SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 6, 2003
CORNICHE GROUP INCORPORATED
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(Exact name of registrant as specified in charter)
Delaware 0-10909 22-2343568
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
610 SOUTH INDUSTRIAL BOULEVARD, SUITE 220, EULESS, TEXAS 76040
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(Address of principal executive offices) (Zip Code)
864-963-8718
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Registrant's Telephone Number
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
Corniche Group Incorporated (the "Company") has appointed Mark Weinreb
as a member of the Board of Directors and as its President and Chief Executive
Officer. The Company and Mr. Weinreb have been exploring business plans for the
Company that may involve, under the name "Phase III Medical, Inc.", 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. Mr.
Weinreb has been appointed to finalize and execute the Company's new business
plan. In any event, the Company will need to recruit management, business
development and technical personnel, and develop its business model.
Accordingly, it will be necessary for the Company to raise new capital. There
can be no assurance that any such business plan developed by the Company will be
successful, that the Company will be able to acquire such new business or rights
or raise new capital, or that the terms of any transaction will be favorable to
the Company.
Mr. Weinreb, age 49, has many years of experience with medical
services, equipment and operations, as well as with development stage private
and public companies. From 2000 until 2002, Mr. Weinreb served as the Chief
Executive Officer of Jestertek, Inc., a 12-year old software development company
pioneering gesture recognition and control using proprietary inter-active video
technology. He was recruited to commercialize Jestertek's technology (initially
focused on interactive entertainment), find the necessary financing for on-going
development, and position the company for an eventual IPO. Recognizing the
market potential in the rehabilitation medicine field, Mr. Weinreb helped
develop the first of its kind interactive "marker less" and peripheral-free
computer controlled, physical therapy and exercise systems, using the company's
proprietary video gesture control technology. Prior to his service with
Jestertek, Inc., Mr. Weinreb was the founder of Big City Bagels, Inc., a
national chain of franchised upscale bagel bakeries, which went public in 1995.
Mr. Weinreb was Big City Bagels' Chief Executive Officer until 1999 when he
redirected its business focus and completed a merger with an internet service
provider. In 1976, Mr. Weinreb joined Bio Health Laboratories, Inc., a medical
diagnostic laboratory providing clinical testing services for physicians,
hospitals and other medical laboratories. He became an owner and the
laboratory's Chief Operating Officer from 1982 to 1989. 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.
To secure Mr. Weinreb's service as President and Chief Executive
Officer, the Company has 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 Company or Mr. Weinreb at least 90
days prior to applicable anniversary date. The Company 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 Company 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 Company, 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 Company
granted Mr. Weinreb the right and option, exercisable for 10 years, to purchase
up to 2,500,000 shares of the Company's common stock at an exercise price of
$0.03 per share and otherwise upon the terms set forth in the Initial Option
Agreement. 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 the term of the employment agreement (whether during initial
term or an annual extension), the Company 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 Company'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 Company 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"). Mr. Weinreb has agreed that he will
not resell publicly any shares of the Company's common stock obtained upon
exercise of any Initial Agreement or the Additional Option Agreement prior to
the first anniversary of the date of the employment agreement.
In connection with the hiring of Mr. Weinreb and the Company's
anticipated new business line, the Company intends to call a meeting of
stockholders: (1) to elect five directors (including Mr. Weinreb and, if he
requests, a person designated by him); (2) to ratify the Company's 2003 Equity
Participation Plan pursuant to which 15,000,000 shares of the Company's common
stock are authorized to be issued; (3) to approve an amendment to the Company's
Certificate of Incorporation to increase the authorized number of shares of
common stock to 250,000,000; and (4) to approve a change of the Company's name
to "Phase III Medical, Inc."
* * * * *
This Report contains forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements represent management's judgment regarding future
events. Although management believes that the expectations reflected in such
statements are reasonable, they give no assurance that such expectations will
prove to be correct and you should be aware that actual results could differ
materially from those contained in the forward-looking statements due to a
number of factors. These factors include the risk that the Company will be
unable to raise capital, to enter successfully the biotech or medical business,
to have appropriate personnel, or the risks inherent in any new business venture
or those detailed in the Company's other reports filed with the Securities and
Exchange Commission. The Company undertakes no obligation to update or revise
the information contained in this Report whether as a result of new information,
future events or circumstances or otherwise.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit 99.1 Press Release
Exhibit 99.2 Employment Agreement dated as of February 6, 2003 by and
between Corniche Group Incorporated and Mark Weinreb
Exhibit 99.3 Stock Option Agreement dated as of February 6, 2003
between Corniche Group Incorporated and Mark Weinreb
Exhibit 99.4 Corniche Group Incorporated 2003 Equity Participation
Plan
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CORNICHE GROUP INCORPORATED
By: /s/ Mark Weinreb
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Name: Mark Weinreb
Title: President
Dated: February 12, 2003
Corniche Group Incorporated Announces
Appointment of Mark Weinreb as new President and CEO
New York, NY, February 12, 2003. Corniche Group Incorporated (OTCBB: CNGI) today
announced the appointment of Mark Weinreb as its President and CEO. This move
signals a strategic change of direction for the Company following the closure
last year of its online extended warranty business, warrantysuperstore.com.
Under Mark Weinreb's direction the Company will now be focused on building a
business in the medical sector.
The Company will seek to exploit value from assets and opportunities in the
medical sector by acquiring or participating in biotech and medical companies
and technologies. The Company will focus on new technology developments and may
participate, or acquire, the rights to new drugs and medical devices currently
under development by smaller independent Biotechnology companies, medical
institutions and medical researchers.
Commenting on his appointment Mark Weinreb said, "I am very excited about this
opportunity. The market for medical device innovation and new drug development
is both huge and fragmented. Right now there appears to be significant potential
to acquire rights, interests and royalty streams on advantageous terms in
interesting projects."
He continued, "We are currently in the process of putting together a high
caliber management team and advisory board drawn from the relevant disciplines
to assist the Company in the execution of its business model."
Mr. Weinreb, age 49, has many years of experience with medical services,
equipment and operations, as well as with development stage private and public
companies. Prior to joining Corniche he served as the Chief Executive Officer of
a software development company pioneering gesture recognition and control using
proprietary inter-active video technology.
To secure Mr. Weinreb's service as President and Chief Executive Officer,
Corniche has entered into a three-year employment agreement with Mr. Weinreb,
and granted him the right and option, exercisable for 10 years, to purchase up
to 2,500,000 shares of Corniche's common stock at an exercise price of $0.03 per
share.
* * * * *
This release contains forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements represent management's judgment regarding future
events. Although management believes that the expectations reflected in such
statements are reasonable, they give no assurance that such expectations will
prove to be correct and you should be aware that actual results could differ
materially from those contained in the forward-looking statements due to a
number of factors. These factors include the risk that the Company will be
unable to raise capital, to enter successfully the biotech or medical business,
to hire appropriate personnel, or the risks inherent in any new business venture
or those detailed in Corniche's reports filed with the Securities and Exchange
Commission. Corniche undertakes no obligation to update or revise the
information contained in this release whether as a result of new information,
future events or circumstances or otherwise.
For further information please contact:
Mark Weinreb on (516) 496 3053
EMPLOYMENT AGREEMENT, dated as of the 6th day of February, 2003, by
and between CORNICHE GROUP INCORPORATED, a Delaware corporation (the "Company"),
and MARK WEINREB (the "Employee").
RECITALS
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WHEREAS, the Company and the Employee desire to enter into an
employment agreement which will set forth the terms and conditions upon which
the Employee shall be employed by the Company and upon which the Company shall
compensate the Employee.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter set forth, the parties hereto have agreed, and do hereby
agree, as follows:
1. EMPLOYMENT; TERM; SEVERANCE
1.1 The Company will employ the Employee in its business, and
the Employee will work for the Company therein, as its Chief Executive Officer
and President for a term commencing as of the date hereof and terminating on the
third anniversary of the date hereof (the "Initial Term"). The term shall be
extended for additional one (1) year periods (the "Extended Period") unless
either party gives ninety (90) days prior written notice to the other of its
desire to terminate this Agreement as of the end of the initial term or any
successive term. The term of this Agreement, as may be extended, is hereinafter
referred to as the "Term." Each twelve (12) month period of the Term is referred
to herein as a "Contract Year." Except as provided for herein, the provisions of
this Agreement shall apply during the Extended Period.
1.2 The Employee's employment may be terminated by the Company
at any time for "cause". As used in this Agreement, "cause" shall mean the
following: (i) the Employee's commission of any act in the performance of his
duties constituting common law fraud; (ii) the Employee's conviction of, or plea
of guilty or nolo contendre to, any felony; or (iii) any embezzlement or
misappropriation by the Employee of the Company's assets, properties or rights.
1.3 The Company may also terminate the Employee's employment
without cause at any time. In the event of termination without cause (other than
pursuant to Paragraph 6.1 hereof), as liquidated damages and as the sole and
exclusive remedy of the Employee, the Employee shall be entitled to (a) (i) a
lump sum payment equal to the greater of (A) his then Base Salary and Automobile
Allowance (each as hereinafter defined) for the remainder of the Term or (B) his
then Base Salary and Automobile Allowance for a period of nine (9) months and
(ii) a lump sum payment equal to the Employee's Bonus (as hereinafter defined)
for the remainder of the Term, and (b) be reimbursed for the remainder of the
Term pursuant to Paragraphs 9.2 and 9.3 hereof.
2. DUTIES
2.1 During the Term, the Employee shall serve as the Company's
Chief Executive Officer. In such capacity, he shall perform duties of an
executive character consisting of administrative and managerial responsibilities
on behalf of the Company, and he shall have such further duties of an executive
character as shall, from time to time, be delegated or assigned to him by the
Board of Directors of the Company (the "Board") consistent with the Employee's
position. The Company acknowledges and agrees that, in his capacity as Chief
Executive Officer of the Company, the Employee shall have the power and
authority to cause the Company to establish and/or move its principal executive
offices and/or its operations to the New York metropolitan area.
3. DEVOTION OF TIME
3.1 During the Term, the Employee shall (i) devote his full-
time efforts in discharging his duties hereunder; (ii) devote his best efforts,
energy and skill to the services of the Company and the promotion of its
interests; and (iii) not take part in activities detrimental to the best
interests of the Company.
4. COMPENSATION; STOCK OPTIONS
4.1 For all services to be rendered by the Employee during the
Term, the Employee shall be entitled to the compensation set forth in Paragraphs
4.2, 4.3 and 4.4 hereof.
4.2 The Employee shall be entitled to receive from the Company
minimum compensation at the following rates per annum ("Base Salary"):
Year Base Salary
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1 $180,000
2 198,000
3 217,800
In the event the Term of this Agreement is extended beyond the Initial Term, the
Base Salary payable hereunder shall be increased by ten percent (10%) per annum.
The Employee shall be entitled to such additional compensation as may be
determined from time to time by the Board of Directors of the Company in its
sole discretion. All amounts due hereunder shall be payable in accordance with
the Company's standard payroll practices.
4.3 The Employee shall be entitled to an annual bonus amount
("Bonus") in the amount of $20,000. The Bonus for the initial Contract Year
shall be payable in the event, and concurrently on the date, that the Company
shall have received debt and/or equity financing in the aggregate amount of at
least $1,000,000 since the date hereof. The Bonus for each subsequent Contract
Year shall be payable on August 1 and shall not be subject to any condition. In
the sole discretion of the Board, any Bonus payment may be made sooner than the
times provided for above.
4.4 (a) Concurrently with the execution hereof, pursuant to
the Company's 2003 Equity Participation Plan (the "Equity Participation Plan")
and a Stock Option Agreement of even date (the "Initial Option Agreement"), the
Company is granting to the Employee the right and option to purchase up to
2,500,000 Common Shares of the Company at an exercise price of $.03 per share
and otherwise upon the terms set forth in the Stock Option Agreement (the
"Initial Option").
(b) In addition, in the event that the closing price of
the Company's Common Shares equals or exceeds $.50 per share for any five (5)
consecutive trading days during the Term, the Company shall grant to the
Employee, on the day immediately following the end of the five (5) day period,
pursuant to the Equity Participation Plan and a Stock Option Agreement, an
option for the purchase of an additional 2,500,000 Common Shares substantially
upon the terms of the Initial Option and in the form of the Initial Option
Agreement, except that the exercise price shall be $.50 per share and the option
shall be treated as an "incentive stock option" for tax purposes only to the
maximum extent permitted by law (the "Additional Option").
(c) The Employee agrees that he will not resell publicly
any Common Shares obtained upon exercise of the Initial Option and/or Additional
Option prior to the first anniversary of the date of this Agreement.
5. REIMBURSEMENT OF EXPENSES; AUTOMOBILE ALLOWANCE
5.1 The Company shall pay directly, or reimburse the Employee
for, all reasonable expenses and disbursements incurred by the Employee for and
on behalf of the Company in the performance of his duties during and prior to
the Term, including, without limitation, all reasonable expenses incurred by the
Employee for food, lodging and transportation, if he is required to perform any
of his duties away from his primary place of residence. For such purposes, the
Employee shall submit to the Company, not less than once in each calendar month,
reports of such expenses and other disbursements in the form normally used by
the Company.
5.2 The Employee shall be entitled to receive an automobile
allowance for the use of his automobile in the amount of one thousand dollars
($1,000) per month (the "Automobile Allowance").
5.3 The Company shall also pay directly, or shall reimburse
the Employee for, all wired and wireless telephone expenses, all other
reasonable home office expenses incurred in the performance of his duties during
the Term, including installation and monthly charges in connection with
broad-band service, and all expenses incurred by the Employee for legal fees and
disbursements in connection with this Agreement and the Initial Option
Agreement.
5.4 The Employee shall be given, and shall be entitled to use,
a Company credit card and telephone card in connection with the performance of
his duties.
6. DISABILITY
6.1 If, during the Term, the Employee shall, in the opinion
of a majority of the members of the Board, as confirmed by competent medical
evidence, become physically or mentally incapacitated to perform his duties for
the Company hereunder for a continuous period, then for the first three (3)
months of such period he shall receive his full Base Salary and for the second
three (3) months of such period, in lieu of full Base Salary, he shall receive
one-half (1/2) of his Base Salary. In no event shall the Employee be entitled to
receive any payments under this Paragraph 6.1 beyond the expiration or
termination date of this Agreement. Effective with the date of his resumption of
full employment, the Employee shall be re-entitled to receive his full Base
Salary. If such illness or other incapacity shall endure for a continuous period
of at least six (6) months, the Company shall have the right, by written notice,
to terminate the Employee's employment hereunder as of a date (not less than
five (5) days after the date of the sending of such notice of termination of
employment) to be specified in such notice. The Employee agrees to submit
himself for appropriate medical examination to a physician of the Company's
designation as necessary for purposes of this Paragraph 6.1. The provisions
hereof are not intended to limit the Employee's right to receive other amounts
payable to him pursuant to the provisions of this Agreement.
6.2 The obligations of the Company under this Paragraph 6 may
be satisfied, in whole or in part, by payments to the Employee under disability
insurance provided by the Company.
7. RESTRICTIVE COVENANT; CONFIDENTIAL INFORMATION
7.1 The Employee agrees that, if the term of his employment
hereunder shall expire or his employment shall at any time terminate voluntary
by the Employee (other than for Good Reason (as hereinafter defined)) or by the
Company for cause, the Employee will not at any time within one (1) year after
such expiration or termination, without the prior written approval of the
Company, anywhere in the United States of America, whether individually or as a
principal, officer, employee, partner, member, director or agent of, or
consultant for, any person or other entity ("Person"), engage or participate in
a business which, as of such expiration or termination date, is competitive with
that of the Company, and shall not make any investments in any such similar or
competitive entity, except that the Employee may acquire up to one percent (1%)
of the outstanding voting stock of any entity whose securities are listed on a
stock exchange or Nasdaq. As used herein, "Good Reason" shall mean the failure
of the Company to obtain Stockholder Approval (as hereinafter defined) and/or
file the Registration Statement (as hereinafter defined) by June 30, 2003 or a
breach by the Company of any of its obligations set forth in this Agreement.
7.2 (a) The Employee represents that he has been informed
that it is the policy of the Company to maintain as secret all Confidential
Information (as hereinafter defined) and further acknowledges that such
Confidential Information is of great value to the Company. The Employee
recognizes that, by reason of his employment with the Company, he will acquire
Confidential Information. The Employee confirms that it is necessary to protect
the Company's goodwill, and, accordingly, hereby agrees that he will not (except
where reasonably necessary in the performance of his duties, or where authorized
by the Board or as required by law, rule or regulation or applicable regulatory
or administrative process or by a court of competent jurisdiction), at any time
during the Term or thereafter, divulge to any Person, or use, any such
Confidential Information.
(b) The Employee agrees that, upon the expiration or
termination of this Agreement for any reason whatsoever, he shall deliver to the
Company any material relating to any Confidential Information received by the
Employee during the Term arising out of, in connection with, or related to any
activity or business of the Company.
(c) For purposes hereof, the term "Confidential
Information" shall mean all proprietary and confidential information obtained by
or given to the Employee during the course of his employment. Confidential
Information shall not include information which (i) was in the public domain at
the time furnished to, or acquired by, the Employee, or (ii) thereafter enters
the public domain other than through disclosure, directly or indirectly, by the
Employee or others in violation of an agreement of confidentiality or
nondisclosure.
8. VACATIONS
8.1 The Employee shall be entitled to five (5) weeks vacation
during each Contract Year of the Term, the time and duration of any particular
vacation period to be determined by mutual agreement between the Employee and
the Company. The Employee shall be paid for up to two (2) weeks unused vacation
time in any Contract Year. Any other vacation time not used by the end of a
Contract Year will be forfeited without compensation.
9. PARTICIPATION IN EMPLOYEE BENEFIT PLANS; OTHER INSURANCE
9.1 The Employee and any beneficiary of the Employee shall be
accorded the right to participate in and receive benefits under and in
accordance with the provisions of any pension, profit sharing, medical, dental,
life insurance and disability insurance benefits and plans of the Company either
in existence as of the date hereof or hereafter adopted for the benefit of its
executive employees.
9.2 Until such time as a medical and dental insurance plan of
the Company is established, the Company shall reimburse the Employee for all
medical and dental insurance premiums paid by him for himself and his family
covering the year 2003 and through the Term.
9.3 The Company shall reimburse the Employee for all premiums
paid by him for disability insurance. Such reimbursement obligation shall relate
to premiums covering the year 2003 and through the Term.
9.4 In the event of termination without cause, the Employee
shall be entitled to be reimbursed for comparable medical and dental insurance
premiums incurred until the earlier of (a) the end of the Term or (b) the date
on which comparable medical and dental coverage is obtained from another
employer.
10. OFFICER AND DIRECTOR LIABILITY INSURANCE
10.1 The Company shall obtain and maintain throughout the
Term officer and director liability insurance from an insurer reasonably
acceptable to the Employee in the amount of at least two million dollars
($2,000,000) or such lesser amount as shall be agreed to by the Employee. In the
event a "claims made" policy is obtained, the Company shall continue to cover
the Employee thereunder as a named issued following termination of employment
and until the expiration of all applicable statutes of limitation.
11. EARLIER TERMINATION
11.1 The Employee's employment hereunder shall automatically
terminate upon his death and may terminate at the option of the Company upon:
(a) the Employee's incapacity in accordance with the
provisions set forth in Paragraph 6.l hereof; or
(b) written notice to the Employee in the event the
Company terminates his employment hereunder for cause or without cause as set
forth in Paragraph 1.2 or 1.3 hereof, respectively.
11.2 The Employee may terminate this Agreement at any time
upon written notice to the Company for Good Reason.
12. REPRESENTATIONS AND WARRANTIES
12.1 The Company has the power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the Board and no other proceedings on the part of
the Company are necessary to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement constitutes the valid and binding obligation of the Company and is
enforceable in accordance with its terms. The Option Plan and the grant of the
Initial Option and the Additional Option have been duly authorized by the Board
and no other proceedings on the part of the Company are necessary in connection
therewith.
12.2 Neither the execution and delivery of this Agreement by
the Company nor compliance by the Company with any of the provisions hereof nor
the consummation of the transactions contemplated hereby, will:
(a) violate or conflict with any provision of the
Certificate of Incorporation or By-laws of the Company;
(b) violate or, alone or with notice or the passage of
time, result in the breach or termination of, or otherwise give any contracting
party the right to terminate, or declare a default under, the terms of any
contract, agreement, understanding or commitment to which the Company is a party
or by which it may be bound;
(c) violate any order, judgment, injunction, award or
decree against, or binding upon, the Company; or
(d) violate any law or regulation of any jurisdiction
relating to the Company.
12.3 Attached hereto as Exhibit 12.3 is a true and complete
copy of the Option Plan.
13. COVENANTS
13.1 The Company agrees that, promptly following the execution
of this Agreement, it shall prepare the necessary materials for, and shall call,
a meeting of stockholders pursuant to which the following matters shall be
submitted for stockholder approval: (a) election of five (5) directors
(including the Employee and, at the request of the Employee, a person designated
by the Employee), (b) approval of the Equity Participation Plan pursuant to
which 15,000,000 Common Shares are authorized to be issued thereunder, (c)
approval of an amendment to the Company's Certificate of Incorporation pursuant
to which the number of authorized Common Shares is increased to 250,000,000 and
(d) approval of a change in the name of the Company to "Phase III Medical, Inc."
(collectively, "Stockholder Approval"). The Company shall recommend approval of
each of the foregoing proposals. The failure of the Company to obtain
Stockholder Approval shall not affect the Employee's rights under the Initial
Option Agreement or his right to obtain the Additional Option.
13.2 The Company agrees that, promptly following the execution
of this Agreement, it shall 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 Option Plan, as well as the
resale of the Common Shares issuable upon exercise of the Initial Option, are
registered. Promptly following any grant of the Additional Option, the Company
shall file a post-effective amendment to the Registration Statement pursuant to
which the Common Shares issuable upon the exercise thereof shall be registered
for resale.
14. ARBITRATION
14.1 All disputes between the parties hereto concerning
the performance, breach, construction or interpretation of this Agreement or any
portion thereof, or in any manner arising out of this Agreement or the
performance thereof, shall be submitted to binding arbitration, in accordance
with the rules of the American Arbitration Association, which arbitration
proceeding shall take place at a mutually agreeable location in Nassau County,
New York or such other location as agreed to by the parties. The parties
acknowledge and agree that the foregoing arbitration provision is the exclusive
means for resolving disputes hereunder and neither party shall claim that such
proceeding is in an inconvenient forum.
14.2 The award rendered by the arbitrators shall be final,
binding and conclusive, and judgment may be entered upon it in accordance with
applicable law in the appropriate court in the State of New York, with no right
of appeal therefrom.
14.3 The prevailing party shall be entitled to be reimbursed
by the other party for its or his expenses of arbitration, including, without
limitation, reasonable attorneys' fees and the expenses of the arbitrators and
the arbitration proceeding; provided, however, that, in the event it is not
evident whether a particular party prevailed in the proceeding, each party shall
pay its or his own expenses of arbitration, and the expenses of the arbitrators
and the arbitration proceeding shall be shared equally; provided further that,
in such event, if, in the opinion of the arbitrator, or a majority of the
arbitrators, as the case may be, any claim or defense was unreasonable, the
arbitrator(s) may assess, as part of his/their award, all or any part of the
arbitration expenses of the other party (including reasonable attorneys' fees)
and of the arbitrator(s) and the arbitration proceeding against the party
raising such unreasonable claim or defense.
15. ASSIGNMENT
15.1 This Agreement, as it relates to the employment of the
Employee, is a personal contract and the rights and interests of the Employee
hereunder may not be sold, transferred, assigned, pledged or hypothecated.
16. NOTICES
16.1 Any notice required or permitted to be given pursuant
to this Agreement shall be deemed to have been duly given when delivered by hand
or sent by certified or registered mail, return receipt requested and postage
prepaid, overnight mail or telecopier as follows:
If to the Employee:
c/o Certilman, Balin, Adler & Hyman, LLP
90 Merrick Avenue
East Meadow, New York 11554
Attention: Fred Skolnik
Telecopier Number: (516) 296-7111
If to the Company:
c/o Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068-1791
Attention: Alan Wovsaniker, Esq.
Telecopier Number: (973) 597-2565
or at such other address as any party shall designate by notice to the other
party given in accordance with this Paragraph 16.1.
17. GOVERNING LAW
17.1 This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, excluding choice
of law principles thereof.
18. WAIVER OF BREACH; PARTIAL INVALIDITY
18.1 The waiver by either party of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach. If any provision, or part thereof, of this Agreement shall be
held to be invalid or unenforceable, such invalidity or unenforceability shall
attach only to such provision and not in any way affect or render invalid or
unenforceable any other provisions of this Agreement, and this Agreement shall
be carried out as if such invalid or unenforceable provision, or part thereof,
had been reformed, and any court of competent jurisdiction or arbiters, as the
case may be, are authorized to so reform such invalid or unenforceable
provision, or part thereof, so that it would be valid, legal and enforceable to
the fullest extent permitted by applicable law.
19. ENTIRE AGREEMENT
19.1 This Agreement constitutes the entire agreement between
the parties and there are no representations, warranties or commitments except
as set forth herein. This Agreement supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral, of the
parties hereto relating to the subject matter hereof. This Agreement may be
amended only by a writing executed by the parties hereto.
20. REPRESENTATION BY COUNSEL; INTERPRETATION
20.1 Each party acknowledges that it or he has been represented
by counsel, or has been afforded the opportunity to be represented by counsel,
in connection with this Agreement. Accordingly, any rule or law or any legal
decision that would require the interpretation of any claimed ambiguities in
this Agreement against the party that drafted it has no application and is
expressly waived by the parties. The provisions of this Agreement shall be
interpreted in a reasonable manner to give effect to the intent of the parties
hereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year above written.
CORNICHE GROUP INCORPORATED
By:_____________________________
James Fyfe, Chairman
________________________________
Mark Weinreb
STOCK OPTION AGREEMENT, made as of the 6th day of February, 2003 (the
"Agreement"), between CORNICHE GROUP INCORPORATED, a Delaware corporation (the
"Company"), and MARK WEINREB (the "Optionee").
----------------------------
WHEREAS, concurrently herewith, the Company has adopted the 2003
Equity Participation Plan (the "Plan").
WHEREAS, concurrently herewith, the Company and the Optionee are
entering into an Employment Agreement of even date pursuant to which the Company
has agreed to grant to the Optionee an option to purchase Common Shares of the
Company pursuant to the Plan.
NOW, THEREFORE, in consideration of the foregoing, the Company hereby
grants to the Optionee the right and option to purchase Common Shares under and
pursuant to the terms and conditions of the Plan and upon and subject to the
following terms and conditions:
1. GRANT OF OPTION. The Company hereby grants to the Optionee the
right and option (the "Option") to purchase up to Two Million Five Hundred
Thousand (2,500,000) Common Shares of the Company (the "Option Shares") during
the period commencing on the date hereof and terminating at 5:00 P.M. on
February 5, 2013 (the "Expiration Date").
2. NATURE OF OPTION. The Option is intended to meet the requirements
of Section 422 of the Internal Revenue Code of 1986, as amended, relating to
"incentive stock options".
3. EXERCISE PRICE. The exercise price of each of the Option Shares
shall be Three Cents ($.03) (the "Exercise Price"). The Company shall pay all
original issue or transfer taxes on the exercise of the Option.
4. EXERCISE OF OPTIONS. The Option shall be exercised in accordance
with the provisions of the Plan. In addition to the permissible methods of
exercise provided for in the Plan, the Optionee may elect to have the Company
reduce the number of shares otherwise issuable to him upon exercise of the
Option by a number of shares having a fair market value (determined in
accordance with the provisions of the Plan) equal to the Exercise Price of the
Option being exercised (a "Net Exercise"). As soon as practicable after the
receipt of notice of exercise and payment of the Option Price as provided for in
the Plan, or upon a Net Exercise, the Company shall tender to the Optionee
certificates issued in the Optionee's name evidencing the number of Option
Shares covered thereby.
5. RELOAD OPTIONS. In the event the Exercise Price is paid by
delivery of Common Shares (as provided for in Section 13(b)(ii) of the Plan) or
through a Net Exercise, the Optionee shall receive, contemporaneously with the
payment of the Exercise Price in such manner, and in accordance with the
provisions of the Plan, a reload stock option to purchase that number of Common
Shares equal to the sum of (i) the number of Common Shares used to exercise the
Option (or not issued in the case of a Net Exercise) and (ii) the number of
Common Shares used to satisfy any tax withholding incident to the exercise of
the Option, as provided for in the Plan.
6. TERMINATION OF EMPLOYMENT. The Option shall remain exercisable
until the Expiration Date notwithstanding any termination or cessation of
employment with the Company or its subsidiaries for any reason whatsoever.
7. INCORPORATION BY REFERENCE. The terms and conditions of the Plan
are hereby incorporated by reference and made a part hereof.
8. NOTICES. Any notice or other communication given hereunder shall
be deemed sufficient if in writing and hand delivered or sent by registered or
certified mail, return receipt requested, addressed to the Company, c/o
Lowenstein Sandler PC, 65 Livingston Avenue, Roseland, New Jersey 07068-1791,
Attention Alan Wovsaniker, Esq. and to the Optionee at the address indicated
below. Notices shall be deemed to have been given on the date of hand delivery
or mailing, except notices of change of address, which shall be deemed to have
been given when received.
9. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective legal representatives,
successors and assigns.
10. ENTIRE AGREEMENT. This Agreement, together with the Plan,
contains the entire understanding of the parties hereto with respect to the
subject matter hereof and may be modified only by an instrument executed by the
party sought to be charged.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
CORNICHE GROUP INCORPORATED
By:_____________________________________
James Fyfe, Chairman
_____________________________________
Signature of Optionee
Mark Weinreb
_____________________________________
Name of Optionee
c/o Certilman, Balin, Adler & Hyman, LLP
90 Merrick Avenue
East Meadow, New York 11554
Attention: Fred Skolnik
________________________________________
Address of Optionee
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 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 13(b) or 26
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 17
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. 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 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"), the 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 12
hereof.
(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 12 hereof).
8. 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 13(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 13(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 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.
9. 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.
10. 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 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
10(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 10(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 12
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.
(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.
11. 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 11(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.
12. 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 Section 12, 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 12. 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 12, 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
12 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.
(e) For purposes of this Section 12, 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.
13. 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 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.
14. 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
13(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 18 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.
15. 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.
16. 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.
17. 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 following restrictions in this Section 17(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 18 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.
(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.
18. 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.
19. Effectiveness of the Plan. The Plan was adopted by the Board of
Directors and is effective on February 6, 2003.
20. 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.
(b) The Board of Directors may at any time, on or before the
termination date referred to in Section 20(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.
21. 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.
22. 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.
23. 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.
24. Captions. The use of captions in the Plan is for convenience. The
captions are not intended to provide substantive rights.
25. 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.
26. 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.
(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.
27. 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.
28. 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.
29. 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.