exercisability applicable
under Sections 5.1 and 5.2 above, this Option may be exercised for any or all
of the Option Shares for which this Option is, at the time of the Termination,
exercisable in accordance with the exercise schedule specified in the Grant
Notice and the provisions of Section 6 of this Agreement.
6. SPECIAL TERMINATION OF OPTION.
6.1 "CORPORATE TRANSACTION" shall mean any of the
following transactions:
6.1.1 A merger or consolidation in which the
Company is not the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Company's incorporation;
6.1.2 The sale, transfer or other disposition of
all or substantially all of the assets of the Company in liquidation or
dissolution of the Company;
6.1.3 Any reverse merger in which the Company is
the surviving entity, but in which fifty percent (50%) or more of the Company's
outstanding voting stock is transferred to holders different from those who
held the securities immediately prior to the merger; or
6.1.4 An acquisition by any person or related
group of persons (other than the Company or a person that directly or
indirectly controls, is controlled by or is under common control with, the
Company) of ownership of more than fifty percent (50%) of the Company's
outstanding Common Stock, pursuant to a tender or exchange offer (other than a
tender or exchange offer approved by the Board of Directors of the Company and
the Board of Directors determines in its sole discretion shall not be
considered a "Corporate Transaction").
All outstanding unexercised Options granted under this Agreement shall
automatically and immediately vest and become exercisable immediately prior to
the specified effective date for the Corporate Transaction, unless, with the
approval of the Board of Directors of the Company, the Options are assumed in
connection with such Corporate Transaction or substitute options are granted as
provided in the Plan. Upon consummation of the Corporate Transaction, all
outstanding Options under this Agreement shall terminate and cease to be
outstanding, unless assumed by the surviving successor corporation or parent
thereof.
6.2 If this Option is to be assumed in connection with the
Corporate Transaction or is otherwise to continue in effect, then it shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would have been
issuable, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such Option
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the Option Price payable per share, provided that the aggregate
Option Price payable for such securities shall remain the same.
6.3 The exercisability of this Option as an ISO under the
Federal tax laws (if designated as such in the Grant Notice) shall, in
connection with any such Corporate Transaction, be subject to the applicable
dollar limitation set forth in the Code.
6.4 This Agreement shall not in any way affect the right
of the Company to adjust, reclassify, reorganize or otherwise make changes in
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES. In the event additional shares
of Common Stock are issued pursuant to a stock split, stock dividend or other
recapitalization resulting in combinations or exchanges of shares or otherwise,
the number of shares of Common Stock then covered by each outstanding Option
shall be increased proportionately with no increase in the total Option Price
of the Common Stock then so covered, and the number of shares of Common Stock
reserved for the purpose of the Plan shall be increased by the same proportion.
In the event that the shares of Common Stock of the Company from time to time
issued and outstanding are reduced by a combination of shares, the number of
shares of Common Stock then covered by each outstanding Option shall be reduced
proportionately with no reduction in the total Option Price of the Common Stock
then so covered, and the number of shares of Common Stock reserved for the
purpose of the Plan shall be reduced by the same proportion.
8. PRIVILEGE OF STOCK OWNERSHIP. The holder of this Option shall
not have any of the rights of a shareholder with respect to the Option Shares
until such individual shall have exercised the Option and paid the Option
Price.
9. MANNER OF EXERCISING OPTION.
9.1 In order to exercise this Option with respect to all
or any part of the Option Shares for which this Option is at the time
exercisable, Optionee (or in the case of exercise after Optionee's death, the
Optionee's executor, administrator, heir or legatee, as the case may be) must
pay the aggregate Option Price in one of the following alternative forms:
(1) Full payment in cash or check; or
(2) Any other form which the Board of Directors
or the Committee, if formed, may, in its
discretion, approve at the time of exercise.
9.2 For purposes of this Agreement, the fair market value
of a share of Common Stock on any relevant date shall be determined in
accordance with the terms of the Plan.
9.3 As soon after the Exercise Date as practical, the
Company shall mail or deliver to Optionee or to the other person or persons
exercising this Option a certificate or certificates representing the shares so
purchased and paid for, with the appropriate legends affixed thereto; provided,
however, if in the determination of the Committee, based upon the advice of the
Company's tax advisors, the issuance of the Option Shares at such time would
materially reduce or eliminate any tax credit, net loss carry-over or other tax
benefit of the Company, the Company may delay issuance and delivery of the
Option Shares until up to the earlier of: (i) the day preceding the occurrence
of a Corporate Transaction; or (ii) one year after the date of exercise by
Optionee.
9.4 In no event may this Option be exercised for any
fractional shares.
10. FEDERAL INCOME TAX CONSEQUENCES. The federal income tax
consequences concerning the grant of this Option is briefly discussed in the
Plan and Section 19 below. The Company assumes no responsibility to advise
Optionee regarding the tax consequences of exercising an option or disposing of
the Option Shares and Optionee must rely solely upon Optionee's independent tax
advisors.
11. COMPLIANCE WITH LAWS AND REGULATIONS.
11.1 The exercise of this Option and the issuance of Option
Shares upon such exercise shall be subject to compliance by the Company and the
Optionee with all applicable requirements of law relating thereto.
11.2 In connection with the exercise of this Option,
Optionee shall execute and deliver to the Company such representations in
writing as may be requested by the Company in order for it to comply with the
applicable requirements of Federal and State securities laws.
12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Section 3 and Section 5 of this Agreement, the provisions of this
Agreement shall inure to the benefit of, and be binding upon, the successors,
administrators, heirs, legal representatives and assigns of Optionee and the
successors and assigns of the Company.
13. LIABILITY OF COMPANY.
13.1 If the Option Shares covered by this Agreement exceed,
as of the Grant Date, the number of shares of Common Stock which may without
shareholder approval be issued under the Plan, then this Option shall be void
with respect to such excess shares, unless shareholder approval of an amendment
sufficiently increasing the number of shares of Common Stock issuable under the
Plan is obtained.
13.2 The inability of the Company to obtain approval from
any regulatory body having authority deemed by the Company to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Company of any liability with respect to the non-issuance or sale
of the Common Stock as to which such approval shall not have been obtained.
The Company, however, shall use its diligent efforts to obtain all such
approvals.
14. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement
or in the Plan shall confer upon the Optionee any right to continue in the
service of the Company for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company or the rights of the
Optionee, which rights are hereby expressly reserved by each, to terminate
Optionee's Service at any time for any reason whatsoever, with or without
cause.
15. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Company in care of Donald Brucker at 7855 Ivanhoe Ave., Suite 322, La
Jolla, CA 92037. Any notice required to be given or delivered to Optionee
shall be in writing and addressed to Optionee at the last known address of
Optionee in Company's employment records. All notices shall be deemed to have
been given or delivered upon personal delivery or upon deposit in the U.S.
mail, postage prepaid and properly addressed to the party to be notified.
16. CONSTRUCTION. This Agreement and the option evidenced hereby
are made and granted pursuant to the Plan and are in all respects limited by
and subject to the express terms and provisions of the Plan.
17. GOVERNING LAW. The interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules and the laws
of the United States of America.
18. SHAREHOLDER APPROVAL. The grant of this Option is subject to
approval of the Plan, and if applicable each amendment to the Plan, by the
Company's shareholders. Notwithstanding any provision of this Agreement to the
contrary, this Option may not be exercised in whole or in part until such
shareholder approval is obtained. In the event that such shareholder approval
is not obtained, then this Option shall thereupon terminate in its entirety and
the Optionee shall have no further rights to acquire any Option Shares
hereunder.
19. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE STOCK OPTION. In
the event this Option is an incentive stock option as specified in the Grant
Notice, this Option may cease to qualify for favorable tax treatment as an
incentive stock option under the Federal tax laws if (and to the extent) this
Option is exercised and the Option Shares are disposed of other than in
compliance with applicable Federal tax laws and regulations. Optionee should
rely solely upon Optionee's independent tax advisors.
20. WITHHOLDING. Optionee hereby agrees to make appropriate
arrangements with the Company for the satisfaction of all Federal, State or
local income tax withholding requirements and Federal social security employee
tax requirements applicable to the exercise of this Option.
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La Jolla Diagnostics, Inc. Optionee
