SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. _)
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[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Corniche Group Incorporated
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(Name of Registrant as Specified in Its Charter)
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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CORNICHE GROUP INCORPORATED
330 South Service Road, Suite 120, Melville, New York 11747
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
July 24, 2003
To the Stockholders of CORNICHE GROUP INCORPORATED:
The Annual Meeting of Stockholders of Corniche Group Incorporated, will be
held at the Corporation's offices at 330 South Service Road, Melville, New York,
on July 24, 2003, at 10:00 A.M. (New York City time) for the purpose of
considering and acting upon the following matters:
1. Election of two directors;
2. Consideration of and vote to approve the proposed change of the
Corporation's name to "Phase III Medical, Inc.";
3. Consideration of and vote to approve the proposed increase in the
number of shares of the Corporation's authorized Common Stock from 75,000,000
shares to 250,000,000 shares;
4. Consideration of and vote to approve the Corporation's 2003 Equity
Participation Plan and the options granted thereunder to the Corporation's new
president and director;
5. Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on June 10, 2003 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the meeting or any adjournment or adjournments thereof.
Your proxy vote is important. Whether or not you expect to attend the
meeting in person, you are urged to mark, sign, date and return the enclosed
proxy in the enclosed prepaid envelope.
Your attention is directed to the Proxy Statement which is set forth on
the following pages.
By Order of the Board of Directors,
Mark Weinreb, President
June 20, 2003
CORNICHE GROUP INCORPORATED
330 South Service Road, Suite 120
Melville, New York 11747
631.574.4999
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
July 24, 2003
SOLICITATION OF PROXY
The enclosed proxy is being mailed and solicited on or about the 20th day
of June, 2003, by and on behalf of the Board of Directors of Corniche Group
Incorporated (the "Corporation"), whose principal executive office is at 330
South Service Road, Suite 120, Melville, New York 11747, for use in connection
with the Annual Meeting of Stockholders to be held at 10:00 A.M. (New York City
time) on July 24, 2003 at the Corporation's offices and at any adjournments
thereof. The matters to be considered and acted upon at such meeting are
referred to in the preceding Notice and are more fully discussed below. All
shares represented by proxies which are returned properly signed will be voted
as specified on the proxy card. If choices are not specified on the proxy card,
the shares will be voted in favor of the Board's nominees for director named
herein, the change of the Corporation's name, the increase in the Corporation's
authorized Common Stock, and the adoption of the Corporation's 2003 Equity
Participation Plan and the options granted to the Corporation's new president
and director thereunder. The By-Laws of the Corporation require that the holders
of a majority of the total number of shares entitled to vote at the meeting be
represented in person or by proxy in order for the business of the meeting to be
transacted with respect to such matters.
The cost of this solicitation will be paid by the Corporation. In addition
to soliciting proxies by mail, the Corporation may make requests for proxies by
telephone, telegraph or messenger, or by personal solicitation by officers,
directors or employees of the Corporation at nominal cost to the Corporation or
by any one or more of the foregoing means. The Corporation will reimburse
brokers, dealers, banks and others authorized by the Corporation for their
reasonable expenses in forwarding proxy solicitation material to the beneficial
owner of shares.
REVOCATION OF PROXY
A proxy may be revoked by a stockholder by giving written notice of
revocation to the Secretary of the Corporation, by filing a later dated proxy
with the Secretary at any time prior to its exercise, or by voting in person at
the meeting. The presence at the meeting of a stockholder who has given a proxy
does not revoke the proxy unless the stockholder files a notice of revocation or
votes by written ballot.
STOCK OUTSTANDING
On June 10, 2003, there were outstanding and entitled to vote at the
Annual Meeting 23,050,085 shares of Common Stock, par value, $.001 per share.
Holders of record of Common Stock at the close of business on June 10, 2003,
will be entitled to one vote for each share held on all matters properly coming
before the meeting. Holders of shares of the Corporation's Series A $0.07
Convertible Preferred Stock, par value $.01 per share, are not entitled to vote
on any of the matters described in this Proxy Statement.
There is no right to cumulate votes in the election of directors. Holders
of the Common Stock will not have any dissenters' rights of appraisal in
connection with any of the matters to be voted on at the Meeting.
The presence in person or by proxy of the holders of shares entitled to
cast a majority of the votes of all shares entitled to vote will constitute a
quorum for purposes of conducting business at the Meeting. Assuming that a
quorum is present, directors will be elected by a plurality vote. The
ratification of all other proposals will require the affirmative vote of a
majority of the shares present and entitled to vote with respect to such
proposal. Pursuant to Delaware corporate law, abstentions and broker non-votes
will be counted for the purpose of determining whether a quorum is present and
do not have an effect on the election of directors. Abstentions, but not broker
non-votes, are treated as shares present and entitled to vote, and will be
counted as a "no" vote. Broker non-votes are treated as not entitled to vote,
and so reduce the absolute number, but not the percentage of votes needed for
approval of a matter.
PROPOSAL ONE
ELECTION OF DIRECTORS
The size of the Board Directors has been fixed at two members. Two
individuals have been nominated by the Board for election as directors at the
forthcoming Annual Meeting, to hold office until the next annual meeting and
until their successors are elected and have qualified. Shares represented by
proxies which are returned properly signed will be voted for the nominees unless
the stockholder indicates on the proxy that authority to vote the shares is
withheld for one or more or for all of the nominees listed. Should a nominee
become unable to serve as a director (which is not anticipated), the proxy will
be voted for the election of a substitute nominee who shall be designated by the
Board.
Information with respect to each nominee including the principal
occupation of each for the past five years, positions and offices held with the
Corporation, membership on other boards of directors and age is set forth below.
There are no family relationships among any of the Corporation's directors and
officers. For information with respect to beneficial ownership of the
Corporation's Common Stock, see "Voting Securities of Certain Beneficial Owners
and Management."
-2-
Mark Weinreb, 50
Director since February 2003
Mr. Weinreb joined the Corporation on February 6, 2003 as a Director,
Chief Executive Officer and President. In 1976, Mr. Weinreb joined Bio Health
Laboratories, Inc., a state-of-the-art medical diagnostic laboratory providing
clinical testing services for physicians, hospitals, and other medical
laboratories. He progressed to become the laboratory administrator in 1978 and
then an owner and the laboratory's COO in 1982. Here he oversaw all technical
and business facets, including finance, laboratory science technology and all
the additional support departments. He left Bio Health Labs in 1989 when he sold
the business to a NYSE biotechnology company. In 1992, Mr. Weinreb founded Big
City Bagels, Inc., a national chain of franchised upscale bagel bakeries and
became Chairman and Chief Executive Officer. The company went public in 1995 and
in 1999 he redirected the company and completed a merger with an Internet
service provider. In 2000, Mr. Weinreb became the Chief Executive Officer of
Jestertek, Inc., a 12-year old software development company pioneering gesture
recognition and control using advanced inter-active proprietary video
technology. In 2002, he left Jestertek after arranging additional financing. Mr.
Weinreb received a Bachelor of Arts degree in 1975 from Northwestern University
and a Master of Science degree in 1982 in Medical Biology, from C.W. Post, Long
Island University.
Wayne Marasco, 49
Director since June 2003
Dr. Wayne A. Marasco, M.D., Ph.D. joined the Board in June 2003. He is
Associate Professor in the Department of Cancer Immunology & AIDS at the
Dana-Farber Cancer Institute and Associate Professor of Medicine in the
Department of Medicine, Harvard Medical School, and has been associated with
both institutions for over five years. Dr. Marasco is a board-certified
physician specializing in the treatment of infectious diseases. His clinical
sub-specialty is in the treatment of immunocompromised (cancer, bone marrow and
solid organ transplants) and HIV-1 infected patients. Dr. Marasco is also the
principal investigator of a Harvard Medical School based clinical gene therapy
trial for the treatment of advanced HIV-1-infection and AIDS.
The Board of Directors
During the year ended December 31, 2002, the Board of Directors held six
meetings, the Audit Committee held four meetings and the Compensation Committee
held one meeting. During 2002, all members of the Board of Directors attended at
least 75% of all meetings of the Board of Directors and committees of the Board
of Directors of which such director was a member. The Corporation did not have a
Nominating Committee. It does not currently have an Audit Committee or a
Compensation Committee, but intends to form such committees when it increases
the size of the Board.
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The functions which would be performed by a Nominating Committee are
performed by the Board as a whole. The Board will consider stockholder
recommendations regarding candidates for director submitted in writing to the
Chairman of the Board of the Corporation. Stockholders wishing to submit such
recommendations may do so by sending a written notice to the Secretary of the
Corporation together with supporting information a reasonable period of time
prior to the mailing of the Corporation's Proxy Statement for the related Annual
Meeting.
Voting Securities of Certain Beneficial Owners and Management
The following table sets forth, as to the number of shares of Common Stock
beneficially owned, as of June 10, 2003 , by (i) each beneficial owner of more
than five percent of the outstanding Common Stock, (ii) each current named
executive officer and director and (iii) all current executive officers and
directors of the Corporation as a group. All shares are owned both beneficially
and of record unless otherwise indicated. Unless otherwise indicated, the
address of each beneficial owner is c/o Corniche Group Incorporated, 330 South
Service Road, Suite 120, Melville, New York 11747.
Number and Percentage of Shares of Common Stock Owned
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Percentage of Common
Name and Address of # of Shares Beneficially Stock Beneficially Owned
Beneficially Owner Owned (See Note 1)
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Pictet & Cie Nominees
Cie 29 Blvd.
Georges Favon 1204
Geneve Switzerland 2,670,000 11.6%
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Joel San Antonio
56 North Stanwich Road
Greenwich, CT 06831 3,752,500 16.3%
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Mark Weinreb (2) 2,540,000 9.9%
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Wayne A. Marasco 300,000 1.3%
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All current directors, officers
and nominees as a group
(two persons)(2) 2,840,000 11.0%
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Notes:
(1) Based on 23,050,085 shares of common stock outstanding on June 10,
2003.
(2) Includes 2,500,000 currently exercisable options to purchase common
stock, subject to shareholder approval.
(3) Includes 300,000 currently exercisable options to purchase common
stock granted on June 3, 2003, subject to shareholder approval.
-4-
Certain Relationships and Related Transactions
Through November 2001 Warrantech Corporation ("Warrantech") acted as
claims administrator for the Corporation's extended warranty and service
business and was paid administrative fees of $48,506 and $29,611 in fiscal 2001
and 2000 respectively. No administrative fees were paid in fiscal 2002. Joel San
Antonio, a former Chairman of the Board of Directors of the Corporation and a
principal stockholder of the Corporation, is also a significant stockholder and
Chief Executive Officer, President and Chairman of the Board of Directors of
Warrantech.
Executive Compensation
The following table sets forth the aggregate compensation paid during the
three years ended December 31, 2002 to the Corporation's Chief Executive
Officer. No other executive officer of the Corporation earned in excess of
$100,000 for services rendered during fiscal 2002.
Summary Compensation Table
Annual Long-Term Other
Compensation Compensation Compensation
Name and Principal Position Notes Fiscal Salary Options/SAR's All other
Year Compensation
Robert F. Benoit (1)(2) 2002 33,077 - $ 27,000
Chief Executive Officer 2001 109,960 - 6,000
(Appointed March 1, 2000) 2000 96,154 75,000 5,800
Notes:
(1) Fiscal 2002 relates to the period ended April 22, 2002, when Mr.
Benoit left the Corporation.
(2) All other compensation comprises monthly automobiles allowances
totaling $2,000 and a compromise and settlement payment of $25,000
in fiscal 2002. All other compensation in fiscal 2001 and 2000
comprises monthly automobile allowances.
-5-
Option/SAR Grants in Last Fiscal Year
None
Employment Agreements
On February 6, 2003 Mr. Weinreb was appointed President and Chief
Executive Officer of the Corporation and the Corporation entered into an
employment agreement with Mr. Weinreb. The employment agreement has an initial
term of three years, with automatic annual extensions unless terminated by the
Corporation or Mr. Weinreb at least 90 days prior to an applicable anniversary
date. The Corporation has agreed to pay Mr. Weinreb an annual salary of $180,000
for the initial year of the term, $198,000 for the second year of the term, and
$217,800 for the third year of the term. In addition, he is entitled to an
annual bonus in the amount of $20,000 for the initial year in the event, and
concurrently on the date, that the Corporation has received debt and/or equity
financing in the aggregate amount of at least $1,000,000 since the beginning of
his service, and $20,000 for each subsequent year of the term, without
condition.
In addition, the Corporation, pursuant to its newly adopted 2003 Equity
Participation Plan, entered into a Stock Option Agreement with Mr. Weinreb (the
"Initial Option Agreement"). Under the Initial Option Agreement, the Corporation
granted Mr. Weinreb the right and option, exercisable for 10 years, to purchase
up to 2,500,000 shares of the Corporation's common stock at an exercise price of
$0.03 per share and otherwise upon the terms set forth in the Initial Option
Agreement, subject to shareholder approval. In addition, in the event that the
closing price of the Corporation's common stock equals or exceeds $0.50 per
share for any five (5) consecutive trading days during the term of the
employment agreement (whether during the initial term or an annual extension),
the Corporation has agreed to grant to Mr. Weinreb, on the day immediately
following the end of the five (5) day period, an option for the purchase of an
additional 2,500,000 shares of the Corporation's common stock for an exercise
price of $0.50 per share, pursuant to the 2003 Equity Participation Plan and a
Stock Option Agreement to be entered into between the Corporation and Mr.
Weinreb containing substantially the same terms as the Initial Option Agreement,
except for the exercise price and that the option would be treated as an
"incentive stock option" for tax purposes only to the maximum extent permitted
by law (the "Additional Option Agreement"). The Corporation has agreed to
promptly file with the Securities and Exchange Commission a Registration
Statement on Form S-8 (the "Registration Statement") pursuant to which the
issuance of the shares covered by the 2003 Equity Participation Plan, as well as
the resale of the common stock issuable upon exercise of the Initial Option
Agreement, are registered. Additionally, the Corporation has agreed, following
any grant under the Additional Option Agreement, to promptly file a
post-effective amendment to the Registration Statement pursuant to which the
common stock issuable upon exercise thereof shall be registered for resale. Mr.
Weinreb has agreed that he will not resell publicly any shares of the
Corporation's common stock obtained upon exercise of
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any Initial Agreement or the Additional Option Agreement prior to the first
anniversary of the date of the employment agreement.
In April 2002 the Company terminated its relationship with Robert F.
Benoit, who was its Chief Executive Officer through April 22, 2002. In August
2002 the Company
entered into a settlement agreement with Mr. Benoit pursuant to which the
Company made a lump sum payment of $25,000 to Mr. Benoit.
To secure Dr. Marasco's service as a director, the Company granted Dr.
Marasco the right and option, exercisable for 10 years, to purchase up to
300,000 shares of the Company's common stock at an exercise price of $0.05 per
share. In addition, in the event that the closing price of the Company's common
stock equals or exceeds $0.50 per share for any five (5) consecutive trading
days during his term as a director, the Company has agreed to grant to Dr.
Marasco an option for the purchase of an additional 100,000 shares of the
Company's common stock for an exercise price of $0.50 per share. Dr. Marasco has
agreed that he will not resell publicly any shares of the Company's common stock
obtained upon exercise of either of these options prior to the first anniversary
of the date of his election to the board.
Director Compensation
Directors who are employees of the Corporation do not receive additional
compensation for serving as directors. Directors of the Corporation are
reimbursed for out-of-pocket expenses incurred in their capacity as directors of
the Corporation. If the proposal with respect to the 2003 Equity Participation
Plan is approved, non-employee directors will receive stock options thereunder
of 300,000 shares upon joining the Board and 50,000 shares per year each year
thereafter. All options will be granted at fair market value on the date of
grant and have a one year vesting period. The Board granted Dr. Marasco an
option to purchase 300,000 shares of common stock at a price of $.05 per share
on June 3, 2003, subject to shareholder approval of the Equity Participation
Plan proposal.
Section 16 - Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and officers, and persons who own more than 10% of a
registered class of the Corporation's equity securities, to file initial reports
of ownership and reports of changes in ownership with the Securities and
Exchange Commission. These persons are required by the Securities and Exchange
Commission to furnish the Corporation with copies of all Section 16(a) reports
that they file. Based solely on our review of these reports and written
representations furnished to us, we believe that in 2002 each of the reporting
persons complied with these filing requirements.
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PROPOSAL TWO
CHANGE OF CORPORATION'S NAME
Proposal to Amend the Corporation's Certificate of Incorporation
to Change its Name to "Phase III Medical, Inc."
On February 6, 2003, the Corporation's Board of Directors unanimously
approved, subject to stockholder approval, a change of the Corporation's name to
"Phase III Medical, Inc."
The Company has been exploring business plans that may involve entering
the medical sector by acquiring or participating in one or more biotech and/or
medical companies or technologies, owning one or more drugs or medical devices
that may or may not yet be available to the public, or acquiring rights to one
or more of such drugs or medical devices or the royalty streams therefrom. There
can be no assurance that any such business plan developed by the Company will be
successful. The Corporation's Board of Directors believes that the change of the
Corporation's name is appropriate in light of the change in the nature of the
Corporation's business.
If the proposed amendment is adopted by the stockholders, the
Corporation's Certificate of Incorporation will be amended, as reflected in
Exhibit A, to effect the name change as promptly as practicable.
The Board of Directors OF THE CORPORATION recommends that the stockholders
of the Corporation vote "For" this proposal.
After the proposed name change becomes effective, it will NOT be necessary
for stockholders to surrender their present Corniche Group Incorporated stock
certificates.
PROPOSAL THREE
Proposed Amendment to the Corporation's
Certificate of Incorporation to Increase the Number
of Authorized Shares of Common Stock
The Corporation's Certificate of Incorporation presently provides that the
authorized capital stock of the Corporation consists of 75,000,000 shares of
Common Stock, par value $.001 per share, and 5,000,000 shares of Preferred
Stock, par value $.01 per share. On February 6, 2003, the Corporation's Board of
Directors unanimously approved, subject to the stockholders' approval, an
amendment to the Corporation's Certificate of Incorporation to increase the
number of authorized
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shares of Common Stock to 250,000,000. The number of authorized shares of
Preferred Stock would remain at 5,000,000.
Of the Corporation's 75,000,000 authorized shares of Common Stock,
23,050,085 shares were issued and outstanding as of June 10, 2003. At that date,
the Corporation had also reserved for issuance a total of 15,000,000 additional
shares of Common Stock available for future awards (including the 2,500,000 and
300,000 share options granted to the Corporation's President and director,
respectively) under the Corporation's 2003 Equity Participation Plan, approval
of which is being requested at the Meeting. See "Proposal Four - Approval of the
or in the Group Incorporated 2003 Equity Participation Plan".
In addition, the Corporation has reserved 100,000 shares for issuance upon
conversion of the Corporation's Series B Preferred Stock, approximately 130,800
shares for issuance upon conversion of the Corporation's Series A Preferred
Stock and 44,000 shares issuable upon the exercise of Common Stock warrants.
Finally, as of June 10, 2003 the Corporation has reserved 375,000 shares for
issuance to holders of a series of promissory notes sold in September 2002.
The Board of Directors also believes that the Common Stock Amendment is
advisable in order to have additional shares available for potential
acquisitions, to maintain the Corporation's financing and capital-raising
flexibility, to have shares available for use for employee benefit plans and
other corporate purposes. Based on the Corporation's current cash position and
efforts to change its line of business, the Corporation will have the need to
raise significant capital in the near term.
As of the date of this Proxy Statement, there are no present agreements or
arrangements for the issuance of any of the additional shares that would be
authorized by the Common Stock Amendment.
Adoption of the Common Stock Amendment would enable the Board of Directors
from time to time to issue additional shares of Common Stock for such purposes
and such consideration as the Board of Directors may approve without further
approval of the Corporation's stockholders, except as may be required by law or
the rules of the Nasdaq National Market or any national securities exchange on
which the shares of Common Stock are at the time listed. The proposed increase
in the number of authorized shares of Common Stock is not intended to prevent or
impede a change in control of the Corporation. Further, the Corporation is not
aware of any current effort to acquire control of the Corporation. However, the
issuance of additional shares of Common Stock could have the effect of delaying,
deferring or preventing a change of control of the Corporation and may
discourage bids for the Common Stock at a premium over the prevailing market
price. In addition, the issuance of additional shares of Common Stock could also
have a dilutive effect on earnings per share and on the equity and voting power
of existing holders of Common Stock.
-9-
There are no preemptive rights with respect to the Common Stock. The
additional authorized shares of Common Stock would have the identical powers and
rights as the shares now authorized. Under Delaware law, stockholders will not
have any dissenter's or appraisal rights in connection with the Common Stock
Amendment. If the Common Stock Amendment is approved by the stockholders, it
will become effective upon the Corporation's executing, acknowledging and filing
a Certificate of Amendment required by the General Corporation Law of the State
of Delaware in the form annexed as Exhibit A.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS OF THE CORPORATION VOTE "FOR" THIS
PROPOSAL.
PROPOSAL FOUR
APPROVAL OF THE
CORNICHE GROUP INCORPORATED
2003 EQUITY PARTICIPATION PLAN
The Board of Directors adopted the Corporation's 2003 Equity Participation
Plan (the "Equity Plan") on February 6, 2003, subject to stockholder approval at
the annual meeting. The Board of Directors approved the Equity Plan to reserve
15,000,000 shares of the Corporation's Common Stock for grant of stock options
and other performance incentives to the Corporation's employees, non-employee
directors, consultants and advisors. The following is a brief description of the
material features of the Equity Plan. Such description is qualified in its
entirety by reference to the Equity Plan, a copy of which is attached hereto as
Exhibit B to this Proxy Statement.
Also on February 6, 2003, the Board of Directors approved the grant of a
stock option to Mark Weinreb upon his election as President of the Corporation.
The Corporation granted Mr. Weinreb the right and option, exercisable for 10
years, to purchase up to 2,500,000 shares of the Corporation's common stock at
an exercise price of $0.03 per share, subject to shareholder approval. In
addition, in the event that the closing price of the Corporation's common stock
equals or exceeds $0.50 per share for any five (5) consecutive trading days
during the term of the employment agreement (whether during the initial term or
an annual extension), the Corporation has agreed to grant to Mr. Weinreb, on the
day immediately following the end of the five (5) day period, an option for the
purchase of an additional 2,500,000 shares of the Corporation's common stock for
an exercise price of $0.50 per share, pursuant to the 2003 Equity Participation
Plan. That option would be treated as an "incentive stock option" for tax
purposes, but only to the extent permitted by law. Approval of the Equity
Participation Plan will also constitute approval of the option grants to Mr.
Weinreb. On February 6, 2003, the closing bid price for the Common Stock was
$0.03.
-10-
The Company granted Dr. Marasco the right and option, exercisable for 10
years, to purchase up to 300,000 shares of the Company's common stock at an
exercise price of $0.05 per share. In addition, in the event that the closing
price of the Company's common stock equals or exceeds $0.50 per share for any
five (5) consecutive trading days during his term as a director, the Company has
agreed to grant to Dr. Marasco an option for the purchase of an additional
100,000 shares of the Company's common stock for an exercise price of $0.50 per
share. Dr. Marasco has agreed that he will not resell publicly any shares of the
Company's common stock obtained upon exercise of either of these options prior
to the first anniversary of the date of his election to the board. On June 3,
2003, the closing bid price for the Common Stock was $0.13.
Purpose.
The purpose of the Equity Plan is to provide long-term incentives to
select employees, non-employee directors, consultants and advisors of the
Corporation to encourage them to devote their abilities and industry to the
success of the Corporation.
Shares and Incentives Available Under the Equity Plan.
The Equity Plan provides for grants of stock options, stock appreciation
rights, and restricted stock. An aggregate of 15,000,000 shares of Common Stock
are authorized for issuance under the Equity Plan, which amount will be
proportionately adjusted in the event of certain changes in the Corporation's
capitalization, a merger, or a similar transaction. Such shares may be treasury
shares, newly issued shares, or shares purchased from stockholders expressly for
use under the Plan. As of June 10, 2003, the closing sale price per share of the
Common Stock on the OTC Bulletin Board was $0.10.
Eligibility.
The persons eligible to receive awards under the Equity Plan are those
persons who are, or who have agreed to become, officers or employees of,
non-employee directors of, or consultants or advisers to, the Corporation or any
parent or subsidiary corporation of the Corporation; provided, however, that (i)
only employees are eligible to receive incentive stock options under the Equity
Plan; and (ii) consultants and advisors will be allowed to receive grants of
nonstatutory stock options or restricted stock only if the consultant or advisor
is a natural person (or an entity wholly-owned by the consultant or advisor),
who is or will be providing bona fide services to the Corporation, and such
services are not in connection with the offer or sale of securities in a capital
raising transaction and do not directly or indirectly promote or maintain a
market for the Corporation's securities. The Corporation intends to form an
Advisory Board and grant options under the Equity Plan to individuals who agree
to serve as advisors.
-11-
Determination of Eligibility; Administration of the Equity Plan.
The Equity Plan is administered by the Board of Directors or by a
committee consisting of at least two people chosen by the Board of Directors
(the "Plan Committee"). The Equity Plan provides that the Plan Committee has
full discretion and authority to (i) select eligible persons to receive awards,
and (ii) determine the type and number of awards to be granted and the number of
shares of Common Stock to which awards will relate. The Plan Committee has no
discretion, however, to select the non-employee directors to whom stock options
will be granted under the Equity Plan, or to set the number of shares subject to
such options or the exercise price of such options. Any action of the Plan
Committee with respect to the interpretation and construction of any provision
of the Plan, or of any stock option, or with respect to any restricted stock is
final, conclusive and binding on all parties, including the Corporation, its
stockholders and its employees. The Equity Plan provides that members of the
Plan Committee will not be liable for any act or determination taken or made in
good faith in their capacities as such members and will be fully indemnified by
the Corporation, to the extent permitted by law, with respect to such acts and
determinations.
Types of Awards.
Stock Options. The Plan Committee is authorized to grant stock options to
employees, non-employee directors, consultants, and advisors of the Corporation
or any of its parent or subsidiary corporations. The Plan Committee may grant
both incentive stock options ("ISOs"), as defined under Section 422 of the
Internal Revenue Code (the "Code"), and non-qualified stock options under the
Equity Plan. However, only employees are allowed to receive ISO grants. The
terms and conditions of grants of stock options granted under the Equity Plan
are set forth in a written agreement (the "Option Agreement").
The purchase price per share subject to an ISO is not less than the fair
market value of a share of Common Stock on the date of grant, except that it
must be at least 110% of the fair market value on the date of grant with respect
to ISOs granted to a 10% stockholder. The purchase price per share subject to a
nonqualified stock option may be less than the fair market value of a share of
Common Stock on the date of grant, and will be determined by the Plan Committee
at the time the option is granted. If options are granted with exercise prices
below fair market value, however, deductions for compensation attributable to
the exercise of such options could be limited by Code Section 162(m). See "--
Federal Income Tax Consequences." The term "fair market value" on any date means
the closing sales price, or if not available, the closing bid price per share on
such date on the OTC Bulletin Board. The aggregate fair market value, determined
at the time of grant, of the shares of Common Stock with respect to which ISOs
are exercisable for the first time by an optionee during any calendar year may
not exceed $100,000.
The maximum term of each option, the times at which each option will be
exercisable, and the vesting schedule, if any, associated with a stock option
grant generally are fixed by the Plan Committee, except that no option may have
a term
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exceeding ten years, or five years in the case of an ISO granted to a 10%
stockholder. Unless otherwise provided in the Option Agreement, options are
fully vested and exercisable on grant. Notwithstanding the foregoing, if the
Board of Directors of the Corporation approves a plan of complete liquidation or
a merger or certain consolidation transactions, the Plan Committee may, in its
sole discretion, and upon written notice to an optionee, provide that an option
must be exercised within twenty days following the date of such notice or it
will be terminated. In the event that such notice is given, the option will
become immediately exercisable in full to the extent it is not already
exercisable.
Options may be exercised by providing written notice to the Secretary of
the Corporation, specifying the number of shares to be purchased and accompanied
by payment for such shares, and otherwise in accordance with the applicable
Option Agreement. Payment may be made, in the discretion of the Plan Committee,
in (i) cash, (ii) other shares of Common Stock, (iii) a combination of cash and
a promissory note, or (iv) through a combination of these methods.
If an optionee pays the option price with shares of Common Stock, the Plan
Committee may, in its discretion, grant the optionee an option with a reload
feature. A reload stock option, which will be granted to the optionee at the
same time that payment is received on the option exercise, will allow the
participant to purchase (i) the number of shares of Common Stock equal to the
sum of the number of shares used to exercise the original option (or the number
of shares not received if the optionee paid the option price by receiving a
reduced number of shares on exercise), or (ii) in the case of non-qualified
stock options, the number of shares of Common Stock used to satisfy any tax
withholding requirement related to the exercise of such option. Generally, the
terms and provisions of the Equity Plan will apply to any reload option. The
term of a reload option will be equal to the remaining term of the option which
gave rise to the reload option.
Stock Appreciation Rights. The Plan Committee is authorized to grant
awards of stock appreciation rights ("SARs"), either at the same time as or
subsequent to an option grant; provided, however, that SARs granted with respect
to an ISO must always be granted at the same time that the ISO is granted. The
grant of a SAR will be evidenced by a written agreement. SARs may be exercised
by providing written notice to the Secretary of the Corporation, specifying the
number of shares with respect to which the SAR is being exercised. The exercise
of a SAR will cancel and terminate the right to purchase an equal number of
shares of Common Stock covered by the related option. Likewise, upon exercise or
termination of any related option, the SAR will terminate to the extent of the
number of shares of Common Stock as to which the related option was exercised or
terminated.
The amount of payment that an optionee will be entitled to upon exercise
of a SAR is 100% of the amount, if any, by which the fair market value of a
share of Common Stock on the exercise date exceeds the exercise price per share
of the related option (minus any amount necessary to satisfy the Corporation's
obligation
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to withhold taxes). Such payment may be made, at the Corporation's discretion,
in either cash or shares of Common Stock.
Restricted Stock. The Plan Committee is authorized to grant awards of
restricted stock to employees, non-employee directors, consultants and advisors.
A restricted stock award is a grant of shares of Common Stock which may not be
sold or disposed of, and which may be forfeited in the event of certain
terminations of employment or service, until the restrictions specified by the
Plan Committee lapse. Grants of restricted stock will be evidenced by a written
agreement. An individual granted restricted stock generally has all of the
rights of a stockholder of the Corporation. The Plan Committee may modify
outstanding awards of restricted stock provided that the modification does not
adversely alter or impair the holder's rights or obligations under the award
without his or her consent. The Plan Committee also has the discretion to
determine how dividends related to shares of restricted stock will be paid. When
the restrictions imposed on an award lapse, the Plan Committee will deliver a
stock certificate for the shares, free of any restrictions, to the individual.
Non-Employee Directors.
Newly elected or appointed non-employee directors of the Corporation will
receive an option under the Equity Plan to purchase 300,000 shares of Common
Stock at an exercise price equal to the fair market value of a share of Common
Stock upon election by the stockholders or appointment by the Board of
Directors, as the case may be. In addition, each of the Corporation's
non-employee directors will receive an annual option grant to purchase 50,000
shares of Common Stock on the date of the Corporation's annual stockholder's
meeting; provided; however, that no director may receive more than one grant in
any calendar year.
Transferability of Awards.
Grants of stock options and other awards are generally not transferable
except by will or by the laws of descent and distribution, or to a designated
beneficiary upon the participant's death, except that the Plan Committee may, in
its discretion, permit transfers of nonstatutory stock options (and related
SARs) for estate planning or other purposes subject to any applicable
restrictions under federal securities laws. The Corporation intends to register
the shares of Common Stock issuable under the Equity Plan under the Securities
Act of 1933 if the Plan is ratified by the shareholders.
Effect of Termination of Employment or Service.
Except as otherwise provided in the Option Agreement, (i) in the event
that a participant's employment or service with the Corporation or its parent or
subsidiary corporations is terminated for cause or voluntarily by the employee,
non-employee director, consultant or advisor, then the option will expire
immediately, (ii) in the event that a participant's employment or service with
the Corporation or its parent or subsidiary corporations terminates for any
reason other than death or disability
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(including retirement), then such option may be exercised, to the extent
exercisable on the date of termination, at any time within three months after
such termination, but in no event after the stated expiration of the option,
(iii) in the event that a participant dies while employed by or providing
service to the Corporation or its parent or subsidiary corporations, or dies
within three months after termination of employment or service, other than
voluntarily or for cause, then the option may be exercised, to the extent
exercisable on the date of death, by the estate of the employee, non-employee
director, consultant or advisor or by his beneficiary, at any time within one
year after the date of such death, but in no event after the stated expiration
of the option, and (iv) in the event that a participant ceases employment or
service because of a permanent or total disability (within the meaning of
Section 22(e)(3) of the Code) while employed by, or while serving as a
non-employee director, consultant or advisor to, the Corporation or its parent
or subsidiary corporations, then the option may be exercised, to the extent
exercisable on the date of termination, at any time within one year after
termination of employment or service due to the disability, but in no event
after the stated expiration of the option.
A grantee of shares of restricted stock will forfeit all unvested shares,
if any, at such time as the grantee is no longer employed by, or providing
service to, the Corporation or its parent or subsidiary corporations.
Amendment, Suspension or Termination of the Equity Plan.
The Equity Plan will terminate on February 6, 2013. Prior to that date,
the Board of Directors may amend, modify, suspend or terminate the Plan, subject
to stockholder approval when required by law. No amendment, modification,
suspension or termination may adversely affect the rights of participants,
without their consent, under any outstanding awards or grants of options.
Federal Income Tax Consequences of Options and Awards.
The following is a brief description of the federal income tax
consequences generally arising with respect to the grant of options and awards
pursuant to the Equity Plan. This summary is based on the Code, regulations,
rulings and decisions now in effect, all of which are subject to change by
legislation, administrative action or judicial decision. This discussion is
intended for the information of stockholders considering how to vote at the
Annual Meeting and not as tax guidance to individuals who participate in the
Equity Plan.
ISOs. In general, an optionee granted an ISO will not recognize taxable
income upon the grant or the exercise of the ISO. The excess of the fair market
value of shares of Common Stock received upon exercise of the ISO over the
exercise price is, however, a tax preference item which can result in imposition
of the alternative minimum tax. The optionee's "tax basis" in the shares of
Common Stock acquired upon exercise of the ISO generally will be equal to the
exercise price paid by the optionee, except in the case in which the optionee
pays the exercise price by delivery of the shares of Common Stock otherwise
owned by the optionee (as discussed below).
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If the shares acquired upon the exercise of an ISO are held by the
optionee for the "ISO holding period" of at least two years after the date of
grant and one year after the date of exercise, the optionee will recognize
long-term capital gain or loss upon the sale of the ISO shares equal to the
amount realized upon such sale minus the optionee's tax basis in the shares, and
such optionee will not recognize any taxable ordinary income with respect to the
ISO. As a general rule, if an optionee disposes of the shares acquired upon
exercise of an ISO before satisfying both holding period requirements (a
"disqualifying disposition"), the gain recognized on the disposition will be
taxed as ordinary income equal to the lesser of (i) the fair market value of the
shares at the date of exercise of the ISO minus the optionee's tax basis in the
shares, or (ii) the amount realized upon the disposition minus the optionee's
tax basis in the shares. Any gain in excess of the amount realized as ordinary
income is capital gain. Certain transactions are not considered disqualifying
dispositions including certain exchanges, transfers resulting from the
optionee's death, and pledges and hypothecations of ISO shares.
Non-qualified stock options. In general, an optionee granted a
non-qualified stock option will not recognize taxable income upon the grant of
the non-qualified stock option. Upon the exercise of the non-qualified stock
option (including an option intended to be an ISO but which has not continued to
so qualify at the time of exercise), the optionee generally will recognize
taxable ordinary income in an amount equal to the fair market value of the
shares at the time of exercise minus the exercise price, and the optionee will
have a tax basis in the shares equal to the fair market value of the shares at
the time of exercise. A subsequent sale of the shares by the optionee generally
will result in short-term or long-term capital gain or loss equal to the sale
price of such shares minus the optionee's tax basis in such shares.
In the event that an optionee forfeits an unexercised ISO or a
non-qualified stock option (or portion of such option), the optionee will not
recognize a loss for federal income tax purposes.
Stock Appreciation Rights. In general, an optionee will not recognize
taxable income upon the grant of a stock appreciation right. Upon the exercise
of the right, the optionee generally will recognize taxable ordinary income in
an amount equal to the fair market value of any shares and/or cash received.
Restricted stock. Because restricted stock will be restricted as to
transferability and subject to a substantial risk of forfeiture for a period of
time after being awarded, a participant generally will not be subject to
taxation at the time of such award. The participant generally must recognize
ordinary income equal to the fair market value of the shares at the first time
the restricted stock becomes transferable or not subject to a substantial risk
of forfeiture. A participant may, however, elect to be taxed at the time of
award of restricted stock rather than upon lapse of the restriction on
transferability or substantial risk of forfeiture. If a participant makes such
an election but subsequently forfeits the restricted stock, he or she would not
be entitled to any tax deduction, including a capital loss, for the value of the
shares on which he or she previously paid tax.
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Compensation Deduction Limitation. Code Section 162(m) generally disallows
a public company's tax deduction for compensation paid to the Chief Executive
Officer, or to the other four most highly compensated officers, in excess of
$1,000,000 in any tax year. Compensation that qualifies as "performance-based
compensation" is excluded from the $1,000,000 deductibility cap, if various
requirements are satisfied. The Corporation intends that options (other than
non-qualified stock options with respect to which the exercise price is less
than the fair market value of the shares subject to such options on the date of
grant) and certain other awards granted to employees whom the Committee expects
to be covered employees at the time a deduction arises in connection with such
awards, qualify as "performance-based compensation," so that such awards will
not be subject to the deductibility cap.
Withholding. The Corporation has the right to deduct from all awards paid
in cash or from other wages paid to an employee of the Corporation, any federal,
state, or local taxes required by law to be withheld with respect to awards, and
the employee or other person receiving shares under the Equity Plan will be
required to pay to the Corporation the amount of any such taxes which the
Corporation is required to withhold with respect to such shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE CORPORATION'S 2003 EQUITY PARTICIPATION PLAN AND THE OPTION
GRANT TO THE NEW PRESIDENT AND DIRECTOR.
ACCOUNTING FEES AND OTHER ACCOUNTING MATTERS
Audit Fees. The Corporation was billed $28,490 for the audit of the
Corporation's annual financial statements for the year ended December 31, 2002
and for the review of the financial statements included in the Corporation's
Quarterly Reports on Form 10-Q filed during 2002.
Financial Information Systems Design Implementation Fees. The Corporation
was billed $0 for any professional services described in Paragraph (c) (4) (ii)
of Rule 2-01 of the SEC's Regulation S-X (in general, information technology
services) rendered by the Corporation's principal accountant during the year
ended December 31, 2002.
All Other Fees. The Corporation was billed $1,572 for non-audit services
(other than the non-audit services described above) rendered by the
Corporation's principal accountant during the year ended December 31, 2002.
Other Matters. The Board of Directors has considered whether the provision
of information technology services and other non-audit services is compatible
with maintaining the independence of the Corporation's principal accountant.
Of the time expended by the Corporation's principal accountant to audit
the Corporation's financial statements for the year ended December 31, 2001,
less than
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50% of such time involved work performed by persons other than the principal
accountant's full-time, permanent employees.
INDEPENDENT PUBLIC ACCOUNTANTS
The Corporation engaged Weinick Sanders Leventhal & Co., LLP ("Weinick")
as its independent accountants as of August 12, 1998. The Corporation had not
consulted with Weinick regarding any matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulations S-K.
On May 7, 2001, the Corporation and Weinick terminated their
client/auditor relationship. The reports of Weinick on the financial statements
of the Corporation for the prior two fiscal years contained no adverse opinion
or disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. The Corporation's Audit Committee and its
Board of Directors participated in and approved the decision to terminate
Weinick as independent auditors. In connection with its audits for the prior two
fiscal years and through May 7, 2001, there were no disagreements with Weinick
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Weinick, would have caused Weinick to make reference
thereto in its report on the financial statements for such years. During the
prior two fiscal years and through May 7, 2001, there have been no "reportable
events" as described in Item 304(a)(1)(v) of Regulation S-K.
The Corporation engaged Travis, Wolff & Corporation, L.L.P. ("Travis") as
its new independent accountants as of May 7, 2001. Such appointment was approved
by the Corporation's Audit Committee and its Board of Directors. During the two
most recent fiscal years and through May 7, 2001, the Corporation has not
consulted with Travis regarding any matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulation S-K.
Representatives of Travis are expected to be present at the Annual Meeting
of Stockholders, to make a statement, if they desire to do so, and to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
Any proposal intended to be presented by a stockholder at the 2004 Annual
Meeting of Stockholders must be received by the Company at the at the
Corporation's principal executive offices, 330 South Service Road, Suite 120,
Melville, New York 11747 no later than the close of business on February 21,
2004 to be considered for inclusion in the Proxy Statement for the 2004 Annual
Meeting and by May 6, 2004 in order for the proposal to be considered timely for
consideration at next year's Annual Meeting (but not included in the Proxy
Statement for such meeting).
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ANNUAL REPORTS
The Corporation's Annual Report on Form 10-K for the fiscal years ended
December 31, 2002 (the "2002 Annual Report") containing consolidated financial
statements reflecting the financial position of the Corporation as of December
31, 2002 and 2001, and the results of operations and statements of cash flows
for each of the three years in the period ended December 31, 2002, has been
mailed with this proxy material to all stockholders. The 2002 Annual Report is
not to be regarded as proxy soliciting material or as a communication by means
of which any solicitation is to be made.
OTHER BUSINESS
The Annual Meeting of Stockholders is called for the purposes set forth in
the Notice. The Board of Directors does not know of any matter for action by
stockholders at such meeting other than the matters described in the Notice.
However, the enclosed proxy will confer discretionary authority with respect to
matters which are not known at the date of printing hereof which may properly
come before the meeting. It is the intention of the person named in the proxy to
vote in accordance with their judgment on any such matter.
You are cordially invited to attend the Annual Meeting in person. Your
participation in and discussion of the Corporation's affairs will be welcome.
By Order of the Board of Directors
/s/ Mark Weinreb
----------------------------------
Mark Weinreb, President
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EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CORNICHE GROUP INCORPORATED
(Under Section 242 of the General Corporation Law)
The undersigned, being the President and Secretary of Corniche Group
Incorporated, a corporation organized and existing under the laws of the State
of Delaware (the "Corporation"), do hereby amend and certify as follows:
1. The name of the Corporation is Corniche Group Incorporated.
2. The Certificate of Incorporation of the Corporation is hereby amended
to effect the following amendments which were set forth in a resolution adopted
by the board of directors and adopted by the holders of a majority of the
outstanding shares of common stock of the Corporation entitled to vote thereon,
in accordance with the provisions of Section 242 of the Delaware General
Corporation Law: (a) to change the name of the Corporation and (b) to increase
the number of authorized shares of Common Stock.
3. To accomplish the first of the foregoing amendments, Article First of
the Certificate of Incorporation is hereby amended to change the name of the
corporation as follows: "The name of the Corporation is PHASE III MEDICAL INC."
4. To accomplish the second of the foregoing amendments, the first
paragraph of Article Fourth of the Certificate of Incorporation, as amended, is
restated in its entirety as follows (with the preceding paragraph to follow):
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is TWO HUNDRED FIFTY FIVE MILLION (255,000,000) shares
consisting of (i) Two Hundred Fifty Million (250,000,000) shares of Common Stock
of the par value of $.001 per share and (ii) Five Million (5,000,000) shares of
Preferred Stock of the par value of $.01 per share.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof of the Preferred Stock, and
the Common Stock are as follows:
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IN WITNESS WHEREOF, the undersigned being a duly elected officer of the
Corporation, has executed this Certificate of Amendment and affirms the
statements herein contained on this ___ day of ________, 2003.
CORNICHE GROUP INCORPORATED
By: _________________________________
Mark Weinreb, President and Secretary
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EXHIBIT B
CORNICHE GROUP INCORPORATED
2003 Equity Participation Plan
1. Purpose of the Plan. The Corniche Group Incorporated 2003 Equity
Participation Plan (the "Plan") is intended to advance the interests of Corniche
Group Incorporated (the "Company") by inducing individuals or entities of
outstanding ability and potential to join and remain with, or provide consulting
or advisory services to, the Company, by encouraging and enabling eligible
employees, non-employee Directors, consultants and advisors to acquire
proprietary interests in the Company, and by providing the participating
employees, non-employee Directors, consultants and advisors with an additional
incentive to promote the success of the Company. This is accomplished by
providing for the granting of "Options," which term as used herein includes both
"Incentive Stock Options" and "Nonstatutory Stock Options," as later defined,
and "Restricted Stock," to employees, non-employee Directors, consultants and
advisors.
2. Administration. The Plan shall be administered by the Board of
Directors of the Company (the "Board" or "Board of Directors") or by a committee
(the "Committee") consisting of at least two (2) persons chosen by the Board of
Directors. Except as herein specifically provided, the interpretation and
construction by the Board of Directors or the Committee of any provision of the
Plan or of any Option, or with respect to any Restricted Stock, granted under it
shall be final and conclusive. The receipt of Options or Restricted Stock by
Directors, or any members of the Committee, shall not preclude their vote on any
matters in connection with the administration or interpretation of the Plan.
3. Shares Subject to the Plan. The shares subject to Options granted under
the Plan, and shares granted as Restricted Stock under the Plan, shall be shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
whether authorized but unissued or held in the Company's treasury, or shares
purchased from stockholders expressly for use under the Plan. The maximum number
of shares of Common Stock which may be issued pursuant to Options or as
Restricted Stock granted under the Plan shall not exceed in the aggregate
fifteen million (15,000,000) shares. The Company shall at all times while the
Plan is in force reserve such number of shares of Common Stock as will be
sufficient to satisfy the requirements of all outstanding Options granted under
the Plan. In the event any Option granted under the Plan shall expire or
terminate for any reason without having been exercised in full or shall cease
for any reason to be exercisable in whole or in part, the unpurchased shares
subject thereto shall again be available for Options and grants of Restricted
Stock under the Plan. In the event any shares of Restricted Stock are forfeited
for
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any reason, the shares forfeited shall again be available for Options and grants
of Restricted Stock under the Plan. In the event shares of Common Stock are
delivered to, or withheld by, the Company pursuant to Sections 14(b) or 27
hereof, only the net number of shares issued, i.e., net of the shares so
delivered or withheld, shall be considered to have been issued pursuant to the
Plan.
4. Participation. The class of individuals that shall be eligible to
receive Options ("Optionees") and Restricted Stock ("Grantees") under the Plan
shall be (a) with respect to Incentive Stock Options described in Section 6
hereof, all employees of either the Company or any parent or subsidiary
corporation of the Company, and (b) with respect to Nonstatutory Stock Options
described in Section 7 hereof and Restricted Stock described in Section 18
hereof, all employees, and non-employee Directors of, or consultants and
advisors to, either the Company or any parent or subsidiary corporation of the
Company; provided, however, neither Nonstatutory Stock Options nor Restricted
Stock shall be granted to any such consultant or advisor unless (i) the
consultant or advisor is a natural person (or an entity wholly-owned by the
consultant or advisor), (ii) bona fide services have been or are to be rendered
by such consultant or advisor and (iii) such services are not in connection with
the offer or sale of securities in a capital raising transaction and do not
directly or indirectly promote or maintain a market for the Company's
securities. The Board of Directors or the Committee, in its sole discretion, but
subject to the provisions of the Plan, shall determine the employees and
non-employee Directors of, and the consultants and advisors to, the Company and
its parent and subsidiary corporations to whom Options and Restricted Stock
shall be granted, and the number of shares to be covered by each Option and each
Restricted Stock grant, taking into account the nature of the employment or
services rendered by the individuals or entities being considered, their annual
compensation, their present and potential contributions to the success of the
Company, and such other factors as the Board of Directors or the Committee may
deem relevant. Notwithstanding the foregoing, the selection of non-employee
Directors whom Options are to be granted, the number of shares subject to the
Option, and the exercise price of any Option shall be as set forth in Section 8
hereof and the Committee shall have no discretion as to such matters. For
purposes hereof, a non-employee to whom an offer of employment has been extended
shall be considered an employee, provided that the Options granted to such
individual shall not be exercisable, and the Restricted Stock granted shall not
vest, in whole or in part, for a period of at least one year from the date of
grant and in the event the individual does not commence employment with the
Company, the Options and/or Restricted Stock granted shall be considered null
and void.
5. Stock Option Agreement. Each Option granted under the Plan shall be
authorized by the Board of Directors or the Committee, and shall be evidenced by
a Stock Option Agreement which shall be executed by the Company and by the
individual or entity to whom such Option is granted. The Stock Option Agreement
shall specify the number of shares of Common Stock as to which any Option is
granted, the period during which the
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Option is exercisable, and the option price per share thereof, and such other
terms and provisions as the Board of Directors or the Committee may deem
necessary or appropriate.
6. Incentive Stock Options. The Board of Directors or the Committee may
grant Options under the Plan which are intended to meet the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), with
respect to "incentive stock options," and which are subject to the following
terms and conditions and any other terms and conditions as may at any time be
required by Section 422 of the Code (referred to herein as an "Incentive Stock
Option"):
(a) No Incentive Stock Option shall be granted to individuals other
than employees of the Company or of a parent or subsidiary corporation of the
Company.
(b) Each Incentive Stock Option under the Plan must be granted prior
to February 6, 2013, which is within ten (10) years from the date the Plan was
adopted by the Board of Directors.
(c) The option price of the shares subject to any Incentive Stock
Option shall not be less than the fair market value (as defined in subsection
(f) of this Section 6) of the Common Stock at the time such Incentive Stock
Option is granted; provided, however, if an Incentive Stock Option is granted to
an individual who owns, at the time the Incentive Stock Option is granted, more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of a parent or subsidiary corporation of the Company (a
"10% Stockholder"), he option price of the shares subject to the Incentive Stock
Option shall be at least one hundred ten percent (110%) of the fair market value
of the Common Stock at the time such Incentive Stock Option is granted.
(d) No Incentive Stock Option granted under the Plan shall be
exercisable after the expiration of ten (10) years from the date of its grant.
However, if an Incentive Stock Option is granted to a 10% Stockholder, such
Incentive Stock Option shall not be exercisable after the expiration of five (5)
years from the date of its grant. Every Incentive Stock Option granted under the
Plan shall be subject to earlier termination as expressly provided in Section 13
hereof.
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(e) For purposes of determining stock ownership under this Section
6, the attribution rules of Section 424(d) of the Code shall apply.
(f) For purposes of the Plan, fair market value shall be determined
by the Board of Directors or the Committee. If the Common Stock is listed or
traded on a national securities exchange, The Nasdaq Stock Market ("Nasdaq"),
the National Association of Securities Dealers OTC Electronic Bulletin Board
(the "Bulletin Board"), the Bulletin Board Exchange (the "BBX") or the Pink
Sheets (or any successor organization), fair market value shall be the closing
selling price or, if not available, the closing bid price or, if not available,
the high bid price of the Common Stock quoted on such exchange, Nasdaq, the
Bulletin Board, the BBX or the Pink Sheets (or any successor organization), as
reported thereby, as the case may be, on the day immediately preceding the day
on which the Option is granted (or, if granted after the close of business for
trading, then on the day on which the Option is granted), or, if there is no
selling or bid price on that day, the closing selling price, closing bid price
or high bid price, as the case may be, on the most recent day which precedes
that day and for which such prices are available. If there is no selling or bid
price for the ninety (90) day period preceding the date of grant of an Option
hereunder, fair market value shall be determined in good faith by the Board of
Directors or the Committee.
7. Nonstatutory Stock Options. The Board of Directors or the Committee may
grant Options under the Plan which are not intended to meet the requirements of
Section 422 of the Code, as well as Options which are intended to meet the
requirements of Section 422 of the Code but the terms of which provide that they
will not be treated as Incentive Stock Options (referred to herein as a
"Nonstatutory Stock Option"). Nonstatutory Stock Options shall be subject to the
following terms and conditions:
(a) A Nonstatutory Stock Option may be granted to any individual or
entity eligible to receive an Option under the Plan pursuant to clause (b) of
Section 4 hereof.
(b) The option price of the shares subject to a Nonstatutory Stock
Option shall be determined by the Board of Directors or the Committee, in its
sole discretion, at the time of the grant of the Nonstatutory Stock Option.
(c) A Nonstatutory Stock Option granted under the Plan may be of
such duration as shall be determined by the Board of Directors or the Committee
(subject to earlier termination as expressly provided in Section 13 hereof).
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8. Grant of Options to Non-Employee Directors.
(a) Subject to the provisions of Section 3 hereof, for so long as
this Plan is in effect and shares are available for the grant of Options
hereunder, each person who shall become a non-employee Director after the
effective date of this Plan shall be granted, on the date of his initial
election by stockholders or initial appointment by the Board of Directors of the
Company, an Option to purchase 300,000 shares of Common Stock at a per share
option price equal to the fair market value of a share of Common Stock on such
date (such number of shares being subject to the adjustments provided in Section
15 of the Plan).
(b) For so long as this Plan is in effect and shares are available
for the grant of options hereunder, on the date of the Company's annual meeting
of stockholders, there shall be granted to each person who is a non-employee
Director on the date of such annual meeting an Option to purchase 50,000 shares
of Common Stock at a per share option price equal to the fair market value of a
share of Common Stock on such date (such number of shares being subject to the
adjustments provided in Section 15 of the Plan); provided, however, that any
non-employee Director who received an Option grant pursuant to Section 8(a)
above shall not be entitled to receive an Option grant pursuant to this Section
8(b) in the same calendar year.
9. Reload Options. The Board of Directors or the Committee may grant
Options with a reload feature. A reload feature shall only apply when the option
price is paid by delivery of Common Stock (as set forth in Section 14(b)(ii)) or
by having the Company reduce the number of shares otherwise issuable to an
Optionee (as provided for in the last sentence of Section 14(b)) (a "Net
Exercise"). The Stock Option Agreement for the Options containing the reload
feature shall provide that the Option holder shall receive, contemporaneously
with the payment of the option price in shares of Common Stock or in the event
of a Net Exercise, a reload stock option (the "Reload Option") to purchase that
number of shares of Common Stock equal to the sum of (i) the number of shares of
Common Stock used to exercise the Option (or not issued in the case of a Net
Exercise), and (ii) with respect to Nonstatutory Stock Options, the number of
shares of Common Stock used to satisfy any tax withholding requirement incident
to the exercise of such Nonstatutory Stock Option. The terms of the Plan
applicable to the Option shall be equally applicable to the Reload Option with
the following exceptions: (i) the option price per share of Common Stock
deliverable upon the exercise of the Reload Option, (A) in the case of a Reload
Option which is an Incentive Stock Option being granted to a 10% Stockholder,
shall be one hundred ten percent (110%) of the fair market value of a share of
Common Stock on the date of grant of the Reload Option and (B) in the case of a
Reload Option which is an Incentive Stock Option
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being granted to a person other than a 10% Stockholder or is a Nonstatutory
Stock Option, shall be the fair market value of a share of Common Stock on the
date of grant of the Reload Option; and (ii) the term of the Reload Option shall
be equal to the remaining option term of the Option (including a Reload Option)
which gave rise to the Reload Option. The Reload Option shall be evidenced by an
appropriate amendment to the Stock Option Agreement for the Option which gave
rise to the Reload Option. In the event the exercise price of an Option
containing a reload feature is paid by check and not in shares of Common Stock,
the reload feature shall have no application with respect to such exercise.
10. Rights of Option Holders. The holder of an Option granted under the
Plan shall have none of the rights of a stockholder with respect to the stock
covered by his Option until such stock shall be transferred to him upon the
exercise of his Option.
11. Alternate Stock Appreciation Rights.
(a) Concurrently with, or subsequent to, the award of any Option to
purchase one or more shares of Common Stock, the Board of Directors or the
Committee may, in its sole discretion, subject to the provisions of the Plan and
such other terms and conditions as the Board of Directors or the Committee may
prescribe, award to the Optionee with respect to each share of Common Stock
covered by an Option ("Related Option"), a related alternate stock appreciation
right ("SAR"), permitting the Optionee to be paid the appreciation on the
Related Option in lieu of exercising the Related Option. A SAR granted with
respect to an Incentive Stock Option must be granted together with the Related
Option. A SAR granted with respect to a Nonstatutory Stock Option may be granted
together with, or subsequent to, the grant of such Related Option.
(b) Each SAR granted under the Plan shall be authorized by the Board
of Directors or the Committee, and shall be evidenced by a SAR Agreement which
shall be executed by the Company and by the individual or entity to whom such
SAR is granted. The SAR Agreement shall specify the period during which the SAR
is exercisable, and such other terms and provisions not inconsistent with the
Plan.
(c) A SAR may be exercised only if and to the extent that its
Related Option is eligible to be exercised on the date of exercise of the SAR.
To the extent that a holder of a SAR has a current right to exercise, the SAR
may be exercised from time to time by delivery by the holder thereof to the
Company at its principal office (attention: Secretary) of a written notice of
the number of shares with respect to which it is being exercised. Such notice
shall be accompanied by the agreements evidencing the SAR
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and the Related Option. In the event the SAR shall not be exercised in full, the
Secretary of the Company shall endorse or cause to be endorsed on the SAR
Agreement and the Related Option Agreement the number of shares which have been
exercised thereunder and the number of shares that remain exercisable under the
SAR and the Related Option and return such SAR and Related Option to the holder
thereof.
(d) The amount of payment to which an Optionee shall be entitled
upon the exercise of each SAR shall be equal to one hundred percent (100%) of
the amount, if any, by which the fair market value of a share of Common Stock on
the exercise date exceeds the exercise price per share of the Related Option;
provided, however, the Company may, in its sole discretion, withhold from any
such cash payment any amount necessary to satisfy the Company's obligation for
withholding taxes with respect to such payment.
(e) The amount payable by the Company to an Optionee upon exercise
of a SAR may, in the sole determination of the Company, be paid in shares of
Common Stock, cash or a combination thereof, as set forth in the SAR Agreement.
In the case of a payment in shares, the number of shares of Common Stock to be
paid to an Optionee upon such Optionee's exercise of a SAR shall be determined
by dividing the amount of payment determined pursuant to Section 11(d) hereof by
the fair market value of a share of Common Stock on the exercise date of such
SAR. For purposes of the Plan, the exercise date of a SAR shall be the date the
Company receives written notification from the Optionee of the exercise of the
SAR in accordance with the provisions of Section 11(c) hereof. As soon as
practicable after exercise, the Company shall either deliver to the Optionee the
amount of cash due such Optionee or a certificate or certificates for such
shares of Common Stock. All such shares shall be issued with the rights and
restrictions specified herein.
(f) SARs shall terminate or expire upon the same conditions and in
the same manner as the Related Options, and as set forth in Section 13 hereof.
(g) The exercise of any SAR shall cancel and terminate the right to
purchase an equal number of shares covered by the Related Option.
(h) Upon the exercise or termination of any Related Option, the SAR
with respect to such Related Option shall terminate to the extent of the number
of shares of Common Stock as to which the Related Option was exercised or
terminated.
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(i) A SAR granted pursuant to the Plan shall be transferable to the
same extent as the Related Option.
(j) All references in this Plan to "Options" shall be deemed to
include "SARs" where applicable.
12. Transferability of Options.
(a) No Option granted under the Plan shall be transferable by the
individual or entity to whom it was granted other than by will or the laws of
descent and distribution, and, during the lifetime of an individual, shall not
be exercisable by any other person, but only by him.
(b) Notwithstanding Section 12(a) above, a Nonstatutory Stock Option
granted under the Plan may be transferred in whole or in part during an
Optionee's lifetime, upon the approval of the Board of Directors or the
Committee, to an Optionee's "family members" (as such term is defined in Rule
701(c)(3) of the Securities Act of 1933, as amended, and General Instruction
A(1)(a)(5) to Form S-8) through a gift or domestic relations order. The
transferred portion of a Nonstatutory Stock Option may only be exercised by the
person or entity who acquires a proprietary interest in such option pursuant to
the transfer. The terms applicable to the transferred portion shall be the same
as those in effect for the Option immediately prior to such transfer and shall
be set forth in such documents issued to the transferee as the Board of
Directors or the Committee may deem appropriate. As used in this Plan the terms
"Optionee" and "holder of an Option" shall refer to the grantee of the Option
and not any transferee thereof.
13. Effect of Termination of Employment or Death on Options.
(a) Unless otherwise provided in the Stock Option Agreement, if the
employment of an employee by, or the services of a non-employee Director for, or
consultant or advisor to, the Company or a parent or subsidiary corporation of
the Company shall be terminated for cause or voluntarily by the employee,
non-employee Director, consultant or advisor, then his Option shall expire
forthwith. Unless otherwise provided in the Stock Option Agreement, and except
as provided in subsections (b) and (c) of this
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Section 13, if such employment or services shall terminate for any other reason,
then such Option may be exercised at any time within three (3) months after such
termination, subject to the provisions of subsection (d) of this Section 13. For
purposes of the Plan, the retirement of an individual either pursuant to a
pension or retirement plan adopted by the Company or at the normal retirement
date prescribed from time to time by the Company shall be deemed to be
termination of such individual's employment other than voluntarily or for cause.
For purposes of this subsection (a), an employee, non-employee Director,
consultant or advisor who leaves the employ or services of the Company to become
an employee or non-employee Director of, or a consultant or advisor to, a parent
or subsidiary corporation of the Company or a corporation (or subsidiary or
parent corporation of the corporation) which has assumed the Option of the
Company as a result of a corporate reorganization or like event shall not be
considered to have terminated his employment or services.
(b) Unless otherwise provided in the Stock Option Agreement, if the
holder of an Option under the Plan dies (i) while employed by, or while serving
as a non-employee Director for or a consultant or advisor to, the Company or a
parent or subsidiary corporation of the Company, or (ii) within three (3) months
after the termination of his employment or services other than voluntarily or
for cause, then such Option may, subject to the provisions of subsection (d) of
this Section 12, be exercised by the estate of the employee or non-employee
Director, consultant or advisor, or by a person who acquired the right to
exercise such Option by bequest or inheritance or by reason of the death of such
employee or non-employee Director, consultant or advisor, at any time within one
(1) year after such death.
(c) Unless otherwise provided in the Stock Option Agreement, if the
holder of an Option under the Plan ceases employment or services because of
permanent and total disability (within the meaning of Section 22(e)(3) of the
Code) ("Permanent Disability") while employed by, or while serving as a
non-employee Director for or consultant or advisor to, the Company or a parent
or subsidiary corporation of the Company, then such Option may, subject to the
provisions of subsection (d) of this Section 13, be exercised at any time within
one (1) year after his termination of employment, termination of Directorship or
termination of consulting or advisory services, as the case may be, due to the
disability.
(d) An Option may not be exercised pursuant to this Section 13
except to the extent that the holder was entitled to exercise the Option at the
time of termination of employment, termination of Directorship, termination of
consulting or advisory services, or death, and in any event may not be exercised
after the expiration of the Option.
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(e) For purposes of this Section 13, the employment relationship of
an employee of the Company or of a parent or subsidiary corporation of the
Company will be treated as continuing intact while he is on military or sick
leave or other bona fide leave of absence (such as temporary employment by the
Government) if such leave does not exceed ninety (90) days, or, if longer, so
long as his right to reemployment is guaranteed either by statute or by
contract.
14. Exercise of Options.
(a) Unless otherwise provided in the Stock Option Agreement, any
Option granted under the Plan shall be exercisable in whole at any time, or in
part from time to time, prior to expiration. The Board of Directors or the
Committee, in its absolute discretion, may provide in any Stock Option Agreement
that the exercise of any Options granted under the Plan shall be subject (i) to
such condition or conditions as it may impose, including, but not limited to, a
condition that the holder thereof remain in the employ or service of, or
continue to provide consulting or advisory services to, the Company or a parent
or subsidiary corporation of the Company for such period or periods from the
date of grant of the Option as the Board of Directors or the Committee, in its
absolute discretion, shall determine; and (ii) to such limitations as it may
impose, including, but not limited to, a limitation that the aggregate fair
market value (determined at the time the Option is granted) of the Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any employee during any calendar year (under all plans of the Company and its
parent and subsidiary corporations) shall not exceed one hundred thousand
dollars ($100,000). In addition, in the event that under any Stock Option
Agreement the aggregate fair market value (determined at the time the Option is
granted) of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any employee during any calendar year (under
all plans of the Company and its parent and subsidiary corporations) exceeds one
hundred thousand dollars ($100,000), the Board of Directors or the Committee
may, when shares are transferred upon exercise of such Options, designate those
shares which shall be treated as transferred upon exercise of an Incentive Stock
Option and those shares which shall be treated as transferred upon exercise of a
Nonstatutory Stock Option.
(b) An Option granted under the Plan shall be exercised by the
delivery by the holder thereof to the Company at its principal office (attention
of the Secretary) of written notice of the number of shares with respect to
which the Option is being exercised. Such notice shall be accompanied, or
followed within ten (10) days of delivery thereof, by payment of the full option
price of such shares, and payment of such option price shall be made by the
holder's delivery of (i) his check payable to the order of the Company, or (ii)
previously acquired Common Stock, the fair market value of which shall be
determined as of the date of exercise (provided that the shares delivered
pursuant hereto are
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acceptable to the Board of Directors or the Committee in its sole discretion) or
(iii) if provided for in the Stock Option Agreement, his check payable to the
order of the Company in an amount at least equal to the par value of the Common
Stock being acquired, together with a promissory note, in form and upon such
terms as are acceptable to the Board or the Committee, made payable to the order
of the Company in an amount equal to the balance of the exercise price, or (iv)
by the holder's delivery of any combination of the foregoing (i), (ii) and
(iii). Alternatively, if provided for in the Stock Option Agreement, the holder
may elect to have the Company reduce the number of shares otherwise issuable by
a number of shares having a fair market value equal to the exercise price of the
Option being exercised.
15. Adjustment Upon Change in Capitalization.
(a) In the event that the outstanding Common Stock is hereafter
changed by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, reverse split, stock
dividend or the like, an appropriate adjustment shall be made by the Board of
Directors or the Committee in the aggregate number of shares available under the
Plan, in the number of shares and option price per share subject to outstanding
Options, and in any limitation on exerciseability referred to in Section
14(a)(ii) hereof which is set forth in outstanding Incentive Stock Options. If
the Company shall be reorganized, consolidated, or merged with another
corporation, subject to the provisions of Section 19 hereof, the holder of an
Option shall be entitled to receive upon the exercise of his Option the same
number and kind of shares of stock or the same amount of property, cash or
securities as he would have been entitled to receive upon the happening of any
such corporate event as if he had been, immediately prior to such event, the
holder of the number of shares covered by his Option; provided, however, that in
such event the Board of Directors or the Committee shall have the discretionary
power to take any action necessary or appropriate to prevent any Incentive Stock
Option granted hereunder which is intended to be an "incentive stock option"
from being disqualified as such under the then existing provisions of the Code
or any law amendatory thereof or supplemental thereto; and provided, further,
however, that in such event the Board of Directors or the Committee shall have
the discretionary power to take any action necessary or appropriate to prevent
such adjustment from being deemed or considered as the adoption of a new plan
requiring shareholder approval under Section 422 of the Code and the regulations
promulgated thereunder.
(b) Any adjustment in the number of shares shall apply
proportionately to only the unexercised portion of the Option granted hereunder.
If fractions of a share would result from any such adjustment, the adjustment
shall be revised to the next lower whole number of shares.
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16. Further Conditions of Exercise of Options.
(a) Unless prior to the exercise of the Option the shares issuable
upon such exercise have been registered with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, the notice of
exercise shall be accompanied by a representation or agreement of the person or
estate exercising the Option to the Company to the effect that such shares are
being acquired for investment purposes and not with a view to the distribution
thereof, and such other documentation as may be required by the Company, unless
in the opinion of counsel to the Company such representation, agreement or
documentation is not necessary to comply with such Act.
(b) If the Common Stock is listed on any securities exchange,
including, without limitation, Nasdaq, the Company shall not be obligated to
deliver any Common Stock pursuant to this Plan until it has been listed on each
such exchange. In addition, the Company shall not be obligated to deliver any
Common Stock pursuant to this Plan until there has been qualification under or
compliance with such federal or state laws, rules or regulations as the Company
may deem applicable. The Company shall use reasonable efforts to obtain such
listing, qualification and compliance.
17. Restricted Stock Grant Agreement. Each Restricted Stock grant under
the Plan shall be authorized by the Board of Directors or the Committee, and
shall be evidenced by a Restricted Stock Grant Agreement which shall be executed
by the Company and by the individual or entity to whom such Restricted Stock is
granted. The Restricted Stock Grant Agreement shall specify the number of shares
of Restricted Stock granted, the vesting periods and such other terms and
provisions as the Board of Directors or the Committee may deem necessary or
appropriate.
18. Restricted Stock Grants.
(a) The Board of Directors or the Committee may grant Restricted
Stock under the Plan to any individual or entity eligible to receive Restricted
Stock pursuant to clause (b) of Section 4 hereof.
(b) In addition to any other applicable provisions hereof and except
as may otherwise be specifically provided in a Restricted Stock Grant Agreement,
the
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following restrictions in this Section 18(b) shall apply to grants of Restricted
Stock made by the Board or the Committee:
(i) No shares granted pursuant to a grant of Restricted Stock
may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated until, and to the extent that, such shares are vested.
(ii) Shares granted pursuant to a grant of Restricted Stock
shall vest as determined by the Board or the Committee, as provided for in the
Restricted Stock Grant Agreement. The foregoing notwithstanding (but subject to
the provisions of (iii) hereof and subject to the discretion of the Board or the
Committee), a Grantee shall forfeit all shares not previously vested, if any, at
such time as the Grantee is no longer employed by, or serving as a Director of,
or rendering consulting or advisory services to, the Company or a parent or
subsidiary corporation of the Company. All forfeited shares shall be returned to
the Company.
(iii) Notwithstanding the provisions of (ii) hereof,
non-vested Restricted Stock shall automatically vest to the same extent as
non-vested options as provided for in Section 19 hereof.
(c) In determining the vesting requirements with respect to a grant
of Restricted Stock, the Board or the Committee may impose such restrictions on
any shares granted as it may deem advisable including, without limitation,
restrictions relating to length of service, corporate performance, attainment of
individual or group performance objectives, and federal or state securities
laws, and may legend the certificates representing Restricted Stock to give
appropriate notice of such restrictions. Any such restrictions shall be
specifically set forth in the Restricted Stock Grant Agreement.
(d) Certificates representing shares granted that are subject to
restrictions shall be held by the Company or, if the Board or the Committee so
specifies, deposited with a third-party custodian or trustee until lapse of all
restrictions on the shares. After such lapse, certificates for such shares (or
the vested percentage of such shares) shall be delivered by the Company to the
Grantee; provided, however, that the Company need not issue fractional shares.
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(e) During any applicable period of restriction, the Grantee shall
be the record owner of the Restricted Stock and shall be entitled to vote such
shares and receive all dividends and other distributions paid with respect to
such shares while they are so restricted. However, if any such dividends or
distributions are paid in shares of Company stock or cash or other property
during an applicable period of restriction, the shares, cash and/or other
property deliverable shall be held by the Company or third party custodian or
trustee and be subject to the same restrictions as the shares with respect to
which they were issued. Moreover, the Board or the Committee may provide in each
grant such other restrictions, terms and conditions as it may deem advisable
with respect to the treatment and holding of any stock, cash or property that is
received in exchange for Restricted Stock granted pursuant to the Plan.
(f) Each Grantee making an election pursuant to Section 83(b) of the
Code shall, upon making such election, promptly provide a copy thereof to the
Company.
19. Liquidation, Merger or Consolidation. Notwithstanding Section 14(a)
hereof, if the Board of Directors approves a plan of complete liquidation or a
merger or consolidation (other than a merger or consolidation that would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity), at least fifty percent (50%) of
the combined voting power of the voting securities of the Company (or such
surviving entity) outstanding immediately after such merger or consolidation),
the Board of Directors or the Committee may, in its sole discretion, upon
written notice to the holder of an Option, provide that the Option must be
exercised within twenty (20) days following the date of such notice or it will
be terminated. In the event such notice is given, the Option shall become
immediately exercisable in full.
20. Effectiveness of the Plan. The Plan was adopted by the Board of
Directors and is effective on February 6, 2003.
21. Termination, Modification and Amendment.
(a) The Plan (but not Options previously granted under the Plan)
shall terminate on February 6, 2013, which is within ten (10) years from the
date of its adoption by the Board of Directors, or sooner as hereinafter
provided, and no Option or Restricted Stock shall be granted after termination
of the Plan. The foregoing shall not be deemed to limit the vesting period for
Restricted Stock granted pursuant to the Plan.
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(b) The Board of Directors may at any time, on or before the
termination date referred to in Section 21(a) hereof, without stockholder
approval, terminate the Plan, or from time to time make such modifications or
amendments to the Plan as it may deem advisable.
(c) No termination, modification, or amendment of the Plan may,
without the consent of the individual or entity to whom any Option or Restricted
Stock shall have been granted, adversely affect the rights conferred by such
Option or Restricted Stock grant.
22. Not a Contract of Employment. Nothing contained in the Plan or in any
Stock Option Agreement or Restricted Stock Grant Agreement executed pursuant
hereto shall be deemed to confer upon any individual or entity to whom an Option
or Restricted Stock is or may be granted hereunder any right to remain in the
employ or service of the Company or a parent or subsidiary corporation of the
Company or any entitlement to any remuneration or other benefit pursuant to any
consulting or advisory arrangement.
23. Use of Proceeds. The proceeds from the sale of shares pursuant to
Options or Restricted Stock granted under the Plan shall constitute general
funds of the Company.
24. Indemnification of Board of Directors or Committee. In addition to
such other rights of indemnification as they may have, the members of the Board
of Directors or the Committee, as the case may be, shall be indemnified by the
Company to the extent permitted under applicable law against all costs and
expenses reasonably incurred by them in connection with any action, suit, or
proceeding to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any rights
granted thereunder and against all amounts paid by them in settlement thereof or
paid by them in satisfaction of a judgment of any such action, suit or
proceeding, except a judgment based upon a finding of bad faith. Upon the
institution of any such action, suit, or proceeding, the member or members of
the Board of Directors or the Committee, as the case may be, shall notify the
Company in writing, giving the Company an opportunity at its own cost to defend
the same before such member or members undertake to defend the same on his or
their own behalf.
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25. Captions. The use of captions in the Plan is for convenience. The
captions are not intended to provide substantive rights.
26. Disqualifying Dispositions. If Common Stock acquired upon exercise of
an Incentive Stock Option granted under the Plan is disposed of within two years
following the date of grant of the Incentive Stock Option or one year following
the issuance of the Common Stock to the Optionee, or is otherwise disposed of in
a manner that results in the Optionee being required to recognize ordinary
income, rather than capital gain, from the disposition (a "Disqualifying
Disposition"), the holder of the Common Stock shall, immediately prior to such
Disqualifying Disposition, notify the Company in writing of the date and terms
of such Disqualifying Disposition and provide such other information regarding
the Disqualifying Disposition as the Company may reasonably require.
27. Withholding Taxes.
(a) Whenever under the Plan shares of Common Stock are to be
delivered to an Optionee upon exercise of a Nonstatutory Stock Option or to a
Grantee of Restricted Stock, the Company shall be entitled to require as a
condition of delivery that the Optionee or Grantee remit or, at the discretion
of the Board or the Committee, agree to remit when due, an amount sufficient to
satisfy all current or estimated future Federal, state and local income tax
withholding requirements, including, without limitation, the employee's portion
of any employment tax requirements relating thereto. At the time of a
Disqualifying Disposition, the Optionee shall remit to the Company in cash the
amount of any applicable Federal, state and local income tax withholding and the
employee's portion of any employment taxes.
(b) The Board of Directors or the Committee may, in its discretion,
provide any or all holders of Nonstatutory Stock Options or Grantees of
Restricted Stock with the right to use shares of Common Stock in satisfaction of
all or part of the withholding taxes to which such holders may become subject in
connection with the exercise of their Options or their receipt of Restricted
Stock. Such right may be provided to any such holder in either or both of the
following formats:
(i) The election to have the Company withhold, from the shares
of Common Stock otherwise issuable upon the exercise of such Nonstatutory Stock
Option or otherwise deliverable as a result of the vesting of Restricted Stock,
a portion of those shares with an aggregate fair market value equal to the
percentage of the withholding taxes (not to exceed one hundred percent (100%))
designated by the holder.
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(ii) The election to deliver to the Company, at the time the
Nonstatutory Stock Option is exercised or Restricted Stock is granted or vested,
one or more shares of Common Stock previously acquired by such holder (other
than in connection with the option exercise or Restricted Stock grant triggering
the withholding taxes) with an aggregate fair market value equal to the
percentage of the withholding taxes (not to exceed one hundred percent (100%))
designated by the holder.
28. Other Provisions. Each Option granted, and each Restricted Stock
grant, under the Plan may contain such other terms and conditions not
inconsistent with the Plan as may be determined by the Board or the Committee,
in its sole discretion. Notwithstanding the foregoing, each Incentive Stock
Option granted under the Plan shall include those terms and conditions which are
necessary to qualify the Incentive Stock Option as an "incentive stock option"
within the meaning of Section 422 of the Code and the regulations thereunder and
shall not include any terms and conditions which are inconsistent therewith.
29. Definitions. For purposes of the Plan, the terms "parent corporation"
and "subsidiary corporation" shall have the meanings set forth in Sections
424(e) and 424(f) of the Code, respectively, and the masculine shall include the
feminine and the neuter as the context requires.
30. Governing Law. The Plan shall be governed by, and all questions
arising hereunder shall be determined in accordance with, the laws of the State
of New York, excluding choice of law principles thereof.
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CORNICHE GROUP INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
July 24, 2003
The undersigned hereby appoints ________________ and __________________,
and each of them, attorneys and proxies with power of substitution, to vote for
and on behalf of the undersigned at the CORNICHE GROUP INCORPORATED Annual
Meeting of Stockholders to be held on July 24, 2003 and at any adjournments or
postponements thereof (the "Meeting"), upon the following matters and upon any
other business that may properly come before the Meeting, as set forth in the
related Notice of Meeting and Proxy Statement, both of which have been received
by the undersigned.
This proxy, when properly executed, will be voted in the manner directed
by the undersigned stockholder. If this proxy is executed but no direction is
made, this proxy will be voted FOR the board's nominees for director, FOR the
approval of the amendment to the Certificate of Incorporation changing the name
of the Corporation, FOR the approval of the amendment to the Certificate of
Incorporation increasing the number of shares of authorized Common Stock, and
FOR the approval of the CORNICHE GROUP INCORPORATED Year 2003 Stock Incentive
Plan.
PLEASE INDICATE YOUR VOTE ON THE OTHER SIDE.
(CONTINUED, AND TO BE DATED AND SIGNED, ON THE OTHER SIDE)
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" PROPOSALS 1, 2, 3 and 4
Against all
nominees
*(except as
marked to
For all the contrary
nominees below) Nominees:
---------
1. Election of 2 ---------- ---------------------- Mark Weinreb
Directors.
---------- ---------------------- Wayne A.
Marasco
* To withhold authority for any individual nominees, print nominee's name on the
line below.
_____________________________________________________
_____________________________________________________
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
2. Amendment to the CORNICHE GROUP
INCORPORATED Certificate of
Incorporation to change its name
to Phase III Medical, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. Amendment to the CORNICHE GROUP
INCORPORATED 2003 Certificate of
Incorporation to increase its
authorized Common Stock to 250
million shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. Approval of the Corporation's 2003
Equity Participation Plan and the
options granted thereunder to the
Corporation's new president and
director
- --------------------------------------------------------------------------------
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In their discretion, the above named proxies are authorized to vote upon such
other business as may properly come before the meeting or any adjournment
thereof and upon matters incident to the conduct of the meeting.
UNLESS OTHERWISE SPECIFIED IN THE SQUARES OR SPACE PROVIDED IN THIS PROXY, THIS
PROXY WILL BE VOTED FOR EACH OF THE BOARD'S NOMINEES, FOR THE AMENDMENT OF THE
CORPORATION'S NAME, FOR THE INCREASE IN THE AUTHORIZED COMMON STOCK AND FOR THE
APPROVAL OF THE 2003 EQUITY PARTICIPATION PLAN.
Please sign this proxy and return it promptly whether or not you expect to
attend the meeting. You may nevertheless vote in person if you attend.
Signed: ____________________________________
Signed: ____________________________________ Dated: _________________, 2003
NOTE: Please sign exactly as your name appears hereon. Give full title if an
Attorney, Executor, Administrator, Trustee, Guardian, etc. For an account in the
name of two or more persons, each should sign, or if one signs, he should attach
evidence of his authority.
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