U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
Commission File Number
PACIFIC HEALTH CARE ORGANIZATION, INC.
(Name of Small Business Issuer in its charter)
UTAH 87-0285238
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 Harbor Ridge Drive, Newport Beach, CA 92260
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(Address of principal executive Offices) (Zip Code)
Issuer's telephone number: (949) 721-8272
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
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Securities to be registered under Section 12(g) of the Act:
TABLE OF CONTENTS
PART I.
Item 1. Description of Business. . . . . . . . . . . . . . . . . . . . .3
Item 2. Plan of Operations . . . . . . . . . . . . . . . . . . . . . . .8
Item 3. Description of Property. . . . . . . . . . . . . . . . . . . . .9
Item 4. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . . . . . .9
Item 5. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . . . . . . . . 11
Item 6. Executive Compensation. . . . . . . . . . . . . . . . . . . . . 14
Item 7. Certain Relationships and Related Transactions. . . . . . . . . 15
Item 8. Description of Securities . . . . . . . . . . . . . . . . . . . 15
PART II.
Item 1. Market Price of and Dividends on the Company's
Common Equity and Other Shareholder Matters. . . . . . . . . . 18
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 19
Item 3. Changes in and Disagreements with Accountants. . . . . . . . . 19
Item 4. Recent Sales of Unregistered Securities. . . . . . . . . . . . 19
Item 5. Indemnification of Directors and Officers. . . . . . . . . . . 20
PART F/S
Index to Financial Statements. . . . . . . . . . . . . . . . . 22
PART III.
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . . . . . . . 33
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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PART 1
ITEM 1. DESCRIPTION OF BUSINESS
HISTORY OF THE COMPANY
Pacific Health Care Organization, Inc. (the "Company") was incorporated under the laws of the state of Utah on April 17, 1970 under the name Clear Air, Inc. The Company was organized and authorized to pursue any lawful purpose or purposes. The Company amended its Articles of Incorporation on September 26, 2000, to effect a seventy-five for one reverse split, and to change the authorized common stock to 50,000,000 shares, par value of $0.001. The Company later amended its Articles of Incorporation on October 30, 2000, changing its name to Immunoclin International, Inc. Due to complications in the proposed business, the Company again amended its Articles of Incorporation on January 31, 2001, changing its name to Pacific Health Care Organization, Inc. In connection with the last name change, a new board of directors was put in place and new management was appointed.
The Company has had limited business operations since the early 1990's, has not generated any significant revenues and is considered to be a 'development stage company'. Management believes that the Company has identified a significant opportunity within the Workers' Compensation industry in the state of California.
On February 26, 2001, the Company acquired Medex Healthcare, Inc. ("Medex"), a California corporation organized March 4, 1994, in a share for share exchange in which the Company acquired all of the outstanding shares of Medex in exchange for 6,500,000 shares of the Company. Medex is now a wholly owned subsidiary of the Company. In addition, the Company formed Workers Compensation Assistance, Inc. ("WCA") on August 14, 2001 which is also a wholly owned subsidiary. WCA does not have any operations to date, and the principal business of the Company is the business of Medex.
INDUSTRY BACKGROUND
The California legislature passed Assembly Bill 110 ("AB 110" or the "bill") in July of 1993 and later deregulated the premiums paid by employers for Workers' Compensation insurance. These two events have given rise to the business of the Company.
AB 110 was a collaboration of efforts from both employers and organizations, such as plaintiffs' attorneys who represent injured workers, in an effort to curtail employers from leaving the state due to escalating Workers' Compensation costs. The bill addresses the problem of rising medical costs associated with poor quality care to the injured worker. Two of the major problems with the existing system, as identified by the legislature, were fraud and the lack of a managed care program that allowed control of the quality of medical care of an injured worker beyond thirty days. As a result, the bill created a new health care delivery body to solve the unique medical and legal issues of Workers' Compensation. These new entities are called Health Care Organizations ("HCO"). The HCOs are networks of health care professionals specializing in the treatment of workplace injuries and in back-to-work rehabilitation and training.
HCOs were created to appeal to employees, while providing substantial savings to employers. This is accomplished by providing high quality medical care and increasing the length of time employers are involved in the medical care provided to injured workers. The increased length in control should translate into a decreased incidence of fraudulent claims and disability awards and is also based upon the notion that if there is more control over medical treatment there will be more control over costs, and subsequently, more control over getting injured workers back on the job.
In addition, the legislature requires that employers who use HCOs give employees a choice of HCOs or managed care physicians for treatment. It is anticipated that this will increase quality and give employees a fair say in their treatment.
Prior to the passing of the bill, premiums paid by employers were fixed by law at a rate that was only dependent on the occupation of the workers covered under the policy. An additional measure enacted by the California legislature deregulated the premiums paid by employers. This encouraged competition for market share of the Workers' Compensation insurance business. The increased competition drove premiums to lower levels which are no longer sustainable. This is forcing insurance companies to hike premiums. Drastically rising premiums are forcing employers to search for alternative Workers' Compensation programs such as the HCOs created by AB 110.
CERTIFICATION PROCESS
All applications for HCO certification are processed by the California Department of Industrial Relations ("DIR"). The application process is time consuming, with each providing detailed descriptions of their entire organization and planned methods of operation.
The applicant for the HCO licence must then develop a contracted network of providers for all of the necessary medical services that injured workers need. This network must be developed to the satisfaction of the DIR. Given the wide range of medical providers needed over a large geographical area, this is a significant undertaking. The network of providers must be under contract with the HCO applicant and be willing to provide the various services in their specialty. All contracts must be approved by the DIR so as to assure the best of care will be provided to the injured worker.
Next, the HCO applicant must develop committees of providers that will ensure the injured worker receives the best of care. This requirement includes the development of Quality Assurance, Utilization, Work Safety, Educational and Grievance committees.
Finally, an HCO applicant must demonstrate to the DIR's satisfaction that it has the resources necessary to manage and administer a large network of providers. In order to establish the HCO applicants ability to administer a network, it requires the applicant to furnish the details of its operating system to the DIR in writing.
BUSINESS OF THE COMPANY
The Company is in the business of managing and administering Health Care Organizations. As mentioned previously, these HCOs are networks of medical providers established to serve the Workers' Compensation industry. The California legislature mandated that injured workers be given a choice between at least two HCOs. The Company recognized early on that two HCO certifications are necessary to be competitive. Instead of aligning with a competitor, the Company elected to go through the lengthy application process with the DIR twice and has subsequently received certification to operate two separate HCOs. These two licenses to operate HCOs are the most valuable assets of the Company considering the time, cost and effort it takes to obtain certification. Specifically, the Company offers the injured worker a choice of enrolling in an HCO with a network managed by primary care providers requiring a referral to specialists or a second HCO where injured workers do not need any prior authorization to be seen and treated by specialists.
The two HCO certifications obtained by the Company cover seven counties in southern California containing over nine million workers, approximately 52% of the states workforce. This geographical area has a multi-billion dollar annual medical and indemnity Workers' Compensation cost. The two HCO networks have contracted over 1,300 providers, 62 hospitals, 200 pharmacies, rehabilitation centers and other ancillary services making the Company's HCOs capable of providing comprehensive medical services throughout this region. The Company is developing these networks and further extending its Workers' Compensation business into a statewide entity.
The Company is currently in discussions with brokers of health insurance and with representatives of larger employers. Based on potential cost savings to employers and the large workforce in the seven counties where the Company is licensed , approximately nine million workers, the Company expects that a significant number of employers will sign contracts paying the Company approximately $5.50 per month per enrolled worker. The Company does not anticipate large capital expenditures. Rather, it has contracted with many medical providers, and therefore, equipment such as x-ray machines are not paid for by the Company. The Company will have fixed costs such as liability insurance and other usual costs of running an office.
PHYSICIANS
The Company strives to select physicians known for excellence and experience in providing Workers' Compensation care. Two of the Company's founders have been active in the southern California medical community for many years, and as a result, the Company has been able to recruit physicians with superlative credentials and reputations.
The Company has also recruited physicians and allied health workers who reflect the ethnic and cultural diversity of California, thus enabling injured workers to readily find a physician who speaks their native tongue. The Company has contracts with over 200 primary care Hispanic physicians, 100 primary care African-American physicians, and many other minority physicians. The Company believes this is a benefit for injured workers and will assist in ensuring a prompt return to the workplace. To date the Company has contracted with approximately 2,000 physicians.
HCO COMMITTEES
The Company has organized seven committees in compliance with AB 110 in order to provide the best possible care to injured workers. The following briefly describes each committee:
HOSPITALS
The Company has been successful in creating relationships with some of the premier medical centers of Southern California. Among the major hospitals the Company has developed relationships with UCLA Medical Center, Cedars-Sinai Medical Center, USC Medical Center and UC San Diego Medical Center. The Company believes the name recognition of these institutions will aid the Company in competing for business. While the Company has not executed binding agreements with these hospitals, they have agreed to allow the Company to list them in its HCO plans because of the Company's relationship with them.
ANCILLARY SERVICES
The Company has contracted a full range of ancillary services to cover all requirements of the California Department of Corporations and Department of Industrial Relations. This includes interpreter services, ambulances, physical therapy, occupational therapy, pharmacies and much more. The ancillary services are vital to ensure there is a complete network capable of independently providing all care that may be necessary.
COMPETITION
Competition in the area of workers' compensation is intense. The largest competitors of the Company are the traditional worker's compensation insurance funds. Although the Company feels it has positioned itself to be one of the first commercial enterprises capable of offering HCO services, there are new companies that are currently setting up similar services as the ones being offered by the Company. Many of these competitors may have greater financial, research and marketing experience and resources than the Company, and will represent substantial long-term competition for the Company.
EMPLOYEES
The Company, through its subsidiary, currently has five full time employees and ten part-time employees. In addition, the officers and directors work on a part time, as needed, basis with no commitment for full time employment. Over the next twelve months, the Company anticipates hiring an additional six full time and three part time employees as needed and as revenues and operations warrant the additional employees.
REPORTS TO SECURITY HOLDERS
Approximately sixty days after the filing of this registration statement on Form 10-SB, the Company will be subject to reporting requirements and will subsequently file annual and quarterly reports with the Securities and Exchange Commission ("SEC") in accordance with the reporting requirements. The public may read and copy any materials filed by the Company with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC- 0330. The Company will be an electronic filer and the SEC maintains an Internet site that will contain reports and other information regarding the Company which may be viewed at http://www.sec.gov
ITEM 2: MANAGEMENTS DISCUSSION & ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2002, the Company had cash on hand of $166,902 compared to $164,136 at the December 31, 2001 year end. The Company raised $63,000 during 2001 in a private stock offering and as a subsequent event to the financial statements has converted a loan in the amount of $345,982 to equity. The Company does not anticipate doing any offerings over the next twelve months. The majority of the funds from the offering and the loan have been, and will be, used to cover operating expenses. Over the next twelve months, the Company anticipates that its main source of capital will be revenues, and that these revenues will be sufficient to cover operating expenses. Therefore, the Company does not anticipate needing to find other sources at this time. If the Company's revenues, however, do not exceed operating expenses then the Company will need to find other sources of capital to continue operations. The Company would then seek additional capital in the form of debt and equity. While the Company believes that it is capable of raising additional capital, there is no assurance that the Company will be successful in locating other sources of capital on favorable terms or at all.
RESULTS OF OPERATIONS
The first revenues were realized by the Company in January of 2002 in the amount of approximately $12,000 and increased steadily to approximately $68,000 in August. As of June 30, 2002 the Company generated revenues in the amount of $226,026 resulting in a net profit in the amount of $29,134 compared to a loss of $235,297 for the year ended December 31, 2001. The Company expects to continue to be profitable and to report a net profit for fiscal 2002. The change in the profitability is the result of the commencing of operations of the Company's subsidiary operation in Long Beach, California.
PLAN OF OPERATIONS
Over the next twelve months the Company plans to continue to focus its efforts on increasing enrollment throughout southern California. The Company may also begin ramping up efforts to enroll employers in other areas of California. The Company will maintain and continue to establish relationships with doctors, nurses and other ancillary services who have experience in the workers' compensation industry. These relationships are vital to the success of the Company as these people and services will help up keep costs down by ensuring proper care.
It is anticipated by the Company that revenues and enrollment will continue to increase at a rate similar to the last six months for the next twelve months. Although there can be no assurance, the Company anticipates revenues of approximately $350,000 per month by the end of fiscal 2003. The Company plans to hire additional employees as they are needed to meet any increase in enrollment.
ITEM 3: DESCRIPTION OF PROPERTY
PROPERTY & FACILITIES
The Company's president has allowed the Company to utilize approximately 300 square feet of his office space at no charge. The Company anticipates to be able to continue to use this space on the same terms for the next twelve months. The executive offices are located at Newport Beach, California. The Company's also leases office space in Long Beach, California through its wholly owned subsidiary Medex, where approximately 1200 square feet are leased for $2,000 per month. This lease expires in April of 2004 and can be renewed at the option of the Company. The Company anticipates needing an additional 2,000 square feet of office space in Long Beach, California, over the next twelve months. The Company believes that it will have no trouble securing additional office space at rates comparable to what it currently pays. The Company does not own or lease any other property.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The term "beneficial owner" refers to both the power of investment and the right to buy and sell shares of PHCO. It also refers to rights of ownership or the right to receive distributions from PHCO and proceeds from the sale of PHCO shares. Since these rights may be held or shared by more than one person, each person who has a beneficial ownership interest in shares is deemed to be the beneficial owners of the same shares because there is shared power of investment or shared rights of ownership.
Type of Amount & Nature of
Security Name and Address Beneficial Ownership % of Class
-------- ---------------- -------------------- ----------
Common Tom Kubota (1) (2) 2,123,972 19.46%
51 Harbor Ridge Drive
Newport Beach, CA 92260
Common Nanko Investments (2) 1,702,305
15.60%
51 Harbor Ridge Drive
Newport Beach, CA 92260
Common Rudy LaRusso (1) 300,000 2.75%
218 Homewood Road
Los Angeles, CA 90049
Common Peter G. Alexakis (1) 1,083,333 9.93%
2001 Santa Monica Blvd Suite 1190W
Santa Monica, CA 90404
Common Tom Roush 1,083,333 9.93%
20457 Kesley St
Canyon Country, CA 91351
Common Marvin Teitelbaum 1,083,333 9.93%
354 Homewood Road
Los Angeles, CA 90049
Common William Rifkin 1,083,333 9.93%
11820 Mayfield Ave #106
Brentwood, CA 90049
Common Janet Zand 1,083,333 9.93%
1505 Rockcliff Road
Austin, TX 78796
Common Donald P. Balzano 1,083,335 9.93%
5422 Michelle Drive
Torrance, CA 90503
Common Manfred Heeb 845,982 7.75%
Meierhofstr Point 121
Treisen, Liechtenstein Fl-9495
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All officers and directors 3,507,305 32.15%
as a group (3 persons)
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TOTAL 9,769,954 89.55%
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(1) Officers and/or directors of PHCO.
(2) Tom Kubota is the president of Nanko Investments, Inc., and might be considered to be a beneficial owner of shares held by Nanko Investments, Inc. Therefore, shares that are registered in the name of Nanko Investment, Inc., are counted as shares owned by Tom Kubota.
CHANGE IN CONTROL
To the knowledge of the management, there are no present arrangements or pledges of the Company's securities that may result in a change in control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following table sets forth the Company's directors, executive officers, promoters and control persons, their ages, and all offices and positions held within PHCO. Directors are elected for a period of one year and thereafter serve until their successor is duly elected by the stockholders and qualified. Officers and other employees serve at the will of the Board of Directors.
Name Age Position Management Since ---- -------- ---------------- Tom Kubota 62 President, Director September 2000 Rudy LaRusso 64 Secretary, Director September 2000 Peter Alexakis 68 Director February 2001 |
The following sets forth certain biographical information relating to
the Company's Officers and Directors:
TOM KUBOTA, AGE 62. Mr. Kubota has thirty years of experience in the investment banking, securities and corporate finance field. He held the position of Vice President at Drexel Burnham Lambert; at Stem, Frank, Meyer and Fox; and at Cantor Fitzgerald. Mr. Kubota is the president of Nanko Corporation, which specializes in capital formation services for high technology and natural resources companies. He has expertise in counseling emerging public companies and has previously served as a director of both private and public companies. For the last five years, Mr. Kubota has been primarily engaged in running his consulting firm Nanko Investments, Inc.
RUDY LA RUSSO, AGE 64. Mr. La Russo graduated from Dartmouth College where he was awarded the Rafer Johnson Award, an annual award presented to a top scholar-athlete. He also attended the Amos Tuck Business School. He served as Vice President of Chanco Medical Industries and subsequently the CEO of Carex International Inc., an operator of convalescent hospitals. For the last five years he has primarily served as President of La Russo & Assoc., Inc., where he directs his consulting firm in investment advice for professional athletes and development stage companies.
PETER G. ALEXAKIS, M.D., AGE 68. Dr. Alexakis attended pre-medical school at the University of California at Los Angeles from 1951 to 1954 after which he went on to Medical School at the University of California at San Francisco graduating in 1957. Dr. Alexakis did an internship and residency at the Veterans Administration Hospital from 1958 to 1961. He received board certification in 1962 and 1965 and is a member of the American Medical Association and the American Academy of Orthopaedic Surgeons. From 1963 to the present Dr. Alexakis has been an assistant clinical professor of orthopaedic surgery at the UCLA School of Medicine. Although Dr. Alexakis helped to found Medex Healthcare, Inc.,in 1994, in the past five years his primary business activities have been practicing medicine.
KEY EMPLOYEES/ADVISORS
DONALD P BALZANO. CEO OF MEDEX HEALTHCARE, INC. (WHOLLY OWNED SUBSIDIARY OF THE COMPANY). Mr. Balzano is a graduate of the UCLA School of Law and is a member of the State Bar of California. From 1979 through 1990 he was the president of Western Medical Review and Care Resources, Inc. From 1990 through 1995 he founded Balzano & Associates which focused on medical and legal delivery systems for workers' compensation programs and he held the position of vice president and general counsel for Keenan & Associates where he was responsible for corporate legal activity and for creation of a workers' compensation defense attorney and managed medical care program. From 1996-2001 Mr. Balzano served as the president and CEO of Priority CompNet, a California workers' compensation health care organization. Mr. Balzano has been with the Company since 2001. He has brought a unique combination of legal and medical expertise to the Company.
INVOLVEMENT IN LEGAL PROCEEDINGS
To the knowledge of management, during the past five years, no present or former director, executive officer or person nominated to become a director or an executive officer of the Company:
(1) filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
(2) was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations or other minor offenses);
(3) was the subject of any order, judgement or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting, the following activities;
(i) acting as a future commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliate person, director or employee of any investment company, of engaging in or continuing any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;
(4) was the subject of any order, judgement, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending, or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the Securities and Exchange Commission has not been subsequently reversed, suspended, or vacated;
(6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.
ITEM 6. EXECUTIVE COMPENSATION.
The following chart sets forth the compensation paid by the Company to each Officer and Director and its other most highly compensated executive officers whose total salary and bonus exceeded $100,000.00 for the last two fiscal years, and the planned compensation during the remainder of the current fiscal year. No officer or director had a salary and bonus during the fiscal years ended December 31, 2001 or 2000 that exceeded $100,000.00 for services rendered in all capacities to the Company.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Awards Payout
Name and Restricted
Principal Bonus Compen Stock Options LTIP Compen
Position Year Salary $ sation Awards /SARs Payout sation
Tom Kubota 2002 -0- -0- -0- -0- -0- -0- -0-
President 2001 -0- 23,000 35,000(1) -0- -0- -0- -0-
Director 2000 -0- -0- -0- -0- -0- -0- -0-
Rudy LaRusso 2002 -0- -0- -0- -0- -0- -0- -0-
Secretary 2001 -0- -0- -0- -0- -0- -0- -0-
Director 2000 -0- -0- -0- -0- -0- -0- -0-
Peter Alexakis 2002 -0- -0- -0- -0- -0- -0- -0-
Director 2001 -0- -0- -0- -0- -0- -0- -0-
2000 -0- -0- -0- -0- -0- -0- -0-
Donald Balzono 2002 104,000 -0- -0- -0- -0- -0- -0-
Director 2002 -0- -0- -0- -0- -0- -0- -0-
2001 -0- -0- -0- -0- -0- -0- -0-
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(1) Tom Kubota provided consulting services to the Company through Nanko Investments, Inc., his private consulting business. This amount represent funds paid by the Company to Nanko Investments, Inc. These services were provided on terms at least as favorable as could have been negotiated with an independent third party.
No other compensation has been paid directly or accrued to any other officer or director of the Company to date. The Company has no policy for compensating its directors for attendance at Board of Directors meetings or for other services as directors.
Compensation of officers and directors is determined by the Company's Board of Directors and is not subject to shareholder approval. The Company has no retirement, pension, or benefit plan at the present time, however, the Board of Directors may adopt plans as it deems to be reasonable under the circumstances.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENT
The Company has no employment agreements with its employees or executive officers. In the past three years no executive officer has received any amounts in connection with an executive officer's resignation, retirement, or other termination. No executive officer received any amounts in the last three years in connection with a change in control of the Company or a change in the executive officer's responsibilities after a change in control.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company does not anticipate engaging in any additional significant dealings with affiliates. If, however, there are dealings with related parties in the future, the Company will attempt to deal on terms competitive in the market and on the same terms that either party would deal with a third person.
ITEM 8. DESCRIPTION OF SECURITIES
DESCRIPTION OF COMMON STOCK.
The Company is presently authorized to issue 50,000,000 shares of $.001 par value common stock and currently has approximately 10,908,982 shares issued and outstanding on a fully diluted basis as of the date of this registration statement. The Company has reserved from its authorized but unissued shares a sufficient number of shares of common stock for issuance of the common stock underlying warrants and options fo the Company.
The holders of common stock are entitled to equal dividends and distributions, per share, with respect to the common stock when, as and if declared by the Board of Directors from funds legally available therefor. No holder of any shares of common stock has a pre-emptive right to subscribe for any securities of the Company nor are any common shares subject to redemption or convertible into other securities of the Company. Upon liquidation, dissolution or winding up of the Company, and after payment of creditors and preferred stockholders, if any, the assets will be divided pro-rata on a share-for-share basis among the holders of the shares of common stock. All shares of common stock now outstanding are fully paid, validly issued and non-assessable. Each share of common stock is entitled to one vote with respect to the election of any director or any other matter upon which shareholders are required or permitted to vote. Holders of the Company's common stock do not have cumulative voting rights, so that the holders of more than 50% of the combined shares voting for the election of directors may elect all of the directors, if they choose to do so and, in that event, the holders of the remaining shares will not be able to elect any members to the Board of Directors. The former Medex Healthcare, Inc. (a wholly owned subsidiary of the Company) shareholders, consisting of five individuals, have entered into a Voting Trust Agreement which limits their common stock voting rights from February of 2001 through February of 2004. This Voting Trust Agreement restricts the former Medex Healthcare, Inc., shareholders to electing one director.
WARRANTS
The Company currently has issued approximately 807,964 warrants ("Warrants") comprised of 408,982 A Warrants and 408,982 B Warrants. Each A Warrant represents the right to purchase one share of restricted common stock of the Company at an exercise price of $3.00 per share for a period through August of 2006. Each B Warrant represents the right to purchase one share of restricted common stock of the Company at an exercise price of $6.00 per share also for a period through August of 2006. The exercise price and the number of shares issuable upon exercise of the Warrants are subject to adjustment in certain events such as a dividend on shares of common stock, subdivisions or combinations of the common stock or similar events. The Warrants do not contain provisions protecting against dilution resulting from the issuance or sale of additional shares of common stock for less than the exercise price of the Warrants or the current market price of the Company's securities.
Holders of Warrants may exercise their Warrants for the purchase of shares of restricted common stock of the Company only if the purchase of such shares is exempt from federal registration requirements and qualified for sale, or deemed to be exempt from qualification, under applicable state securities law. Although the Company believes that exercise of Warrants will be exempt from federal registration requirements pursuant to Rule 506 of Regulation D, there is no assurance that valid state qualification/exemption will be available for such exercise, particularly if warrant holders reside in states where the Units were not initially offered and sold by the Company. In such event, warrant holders would have no opportunity to exercise the Warrants.
Furthermore, the outstanding Warrants are redeemable or callable, in whole or in part, at the option of the Company, upon not fewer than 30 days notice, at a redemption price equal to $0.01 per Warrant at any time. Although the Company would not normally do so, in the event it calls for redemption of the Warrants at a time when exercise is not possible or is impractical, warrant holders would be compelled to accept the nominal redemption price of $0.01 per warrant. If exercise of the Warrants is qualified or exempt from qualification, and the Company should call for redemption, warrant holders would have a minimum of 30 days in which to decide whether to exercise their Warrants, after which they would have to accept the redemption price.
Holders of Warrants will be entitled to notice in the event of (a) the granting by the Company to all holders of its common stock of rights to purchase any share of capital stock or any other rights or (b) any reclassification of the common stock, any consolidation of the Company with, or merger of the Company into any other entity or merger of any other entity into the Company (other than a merger that does not result in any reclassification, conversion, exchange or cancellation of any outstanding share of common stock), or any sale or transfer of all or substantially all of the assets of the Company.
Except as described above, the holders of the Warrants have no rights as stockholders of the Company, including the right to vote, until they exercise their Warrants.
DESCRIPTION OF STOCK OPTIONS.
The Board of Directors of the Company have adopted the PHCO 2002 Stock Option Plan (the "Plan") allowing the Company to offer key employees, officers, directors, consultants and sales representatives, an opportunity to acquire a proprietary interest in the Company. The various types of incentive awards which may be provided under the Stock Option Plan will enable the Company to respond to changes in compensation practices, tax laws, accounting regulations and the size and diversity of its business. To date the Company has issued approximately 85,000 options pursuant to the Plan. The total number of shares reserved and available for distribution under the Plan is 1,000,000 shares. These shares underlie the options issued by the Company pursuant to the Plan. The option holders will not be protected against dilution if the Company issues additional shares in the future. Neither the options, nor the shares underlying the option have preemptive rights.
In the case of any reclassification, change, consolidation, merger, sale or conveyance of our shares to another corporation, the Company will make adequate provision whereby the registered holder of any outstanding option will have the right thereafter to receive an exercise of the options immediately prior to the reclassification, change, consolidation, merger, sale or conveyance of the Company shares.
Other provisions of the options are set forth below. This information is subject to the provisions of the Plan and the Stock Option Certificates representing the options. The following information is a summary of the PHCO 2002 Stock Option Plan and is qualified by reference to the plan.
1. The shares underlying the Options offered pursuant to the Plan are subject to the same rights and restrictions as other shares.
2. Once an option is granted, it may not be called by the Company.
3. The options may not be sold prior to six months from the date of the grant of the related award without our prior approval.
4. Unless exercised within the time provided for exercise, the options will automatically expire.
5. The exercise price per share purchasable under a stock option shall be determined by the Committee at the time of grant and may not be less that 100% of Fair Market Value of the shares, provided however, that the exercise price of an Incentive Stock Option granted to a 10% Stockholder shall not be less than 110% of the Fair Market Value of the shares.
6. There is no minimum number of shares which must be purchased upon exercise of the option.
7. The option holders, in certain instances, are protected against dilution of their interest represented by the underlying shares upon the occurrence of stock dividends, stock splits, reclassifications and mergers.
TRANSFER AGENT.
The Company's transfer agent and registrar is Pacific Stock Transfer Company, 500 East Warm Springs Road, Suite 240, Las Vegas, Nevada 89119, phone number 702-361-3033.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANTS COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.
The Company's shares are currently traded on the Pink Sheets under the symbol "PHCO". The Company plans to apply for a listing on the Over-the- Counter Bulletin Board ("OTCBB") upon the effective date of this registration statement. The Company currently has 10,908,982 shares outstanding held by approximately 1,077 shareholders. The following table shows the historical bid and ask price data for PHCO:
BID PRICES ASK PRICES
HIGH LOW HIGH LOW
2000
July 3 thru September 29 .02 .005 .05 .03
October 2 thru October 11 .02 .02 .05 .05
Fourth Quarter ended Dec. 29 .75 .50 3 2
(After a 1 for 75 Reverse Split)
2001
First Quarter ended March 30 1.50 .75 2 1.25
Second Quarter ended June 29 2 1.50 2.25 1.075
Third Quarter ended Sept. 28 2 1.75 2.25 2.25
Fourth Quarter ended Dec. 31 1.75 .45 2.25 1
2002
First Quarter ended March 28 .45 .45 1.01 1.01
Second Quarter ended June 28 .45 .15 1.15 1.01
|
The above quotations, as provided by the Pink Sheets, LLC., represent prices between dealers and do not include retail markup, markdown or commission. In addition, these quotations do not represent actual transactions.
Approximately 902,964 of the Company's unissued common shares are subject to outstanding options or warrants to purchase, or securities convertible into, common equity of the Company. Of the 10,908,982 outstanding shares of common stock approximately 9,908,527 are restricted common shares of the Company and approximately 109,089 shares are eligible for resale pursuant to Rule 144 every 90 days. The Company has no agreements to register shares on behalf of shareholders currently holding unregistered securities. The Company has not paid, nor declared, any dividends since its inception and does not intend to declare any such dividends in the foreseeable future. The Company's ability to pay dividend is subject to limitations imposed by Utah law. Under Utah law, dividends may be paid to the extent that the corporation's assets exceed it liabilities and it is able to pay its debts as they become due in the usual course of business.
ITEM 2. LEGAL PROCEEDINGS.
To the knowledge of management, there is no material litigation or governmental agency proceeding pending or threatened against the Company or its management. Further, the Company is not aware of any material pending or threatened litigation or governmental agency proceeding to which the Company or any of its directors, officers or affiliates are or would be a party.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On or about September 28, 2000, the Company issued 426,667 restricted common shares to Tom Kubota. The shares were not publicly offered. The shares were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933. The Company received $32,000 cash for the shares.
On or about April 5, 2001, the Company issued 50,000 restricted common shares to Ronald L. Poulton in exchange for services. The shares were not publicly offered. The shares were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933. The Company received no cash for the shares.
On or about January 30, 2001, the Company issued 700,000 common shares to Mid-Mountain Investments, LLC. The shares were not publicly offered. The shares were issued pursuant to an exemption from registration under Rule 504 of Regulation D of the Securities Act of 1933. The Company received $25,000 cash for the shares.
On or about April 5, 2001, the Company issued 1,754,305 restricted common shares to Nanko Investments, Inc., in exchange for services. The shares were not publicly offered. The shares were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933. The Company received no cash for the shares.
On or about April 5, 2001, the Company issued 330,000 restricted common shares to Rudy LaRusso in exchange for services. The shares were not publicly offered. The shares were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933. The Company received no cash for the shares.
On or about April 5, 2001, the Company issued 6,500,000 restricted common shares to five persons in a share for share exchange pursuant to a reorganization agreement. The shares were not publicly offered. The shares were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933. The Company received no cash for the shares.
On or about April 30, 2001, the Company issued 63,000 restricted common shares, A Warrants to purchase an additional 63,000 restricted common shares and B Warrants to purchase an additional 63,000 restricted common shares to five persons pursuant to subscriptions received from a private offering. The shares were not publicly offered. The shares and warrants were issued pursuant to an exemption from registration under Rule 506 of Regulation D of the Securities Act of 1933. The Company received approximately $63,000 cash for the shares.
In August of 2002, the Company issued approximately 845,982 restricted common shares, A Warrants to purchase an additional 345,982 restricted common shares and B Warrants to purchase an additional 345,982 restricted common shares to Manfred Heeb to resolve debt in the amount of $345,982. The shares were not publicly offered. The shares were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933. The Company converted outstanding debt in the amount of $345,982 in exchange for the shares and warrants.
In August of 2002, the Company granted options to purchase approximately 85,000 restricted common shares of the Company to four employees. 50% of the options vested upon grant, 25% will vest on the first annual anniversary of the grant date and the remaining 25% will vest on the second annual anniversary of the grant date. The exercise price of the options is $0.05 and they expire five years from the grant date.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The statutes, charter provisions, bylaws, contracts or other arrangements under which controlling persons, directors or officers of the registrant are insured or indemnified in any manner against any liability which they may incur in such capacity are as follows:
The Company's Articles of Incorporation and Bylaws limit liability of and indemnify its Officers and Directors to the full extent permitted by the Utah Revised Business Corporation Act ("Utah Act").
Under the Utah Act, a Utah corporation has the authority to indemnify officers and directors:
(1) Except as provided in Subsection (4), a corporation may indemnify an individual made party to a proceeding because he is or was a director, against liability incurred in the proceeding if:
(a) his conduct was in good faith; and
(b) he reasonably believed that his conduct was in, or not
opposed to, the corporation's best interests; and
(c) in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
(2) A director's conduct with respect to any employee benefit plan for a purpose he reasonably believed to be in or not opposed to the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of Subsection (1)(b).
(3) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section.
(4) A corporation may not indemnify a director under this section:
(a) in connection with a proceeding by or in the right of
the corporation in which the director was adjudged
liable to the corporation; or
(b) in connection with any other proceeding charging that
the director derived an improper personal benefit,
whether or not involving action in his official
capacity, in which proceeding he was adjudged liable on
the basis that he derived an improper personal benefit.
(5) Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.
In accordance with the Utah Act indemnification may also be provided as follows:
(1) an officer of the corporation is entitled to mandatory indemnification, and is entitled to apply for court-ordered indemnification, in each case to the extent as a director.
(2) the corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent of the corporation to the same extent as to a director; and
(3) a corporation may also indemnify and advance expenses to an officer, employee, fiduciary, or agent who is not a director to a greater extent, if not inconsistent with public policy, and if provided for by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract.
PART F/S
Index to Financial Statements
Independent Auditors Opinion . . . . . . . . . . . . . . . . . . . . . . 23 Balance Sheet at June 30, 2002, December 31, 2001 and 2000 . . . . . . . 24 Statement of Operations for the Period January 31, 2002 to June 30, 2002 and the Years Ended December 31, 2001 and 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Statement of Stockholders' Equity from October 31, 1999 to June 30, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Statement of Cash Flows for the Period January 1, 2002 to June 30, 2002 and the Years Ended December 31, 2001 and 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . 29 |
/Letterhead/
To the Board of Directors
Pacific Health Care Organization, Inc.
We have audited the accompanying balance sheet of Pacific Health Care Organization, Inc., as of June 30, 2002, December 31, 2001 and the period November 1, 2000 through December 31, 2000, and the related statements of income, retained earnings, and cash flows for the periods and year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Pacific Health Care Organization, Inc., as of October 31, 2000, were audited by other auditors whose report dated December 8, 2000, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards, in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of Pacific Health Care Organization, Inc., as of June 30, 2002, December 31, 2001 and the period November 1, 2000 to December 31, 2000, and the results of its operations and its cash flows for the periods and year then ended, in conformity with generally accepted accounting principles, in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the Company has an accumulated deficit and a negative net worth at June 30, 2002. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 5. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/S/ Bierwolf, Nilson & Associates Bierwolf, Nilson & Associates August 29, 2002 |
Pacific Health Care Organization, Inc. Balance Sheet
June December December
30, 2002 31, 2001 31, 2000
---------- ---------- ----------
Assets
Current Assets
--------------
Cash $ 166,902 $ 164,136 $ -
Accounts Receivable 21,822 - -
Prepaid Expenses 3,087 6,174 -
---------- ---------- ----------
Total Current Assets 191,811 170,310 -
Property & Equipment
--------------------
Computer Equipment 37,075 17,200 -
Furniture & Fixtures 7,082 4,560 -
---------- ---------- ----------
Total Property & Equipment 44,157 21,760 -
Less: Accumulated Depreciation (6,499) (2,209) -
---------- ---------- ----------
Net Property & Equipment 37,658 19,551 -
---------- ---------- ----------
Total Assets $ 229,469 $ 189,861 $ -
========== ========== ==========
|
Continued
Pacific Health Care Organization, Inc. Balance Sheet
June December December
30, 2002 31, 2001 31, 2000
---------- ---------- ----------
Liabilities & Stockholders' Equity
Current Liabilities
-------------------
Accounts Payable $ 10,474 $ - $ -
Note Payable - Shareholder (Note 6) 345,982 345,982 -
---------- ---------- ----------
Total Current Liabilities 356,456 345,982 -
Stockholders' Equity
--------------------
Common Stock; 50,000,000 Shares
Authorized at $0.001 Par Value;
10,063,000 and 1,365,695 Shares
Issued and Outstanding Respectively 10,063 10,063 1,366
Additional Paid In Capital 644,036 659,936 589,457
Additional Paid In Capital - Warrants 15,900 - -
Accumulated (Deficit) (796,986) (826,120) (590,823)
---------- ---------- ----------
Total Stockholders' Equity (126,987) (156,121) -
---------- ---------- ----------
Total Liabilities &
Stockholders' Equity $ 229,469 $ 189,861 $ -
========== ========== ==========
|
The accompanying notes are an integral part of these financial statements
Pacific Health Care Organization, Inc Statement of Operations For the Period January 31, 2002 to June 30, 2002 and the Years Ended December 31, 2001 and 2000
June December December
30, 2002 31, 2001 31, 2000
---------- ---------- ----------
Revenues $ 222,026 $ - $ 3,545
-------- ---------- ---------- ----------
Cost of Goods Sold - - 3,160
------------------ ---------- ---------- ----------
Gross Profit 222,026 - 385
Expenses
--------
General & Administrative 56,858 36,196 109,173
Depreciation 4,290 2,209 -
Salaries & Wages 21,032 12,928 -
Consulting Fees 121,011 134,991 -
Legal Fees 309 40,729 -
---------- ---------- ----------
Total Expenses 203,500 227,053 109,173
Other Income (Expenses)
-----------------------
Interest Income 10,608 5,798 13
Loss on Abandonment of Equipment - (14,042) -
---------- ---------- ----------
Total Other Income (Expenses) 10,608 (8,244) 13
---------- ---------- ----------
Income (Loss) Before Taxes 29,134 (235,297) (108,775)
Tax Expense - - -
---------- ---------- ----------
Net Income (Loss) $ 29,134 $(235,297) $(108,775)
========== ========== ==========
Income (Loss) Per Share $ 0.00 $ (0.03) $ (0.16)
Weighted Average Shares Outstanding 10,063,000 7,827,634 665,695
|
The accompanying notes are an integral part of these financial statements.
Pacific Health Care Organization, Inc. Statement of Stockholders' Equity From October 31, 1999 to June 30, 2002
Common Stock Paid In Accumulated
Shares Amount Capital Deficit
-------------------------------------------------
Balance,
October 31, 1999 238,311 $ 238 $ 383,585 $ (482,048)
Shares Issued for Cash at
$0.43 Per Share 427,384 428 181,572 -
Net Loss for Period Ended
December 31, 2000 - - - (108,775)
-------------------------------------------------
Balance, December 31, 2000 665,695 666 565,157 (590,823)
Shares Issued for Cash at
$.04 Per Share 700,000 700 24,300 -
Shares Issued for Services
at $0.001 Per Share 2,134,305 2,134 - -
Shares Issued for Cash at
$.70 Per Share 63,000 63 44,037 -
Stock Warrants, A & B at
$0.10 & $0.20 Respectively - - 18,900 -
Shares Issued for Medex
Stock at $0.002 Per Share 6,500,000 6,500 7,542 -
Net Loss for Year Ended
December 31, 2001 (235,297)
-------------------------------------------------
Balance, December 31, 2001 10,063,000 10,063 659,936 (826,120)
Net Profit for Period Ended
June 30, 2002 29,134
-------------------------------------------------
Balance, June 30, 2002 10,063,000 $ 10,063 $ 659,936 $ (796,986)
=================================================
|
The accompanying notes are an integral part of these financial statements.
Pacific Health Care Organization
Statement of Cash Flows
For the Period January 1, 2002 to June 30, 2002 and the Years Ended December 31, 2001 and 2000
June December December
30, 2002 31, 2001 31, 2000
---------- ---------- ----------
Cash Flows from Operating Activities
------------------------------------
Net Income (Loss) $ 29,134 $(235,297) $(108,775)
Adjustments to Reconcile Net Income to
Net Cash:
Amortization - - 3,038
Depreciation 4,290 2,209 -
Shares Issued for Services - 2,134 -
Changes in Operating Assets & Liabilities:
Loss on Abandonment - 14,042 -
(Increase) Decrease in Inventory - - 4,740
(Increase) Decrease in Prepaid 3,086 (6,174) -
(Increase) Decrease in Accounts Receivable (21,822) - -
Increase (Decrease) in Account Payable
Related Party - - (105,872)
Increase (Decrease) in Accounts Payable 10,474 - (4,853)
---------- ---------- ----------
Net Cash Provided by Operating Activities 25,162 (223,086) (211,722)
Cash Flows from Investing Activities
------------------------------------
Purchase of Furniture & Fixtures (22,396) (21,760) -
---------- ---------- ----------
Net Cash Used by Investing Activities (22,396) (21,760) -
Cash Flows from Financing Activities
------------------------------------
Proceeds from Sale of Warrants - 15,900 -
Proceeds from Issuance of Stock - 47,100 207,000
Proceeds from Notes Payable - 345,982 -
---------- ---------- ----------
Net Cash Provided by Financing Activities - 408,982 207,000
---------- ---------- ----------
Increase (Decrease) in Cash 2,766 164,136 (4,722)
Cash at Beginning of Period 164,136 - 4,722
---------- ---------- ----------
Cash at End of Period $ 166,902 $164,136 $ -
========== ========== ==========
Supplemental Cash Flow Information
----------------------------------
Interest $ - $ - $ -
Taxes - - -
|
The accompanying notes are an integral part of these financial statements.
Pacific Health Care Organization, Inc. Notes to Financial Statements June 30, 2002
Pacific Health Care Organization, Inc was incorporated under the laws of the state of Utah on April 17, 1970 under the name Clear Air, Inc. On September 25, 2000, the Company changed its name to Pacific Health Care Organization, Inc. On February 26, 2001, the Company acquired Medex Healthcare, Inc., ("Medex"), a California corporation organized March 4, 1994, in a share for share exchange in which the Company acquired all of the outstanding shares of Medex in exchange for 6,500,000 shares of the Company, and subsequently elected to change their fiscal year end to December 31.
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the period
when the Services are provided to the customer.
C. The Company considers all short term, highly liquid investments that
are readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
D. Primary Earnings Per Share amounts are based on the weighted average
number of shares outstanding at the dates of the financial statements.
Fully Diluted Earnings Per Shares shall be shown on stock options and
other convertible issues that may be exercised within ten years of the
financial statement dates.
E. Depreciation: The cost of property and equipment is depreciated over
the estimated useful lives of the related assets. The cost of
leasehold improvements is amortized over the lesser of the length of
the lease of the related assets for the estimated lives of the assets.
Depreciation and amortization is computed on the straight line method.
F. Estimates: The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
Continued
Pacific Health Care Organization, Inc. Notes to Financial Statements June 30, 2002
Accumulated Depreciation
Cost Cost Depreciation Expense
June December June December June December
Assets 30, 2002 31, 2001 30, 2002 31, 2001 30, 2002 31, 2001
-------------------------------------------------------------------------------------
Computer
Equipment $ 37,075 $ 17,200 $ 5,674 $ 1,720 $ 3,954 $ 1,720
Furniture
& Fixtures 7,082 4,560 825 489 336 489
------------------------------------------------------------------
Totals $ 44,157 $ 21,760 $ 6,499 $ 2,209 $ 4,290 $ 2,209
==================================================================
|
The Company has incurred losses that can be carried forward to offset future earnings if conditions of the Internal Revenue Codes are met. These losses are as follows:
Year of Loss Amount Expiration Date
--------------------------------------------
2000 $ 108,775 2020
2001 235,297 2021
|
2001 2000
---------- ----------
Current Tax Asset Value of Net Operating
Loss Carryforwards at Current Prevailing
Federal Tax Rate $ 116,984 $ 36,984
Evaluation Allowance (116,984) (36,984)
---------- ----------
Net Tax Asset $ - $ -
========== ==========
Current Income Tax Expense $ - $ -
Deferred Income Tax Benefit - -
|
Continued
Pacific Health Care Organization, Inc. Notes to Financial Statements June 30, 2002
2002 2001
---------- ----------
Convertible Note Payable to an unrelated individual,
non interest bearing, unsecured, due on demand. $ 345,982 $ 345,982
---------- ----------
Total 345,982 345,982
Less Current Maturities - -
---------- ----------
Total Notes Payables $ 345,982 $ 345,982
========== ==========
|
Following are maturities of long-term debt for each of the next five years;
2002 $ 345,982
2003 -
2004 -
2005 -
----------
Total $ 345,982
==========
|
On March 1, 2001, the Company entered into a lease agreement to lease office space at 5150 East Pacific Coast Highway, Long Beach, California 90804. The Company pays $1,962, $2,020 and $2,077 per month for a 1,154 square foot facility, for the periods ending February 28, 2002, 2003 and 2004, respectively. The lease expires on February 29, 2004 and has a renewal option for an additional year. A lease deposit of $6,174 was required prior to signing. The space the Company is leasing is sufficiently large enough to accommodate all of its administrative needs.
Continued
Pacific Health Care Organization, Inc. Notes to Financial Statements June 30, 2002
Total Lease Commitments; Year Amount
---------- ----------
2002 $ 24,119
2003 24,926
2004 4,154
2005 -
2006 -
----------
Total $ 53,199
==========
|
Rent expense for the period ended June 30, 2002 and December 31, 2001 was $12,002 and $19,747, respectively.
During 2001, the Company issued 63,000 restricted common shares, A Warrants to purchase an additional 63,000 restricted common shares and B Warrants to purchase an additional 63,000 restricted common shares to five persons pursuant to subscriptions received from a private offering. Accordingly $44,037 has been charged to additional paid-in capital, representing the excess of cash received over the par value of the stock. In addition $18,900 has been charged to additional paid-in capital, representing the amount paid for the A and B Warrants.
During 2001, the Company issued 2,134,305 shares of common stock in exchange for consulting services rendered. The cost of the services has been charged to operations, and capital stock has been increased by $2,134.
In August of 2002, the Company granted options to purchase approximately 85,000 restricted common shares of the Company to four employees; (50%) of the options vested upon grant, 25% will vest on the first annual anniversary of the grant date and the remaining 25% will vest on the second annual anniversary of the grant date. The exercise price of the options is $0.05 and they expire five years from the grant date.
PART III
Item 1. Index and Description of Exhibits
Exhibit
Number Title of Document Location
------ ----------------- --------
3.1 Articles of Incorporation Attached
and amendments thereto
3.2 Bylaws Attached
4.1 PHCO 2002 Stock Attached
Option Plan
21.1 Subsidiaries of Registrant Attached
Medex Healthcare, Inc.
Workers' Compensation ....
|
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this registration statement to be signed on its behalf, thereunto duly authorized.
PACIFIC HEALTH CARE ORGANIZATION, INC.
Date: September 19, 2002 /S/ Tom Kubota
-------------------------------------------
Tom Kubota
President
Date: September 19, 2002 /S/ Rudy LaRusso
-------------------------------------------
Rudy LaRusso
Secretary
|
ARTICLES OF INCORPORATION
OF
CLEAR AIR, INC.
KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, have associated ourselves together for the purpose of forming a corporation under and by virtue of the laws of the State of Utah, and for that purpose we do hereby certify, declare and agree as follows:
NAME
The name of this corporation shall be Clear Air, Inc.
DURATION
The existence of this corporation shall be perpetual unless sooner dissolved or disincorporated according to law.
This corporation is organized at Ogden, Weber County, State of Utah, which shall be the place of its general business, but branch offices may be established at any place the Board of Directors determine to be necessary or convenient for the conduct of the business of this corporation.
The names of the parties to this agreement, who are the incorporators of this corporation, and their places of residence are as follows; to-wit:
Ralph W. Taylor 1720 East 46th South
Ogden, Utah
Grant L. Anderson 1321 Darling
Ogden, Utah
Wilbur W. Hish Rural Route #1, Box 82
Alton, Illinois 60120
|
The address of the initial office and the name of the initial registered agent of this corporation shall be Ralph W. Taylor, c/o Ralph W. Taylor Steel Company, 222 West 20th Street, Ogden, Utah.
This corporation will not commence business in the State of Utah until consideration of the value of at least one thousand dollars ($1,000.00) has been received for the issuance of shares of stock of said corporation.
The amount of capital stock of this corporation shall be 15,000,000 shares with a par value of two cents ($.02) per share.
The pursuit and business of this corporation shall be as follows:
(1) To engage in any lawful business which may be conducted under the
laws of the State of Utah.
(2) Among other things, to carry on the business of selling,
promoting, manufacturing, engineering and leasing of incinerators of a type
covered specific U.S. patents for the purpose of incineration of garbage.
The corporation further contemplates activities in the area of air
pollution, including research and development in the area of incineration
with respect to the corporation's patents.
The number of directors constituting the original Board of Directors to serve until the first annual meeting of the shareholders shall be three, and the names and residences of these directors are as follows:
Name Address
---- -------
Ralph W. Taylor
1720 East 46th South
Ogden, Utah
Grant L. Anderson 1321 Darling
Ogden, Utah
Wilbur W. Hish Rural Route #1, Box 82
Alton, Illinois 60120
|
The shareholders of this corporation shall not be entitled to preemptive rights with respect to any subsequent issuance of stock by the corporation.
All stock issued by the corporation shall be common stock with equal voting rights vested in each share. However, cumulative voting for the election of directors shall not be allowed.
IN WITNESS WHEREOF, we have hereunto set our hands this __ day of April , 1970.
/s/ Ralph W. Taylor ----------------------- /s/Grant L. Anderson ------------------------ /s/ Wilbur W. Hish ----------------------- |
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
|
I David B. Dee, a notary public, hereby certify that on the 14th day of April, 1970, personally appeared before me Ralph W. Taylor and Grant L. Anderson who, being by me first duly sworn, severally declared that they are the persons who signed the foregoing document as incorporators and that the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 14th day of April, 1970.
My commission expires:
/s/ David B. Dee
April 10, 1971
--------------------
Notary Public
|
Residing at Salt Lake City, Utah
STATE OF )
) ss.
COUNTY OF )
|
I /s/ Ruth A. DeCastir , a notary public, hereby certify that on
the 15th day of April, 1970, personally appeared before me Wibur W. Hish,
who being by me first duly sworn, declare that he is one of the persons who
signed the foregoing document as an incorporator and that the statements
therein contained are true.
|
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 15 day of April, 1970.
My commission expires: Addison, Illinois 2/18/1971 Notary Public Residing at:
We, the undersigned, being the President and Assistant Secretary of
Clear Air, Inc., a corporation duly incorporated under the laws of the
State of Utah, do hereby file these Articles of Amendment to the Articles
of Incorporation of Clear Air, Inc., and in support thereof do hereby
certify the following:
1. That the name of the corporation submitting these Articles of
Amendment is Clear Air, Inc.
2. That at the annual meeting of the stockholders held on December
4, 1979, in accordance with the Bylaws of the corporation and pursuant to
the laws of the State of Utah regarding amendments to Articles of
Incorporation, the following amendments to the Articles of Incorporation of
Clear Air, Inc., were adopted by the shareholders:
the number of authorized shares of capital (common) stock of the
corporation, $.02 par value.
Incorporation be amended as follows:
corporation shall be common stock with equal voting rights vested
in each share. However, cumulative voting for the election for
directors shall not be allowed.
provide as follows:
The corporation shall have a class of preferred stock which shall
be preferred as to liquidation only and shall consist of
1,000,000 authorized shares at $1.00 par value, with a 4%
dividend yield, on a cumulative basis. These preferred shares
shall be callable at a price of : $1.02 per dollar of stated
value, if called on or before June 30, 1982; $1.05 per dollar of
stated value if called between July 1, 1982 and June 30, 1985;
and $1.10 per dollar of stated value if called after July 1,
1985. The preferred stock, shall not be voting stock.
3. There were 7,117,000 shares of capital (common) stock, $.02 par
value, which were entitled to vote at the Stockholders' Meeting of December
4, 1979. This was the only class of stock authorized and/or outstanding of
the corporation at the time of the Stockholders' Meeting.
4. At the Stockholders' Meeting of December 4, 1979 there were
3,879,473 shares of capital (common) stock represented. The amendment to
increase the number of shares of authorized capital (common) stock $.02 par
value, from 15,000,000 shares to 20,000,000 shares and thus amend Article
VI of the Articles of Incorporation was unanimously approved by all of the
shares present at the meeting. The amendment to authorize a class of
preferred stock, and thus amend Article X and add Article XI to the
Articles of Incorporation, was passed by a vote of 3,844,473 shares in
favor of the Amendment and 35,000 shares against the Amendment.
5. The Amendment submitted authorizing 1,000,000 shares of a new
class of preferred stock, $1.00 par value, will result in a change in the
stated capital of the corporation since there will be a conversion of a
portion of the corporation's debt to an equity position and additionally,
some preferred shares will be issued by the corporation as a result of
certain offers to subscribe to such shares. The corporation will issue one
share of preferred stock in exchange for the cancellation of certain
corporate indebtedness evidenced by certain promissory notes payable, and
the cancellation shall be on the basis of $1.00 of debt cancelled for each
one share of preferred stock issued. In total, there will be an increase
in the stated capital of the corporation in the amount of $354,308.00. Of
this total, $170,854 represents a conversion of $170,854.00 of promissory
notes payable to 170,854 shares of preferred stock, at $1.00 par value.
The balance is reflected by the sale of 183,454 shares of preferred stock,
$1.00 par value.
Under penalties of perjury we declare that the foregoing is true,
to the best of our knowledge and belief.
Dated this 18th day of March, 1981.
/s/ William E. McMillen ------------------------------------- William E. McMillen, President /s/ Paul H. Freeman ------------------------------------- Paul H. Freeman, Assistant Secretary |
STATE OF FLORIDA )
) ss
COUNTY OF DADE )
|
BEFORE ME, the undersigned authority, personally appeared WILLIAM E. McMILLEN and PAUL H. FREEMAN, who being first duly sworn, represented unto me that he, William E. McMillen, as President, and Paul H. Freemen, as Assistant Secretary, did execute the foregoing on behalf of the corporation, and that the representations therein contained are true to the best of their information and belief.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 18th day of March, 1981.
/s/ David Stewart -------------------------------- Notary Public, State of Florida at Large My Commission Expires: December 13, 1983 |
AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
CLEAR AIR, INC.
Clear Air, Inc., a corporation organized under the laws of the State of
Utah, on April 17, 1970, hereby adopts the following Amendments to its
Articles of Incorporation pursuant to the provisions of Utah Revised Business
Corporation Act, Section 16-10a-1006.
The Articles of Incorporation shall be amended to read as follows:
The authorized Capital Stock of the Corporation is Fifty Million
(50,000,000) shares of Common Stock, $.001 par value per share. The
authorized Preferred Stock of the Corporation is Five Million (5,000,000)
shares, $.001 par value per share, which may be issued in one or more series,
with designations, rights and privileges of such preferred stock as set by
the Board of Directors from time to time.
That the provisions of Section 16-10a-1704 shall not apply to the
Company, and in lieu of 16-10a-1704, the Corporation hereby adopts Section
16-10a-704 of the Utah Revised Business Corporation Act.
The shareholders also approved a one for seventy-five reverse split of
the issued and outstanding common shares of the Corporation. There are
currently 17,872,337 shares issued and outstanding in the Corporation.
Following the reverse split there will be approximately 290,000 common shares
outstanding.
The date of the adoption of the foregoing amendments and reverse split
by the Shareholders was September 18, 2000. The number of shares outstanding
in the Corporation and entitled to vote, as of the record date, on the
foregoing amendments and reverse split was 17,872,337. All common stock in
the Corporation is entitled to one vote per share for each matter coming
before the Shareholders. A majority of the shares constitutes a quorum of
the Shareholders. The number of shares that voted in favor of the foregoing
amendments and reverse split was 10,078,700 or 56% of the outstanding shares.
The number of shares that voted against the foregoing amendments and reverse
split was 36,300 or 0.2% of the outstanding shares.
Dated this September 25, 2000
CLEAR AIR, INC.
By: /s/ Rudy LaRusso
------------------------------------------
Rudy LaRusso, Secretary
|
AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
IMMUNOCLIN INTERNATIONAL, INC.
Clear Air, Inc., a corporation organized under the laws of the State of
Utah, on April 17, 1970, hereby adopts the following Amendment to its
Articles of Incorporation pursuant to the provisions of Utah Revised Business
Corporation Act, Section 16-10a-1006.
The Articles of Incorporation shall be amended to read as follows:
The name of the Corporation shall be Immunoclin International, Inc.
The date of the adoption of the foregoing amendment by the Shareholders
was September 18, 2000. The number of shares outstanding in the Corporation
and entitled to vote, as of the record date, on the foregoing amendment was
17,872,337. All common stock in the Corporation is entitled to one vote per
share for each matter coming before the Shareholders. A majority of the
shares constitutes a quorum of the Shareholders. The number of shares that
voted in favor of the foregoing amendment was 10,106,700 or 57% of the
outstanding shares. The number of shares that voted against the foregoing
amendment was 8,300 or 0.05% of the outstanding shares.
Dated this October 27, 2000
IMMUNOCLIN INTERNATIONAL, INC.
By: /s/ Tom Kubota
------------------------------
Tom Kubota, President
|
AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
IMMUNOCLIN INTERNATIONAL, INC.
Immunoclin International, Inc., a corporation organized under the laws
of the State of Utah, on April 17, 1970, hereby adopts the following
Amendment to its Articles of Incorporation pursuant to the provisions of Utah
Revised Business Corporation Act, Section 16-10a-1006.
The Articles of Incorporation shall be amended to read as follows:
The name of the Corporation shall be Pacific Health Care Organization,
Inc.
The date of the adoption of the foregoing amendment by the Shareholders
was January 31, 2001. The number of shares outstanding in the Corporation
and entitled to vote, as of the record date, on the foregoing amendment was
1,415,695. All common stock in the Corporation is entitled to one vote per
share for each matter coming before the Shareholders. A majority of the
shares constitutes a quorum of the Shareholders. The number of shares that
voted in favor of the foregoing amendment was 1,126,667 or 79% of the
outstanding shares. The number of shares that voted against the foregoing
amendment was -0- of the outstanding shares.
Dated this January 31, 2001
PACIFIC HEALTH CARE ORGANIZATION, INC.
By: /s/ Tom Kubota
---------------------------------------
Tom Kubota, President
|
BY - LAWS OF
CLEAR AIR, INC.
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I
---------
OFFICES
-------
Section 1.01 Corporate Offices 1
Section 1.02 Address of Principal Office 1
ARTICLE II
----------
SHAREHOLDERS
------------
Section 2.01 Annual Meetings 1
Section 2.02 Special Meetings 1
Section 2.03 Place of Meeting 2
Section 2.04 Notice of Shareholders Meetings 2
Section 2.05 Closing of Transfer Books 3
Section 2.06 Voting Lists 3
Section 2.07 Quorum 4
Section 2.08 Manner of Voting 4
Section 2.09 Proxies 4
Section 2.10 Voting of Shares by Corporation 5
Section 2.11 Informal Action by Shareholders 5
ARTICLE III
-----------
BOARD OF DIRECTORS
------------------
Section 3.01 General Powers 5
Section 3.02 Number, Tenure and Qualification 5
Section 3.03 Regular Meetings 6
Section 3.04 Special Meetings 6
Section 3.05 Notice of Directors Meetings 6
Section 3.06 Quorum and Manner of Acting 6
Section 3.07 Vacancies and Newly Created Directorships 6
Section 3.08 Compensation 7
Section 3.09 Resignation 7
|
ARTICLE IV
----------
PAGE
----
OFFICERS
--------
Section 4.01 Number 7
Section 4.02 Election and Qualifications 7
Section 4.03 Subordinate Officers, etc. 8
Section 4.04 Resignations 8
Section 4.05 Removal 8
Section 4.06 Vacancies and Newly Created Offices 8
Section 4.07 The Chairman of the Board 9
Section 4.08 The President 9
Section 4.09 The Vice-President 10
Section 4.10 The Secretary-Treasurer 10
Section 4.11 General Manager 12
Section 4.12 Salaries 12
Section 4.13 Surety Bond 13
ARTICLE V
----------
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
----------------------------------------
Section 5.01 How Constituted 13
Section 5.02 Powers 13
Section 5.03 Proceedings 14
Section 5.04 Quorum and Manner of Acting 14
Section 5.05 Resignations 14
Section 5.06 Removal 14
Section 5.07 Vacancies 14
Section 5.08 Compensation 15
ARTICLE VI
----------
EXECUTION OF INSTRUMENTS, BORROWING OF
MONEY AND DEPOSIT OF CORPORATE FUNDS
--------------------------------------
Section 6.01 Execution of Instruments 15
Section 6.02 Loans 15
Section 6.03 Deposits 15
Section 6.04 Checks, Drafts, etc. 15
Section 6.05 Bonds and Debentures 16
Section 6.06 Sale, Transfer, etc. of Securities 16
Section 6.07 Proxies 17
|
ARTICLE VII
-----------
PAGE
----
CAPITAL STOCK
-------------
Section 7.01 Certificate of Stock 17
Section 7.02 Transfer of Stock 18
Section 7.03 Regulations 18
Section 7.04 Maintenance of Stock Book at Principal
Place of Business 18
Section 7.05 Transfer Agent and Registrars 19
Section 7.06 Closing of Transfer Books and Fixing of
Record Date 19
Section 7.07 Lost or Destroyed Certificates 19
ARTICLE VIII
------------
FISCAL YEAR
----------- 19
ARTICLE IX
-----------
DIVIDENDS 20
---------
ARTICLE X
---------
AMENDMENTS 20
----------
ARTICLE XI
----------
SHAREHOLDERS' TRANSFER OF SHARES 20
--------------------------------
ARTICLE XII
-----------
DEADLOCK 21
--------
ARTICLE XIII
-------------
GENERAL BY-LAWS
---------------
Section 13.1 Meetings on Legal Holidays 21
Section 13.2 Manner of Giving Notice 21
Section 13.3 Attendance Constitutes Waiver of Notice 22
Section 13.4 General Waiver of Notice 22
Section 13.5 Preemptive Rights 22
|
BY - LAWS OF
CLEAR AIR, INC.
ARTICLE I. OFFICES.
Section 1.01. Corporate Offices. The corporation may maintain such
offices, within or without the State of Utah, as the Board of Directors may
from time to time designate.
Section 1.02. Address of Principal Office. The address of the
principal office os the corporation may be changed by the Board of
Directors.
ARTICLE II. SHAREHOLDERS.
Section 2.01. Annual Meetings. The annual meeting of the
shareholders shall be held on the first Monday in December of each year at
6:00P.M., beginning with the calendar year following the filing of the
Articles of Incorporation for the purpose of electing Directors and for the
transaction of such other business as may come before the meeting. If the
election of Directors shall not be held on the day designated herein for
the annual meeting of the shareholders, or at any adjournment thereof, the
Board of Directors shall cause the election to be held at a special meeting
of the shareholders as soon thereafter as conveniently may be.
Section 2.02. Special Meetings. Subject to the notice requirements
of Section2.04, special meetings of the shareholders may be called at any
time either by the Chairman of the Board, or by the President, or by the
Board of Directors, or in their absence or disability, by any Vice-
President. Upon the written request of the holders of not less than one-
tenth of all shares entitled to vote at the meeting, a special meeting
shall forthwith be called by one of the foregoing officers, or by the Board
of Directors, as the case may be. Such written request shall state the
purpose of the meeting and shall be delivered to the appropriate officer or
to the Board of Directors, as the case may be, in accordance with the
general procedure set forth in Section 11.2. If the appropriate officer,
of the Board of Directors, as the case may be, shall fail to call such
meeting within 10 days after delivery of such request, the meeting may be
called by the shareholders who originally requested the meeting. For these
purposes a meeting is called when the Secretary gives the notice required
by Section 2.04. Only the business mentioned in the notice of a special
meeting of shareholders shall be conducted at such special meeting.
Section 2.03. Place of Meeting. The Board of Directors may designate
any place, within or without the State of Utah, as the place of meeting for
any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to vote
at a meeting may designate any place, either within or without the State of
Utah, as the place for the holding of such meeting. If no designation is
made, either by the Board of Directors or by the shareholders, the place of
meeting shall be the registered office of the corporation in the State of
Utah.
Section 2.04. Notice of Shareholders Meetings. The Secretary shall
cause notice of the time, place and purposes of both annual and special
meetings of the shareholders to be given pursuant to Section 11.2 not less
than 10 nor more than 50 days prior to the meeting to each shareholder of
record entitled to vote at such meeting. If a special meeting is called by
shareholders as set forth in Section 2.02, such shareholders shall give
notice as provided in the next preceding sentence and shall be reimbursed
for reasonable expenses incurred thereby.
Section 2.05. Closing of Transfer Books. For the purpose of
determining (a) shareholders entitled to notice of, or to vote at, any
meeting of shareholders, or any adjournment thereof, or (b) shareholders
entitled to receive payment of any dividend, or (c) in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors of the corporation may provide that the stock transfer books
shall be closed for the purpose of determining shareholders entitled to
notice of, or to vote at, a meeting of shareholders, such books shall be
closed for at least 10 days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than 50 days and, in
case of a meeting of shareholders, not less than 10 days prior to the date
on which the particular action requiring such determination of shareholders
is to be taken. When a determination of shareholders entitled to vote at
any meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
Section 2.06. Voting Lists. The officer or agent having charge of
the stock transfer books for shares of the corporation shall make, at least
10 days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of
shares held by each, which list, for a period of 10 days prior to the
meeting, shall be kept on file at the registered office of the corporation
and shall be subject to the inspection of any shareholders during the whole
time of the meeting. The original stock transfer books shall be prima-
facie evidence as to who are the shareholders entitled to examine such list
or transfer books or to vote at any meeting of shareholders.
Section 2.07. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at any meeting of shareholders. If less than a
majority of such shares are represented at a meeting, at majority of the
shares so represented may adjourn the meeting from time to time without
further notice. At a meeting resumed after any such adjournment at wich a
quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally called.
Section 2.08. Manner of Voting. If a quorum is present, the
affirmative vote of a majority of the shares of stock represented at the
meeting shall be the act of the shareholders unless the vote of a greater
number of shares of stock is required by law or by the provisions of theses
By-laws. At each election for Directors, there shall be no cumulative
voting.
Section 2.09. Proxies. At each meeting of the shareholders, each
shareholder entitled to vote shall be entitled to vote in person or by
proxy; provided, however, that the right to vote by proxy shall exist only
in case the instrument authorizing such proxy to act shall have been
executed in writing by the shareholder himself or by his attorney thereunto
duly authorized in writing. Such proxy may state the period for which it
shall be valid and if it does not otherwise provide, the proxy shall be
valid for eleven (11) months after its execution. Such instrument
authorizing a proxy to act shall be delivered to the Secretary of the
corporation or to such other officer or person who may, in the absence of
the Secretary, be acting as Secretary of the meeting. In the event that
any such instrument shall designate two or more persons to act as proxies,
a majority of such persons present at the meeting, or, if only one be
present, that one shall have (unless the instrument shall otherwise
provide) all of the powers conferred by the instrument upon all persons so
designated. Persons holding stock in a fiduciary capacity shall be entitled
to vote the shares so held. A shareholder whose shares are pledged shall
be entitled to vote such shares until the shares shall be entitled to vote
the shares so transferred.
Section 2.10. Voting of Shares by Corporation. Treasury shares of
the Corporation shall not be voted directly or indirectly at any meeting
and shall not be counted in determining the total number of outstanding
shares at any given time.
Section 2.11. Informal Action by Shareholders. Any action required
or permitted to be taken at a meeting of the shareholders may be taken
without a formal meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the shareholders entitled to vote with
respect to the subject matter thereof.
ARTICLE III. BOARD OF DIRECTORS.
Section 3.01. General Powers. The property, affairs and business of
the corporation shall be managed by the Board of Directors. The Board of
Directors may exercise all the powers of the corporation whether derived
from law or the Articles of Incorporation, except such powers as are by
statute, or by the Articles of Incorporation, or by these By-laws, vested
solely in the stockholders of the corporation.
Section 3.02. Number, Tenure, and Qualifications. The number of
Directors of the corporation may be fixed and varied by amending these By-
laws. Each Director shall have been elected and qualify. Directors need
not be residents of the State of Utah or shareholders of the corporation.
Section 3.03. Regular Meetings. Without other notice than by this
by-law, a regular meeting of the Board of Directors shall be held
immediately after, and at the same place as, the annual meeting of
shareholders. The Board of Directors may provide by resolution the time
and place, either within or without the State of Utah, for the holding of
additional regular meetings without other notice than such resolution.
Section 3.04. Special Meetings. Subject to the notice requirements
of Section 3.05, special meetings of the Board of Directors may be called
by, or at the request of, the President, any Vice-President or any two
Directors. The person or persons authorized to call special meetings of
the Board of Directors may fix any place, either within or without the
State of Utah, as the place for holding any such special meetings.
Section 3.05. Notice of Directors Meetings. The Secretary shall
cause notice of the time and place of each special meeting of the Directors
to be given to each Director pursuant to Section 13.2 not less than 5 days
prior to such meetings.
Section 3.06. Quorum and Manner of Acting. A majority of the
Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, but if less than a majority is present
at a meeting, a majority of the Directors present may adjourn the meeting
from time to time without further notice. The act of a majority of the
Directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors.
Section 3.07. Vacancies and Newly Created Directorships. If any
vacancy shall occur in the Board of Directors by reason of death,
resignation or otherwise, or if the authorized number of Directors shall be
increased, such vacancy or newly created directorship shall be filled by
the Directors then in office, though less than a quorum. Any directorship
to be filled by reason of the removal of one or more Directors by the
shareholders, pursuant to Section 16-10-37 (UCA Ann.), may be filled by
election by the shareholders at the meeting at which the Director or
Directors are removed.
Section 3.08. Compensation. By resolution of the Board of Directors,
a Director may be paid his expenses, if any, of attendance at meetings of
the Board of Directors and may be paid either a fixed sum for attendance at
each such meeting or a stated salary as Director. No such payment shall
preclude a Director from serving the corporation in any other capacity and
receiving compensation therefor.
Section 3.09. Resignation. A Director may resign at any time by
delivering a written resignation either to the President or a Vice-
President or the Secretary. The resignation shall become effective on its
acceptance by the Board of Directors, provided, however, that if the Board
has not acted thereon within 10 days from the date of its delivery, the
resignation shall, on the tenth day, be deemed accepted.
ARTICLE IV. OFFICERS.
Section 4.01. Number. The officers of the corporation shall consist
of a President, one or more Vice-Presidents as shall be determined by the
Board of Directors, and a Secretary-Treasurer, each of whom shall be
elected by the Board of Directors.
Section 4.02. Election and Qualification. The officers of the
corporation shall be elected by the Board of Directors annually at its
meeting. In the event of failure to elect officers at an annual meeting of
the Board of Directors, officers may be elected at any regular or special
meeting of the Board of Directors. Any one person may hold two or more
such offices except that the President shall not also be the Secretary. No
person holding two or more offices shall act in or execute any instrument
in the capacity of more than one office. The President and the Chairman of
the Board, if there is such a Chairman, shall be Directors of the
corporation during the terms of their respective offices. No other officer
need be a Director. No officer need be a shareholder of the corporation.
Section 4.03. Subordinate Officers, etc. The Board of Directors form
time to time may appoint such other officers or agents as it may deem
advisable, each of whom shall have such title, hold office for such period,
have such authority and perform such duties as the Board of Directors from
time to time may determine. The Board of Directors from time to time may
delegate to any officer or agent the power to appoint any such subordinate
officer or agents and to prescribe their respective titles, terms of
office, authorities and duties.
Section 4.04. Resignations. Any officer may resign at any time by
delivering a written resignation either to the President, or to a Vice-
President, or to the Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 4.05. Removal. Any officer may be removed by the Board of
Directors whenever in its best judgement the best interests of the
corporation will be served thereby. For these purposes a two-thirds
majority of the Board (exclusive of the officer in question if he is also a
Director) shall be necessary to form a quorum, but the action may be taken
at any special meeting of the Board of Directors called for that purpose or
at any regular meeting. Any agent (not an officer) appointed in accordance
with the provisions of Section 4.03 hereof may also be removed, either for
or without cause, by any officer upon whom such power of removal shall have
been conferred by the Board of Directors.
Section 4.06. Vacancies and Newly Created Offices. If any vacancy
shall occur in any office by reason of death, resignation, removal,
disqualification or any other cause, or if a new office shall be created,
such vacancy or newly created office may be filled by the Board of
Directors at any regular or special meeting.
Section 4.07. The Chairman of the Board. The Chairman of the Board,
if such officer is elected, shall have the following powers and duties:
a. He shall be the senior officer of the
corporation and shall perform such duties, in addition to those specified
below in this Section 4.07, as may be assigned to him by the Board of
Directors.
b. He shall preside at all stockholders meetings.
c. He shall preside at all meetings of the Board of Directors.
d. He shall be a member of the Executive Committee, if one is
appointed.
Section 4.08. The President. The President shall have the following
powers and duties:
a. He shall be the chief executive officer of the
corporation and, subject to the direction of the Board of Directors, shall
have general charge of the business, affairs and property of the
corporation and general supervision over the officers, employees and
agents.
b. If no Chairman of the Board has been elected,
or if such officer is absent or disabled, he shall preside at meetings of
the stockholders and Board of Directors.
c. He shall be a member of the Executive
Committee, if one is appointed.
d. He shall be empowered to sign certificates
representing stock of the corporation, the issuance of which shall have
been authorized by the Board of Directors.
e. He shall have all powers and perform all
duties incident to the office of a President of a corporation and shall
exercise such other powers and perform such other duties as from time to
time may be assigned to him by the Board of Directors.
Section 4.09. The Vice-President. The Vice-President, or if there
shall be more than one, the Vice-Presidents in the order determined by the
Board of Directors shall, in the absence or disability of the President,
perform the duties and exercise the powers of the President. Each Vice-
President shall have such other powers and perform such other duties as
from time to time may be assigned to him by the Board of Directors or by
the President. The Board of Directors may appoint an Executive Vice-
President from time to time, and such Executive Vice-President shall be
first in succession to the duties and powers of the President in the event
of his absence or disability.
Section 4.10. The Secretary-Treasurer. The Secretary-Treasurer shall
have the following powers and duties:
a. He shall keep or cause to be kept a record of
all of the proceedings of the meeting of the stock holders and of the Board
of Directors in books provided for that purpose.
b. He shall cause all notices to be duly given in
accordance with the provisions of these By-laws and as required by statute.
c. He shall be the custodian of the records and
of the seal of the corporation, and shall cause such seal, or a facsimile
thereof, to be affixed to all certificates representing stock of the
corporation prior to the issuance thereof and to all other instruments, the
execution of which, on behalf of the corporation under its seal, shall have
been duly authorized, and when so affixed he may attest the same.
d. He shall see that the books, reports,
statements, certificates and other documents and records required by
statute are properly kept and filed.
e. He shall have charge of the stock books of the
corporation and shall cause the stock an transfer books to be kept in such
manner as to show at any time the amount of the stock of the corporation of
each class issued and outstanding, the manner in which and the time when
such stock was paid for, the names alphabetically arranged and the
addresses of the holders of record thereof, the number of shares held by
each holder and time when each became such holder of record. Upon
application he shall exhibit the original or duplicate stock register to
any Director at any reasonable time. He shall cause the stock book
referred to in Section 7.04 to be kept and exhibited at the Utah office of
the corporation in the manner and for the purpose provided in such Section.
f. He shall be empowered to sign certificates
representing stock of the corporation, the issuance of which shall have
been authorized by the Board of Directors.
g. He shall perform in general all duties
incident to the office of Secretary-Treasurer and such other duties as from
time to time may be assigned to him by the Board of Directors of by the
President.
h. He shall have charge and supervision over and
shall be responsible for the monies, securities, receipts and disbursements
of the corporation.
i. He shall cause the monies and other valuable
effects of the corporation to be deposited in the name and to the credit of
the corporation in such banks or trust companies or with such bankers or
other depositories as shall be selected in accordance with Section 6.03
hereof.
j. He shall cause the monies of the corporation
to be disbursed by checks or drafts (signed as provided in Section 6.04
hereof) upon the authorized depositories of the corporation, and cause to
be taken and preserved proper vouchers for all monies disbursed.
k. He shall render to the Board of Directors or
the President whenever requested a statement of the financial condition of
the corporation and of all his transactions as Treasurer, and shall render
a full financial report at the annual meeting of the shareholders, if
called upon to do so.
l. He shall cause to be kept correct books of
account of all the business and transactions of the corporation and shall
exhibit such books to any Director upon request at any reasonable time.
m. He shall be empowered from time to time to
require from any officer or agent of the corporation reports or statements
giving such information as he may desire with respect to any and all
financial transactions of the corporation.
n. He shall perform in general all duties
incident to the office of Treasurer and such other duties as from time to
time may be assigned to him by the Board of Directors or by the President.
Section 4.11. General Manager. The Board of Directors may employ and
appoint a General Manager who may or may not be one of the officers or
Directors of the corporation. The General Manager shall have such powers
and duties as shall be delegated to him by the Board of Directors from time
to time.
Section 4.12. Salaries. The salaries or other compensation of the
officers of the corporation shall be fixed from time to time by the Board
of Directors except that the Board of Directors may delegate to any person
or group of persons the power to fix the salaries or other compensation of
any subordinate officer or agent appointed in accordance with the
provisions of Section 4.03. No officer shall be prevented from receiving
any such salary or compensation by reason of the fact that he is also a
Director of the corporation.
Section 4.13. Surety Bond. In case the Board of Directors shall so
require, any officer or agent of the corporation shall execute to the
corporation a bond in such sum and with such sureties as the Board of
Directors may direct, conditioned upon the faithful performance of his
duties to the corporation, including responsibility for negligence and for
the accounting for all property, monies or securities of the corporation
which may come into his hands.
ARTICLE V. EXECUTIVE COMMITTEE AND OTHER COMMITTEES.
Section 5.01. How Constituted. The Board of Directors may designate
an Executive Committee which shall consist of two or more Directors, one of
whom shall be the Chairman of the Board, if there be such officer, one of
whom shall be the President, and the other member or members of the
Executive Committee shall be appointed from the Board of Directors.
Thereafter, members of the Executive Committee shall be designated annually
at the annual meeting of the Board of Directors; provided, however, that at
any time the Board of Directors may abolish or reconstitute the Executive
Committee. Each member of the Executive Committee shall hold office until
his successor shall have been designated or until his resignation or
removal in the manner provided in these By-laws.
Section 5.02. Powers. During the intervals between meetings of the
Board of Directors, the Executive Committee shall have any may exercise all
powers of the Board of Directors in the management of the business and
affairs of the corporation, except for the power (a) to fill vacancies in
the Board of Directors, (b) to amend these By-laws, and (c) except for such
powers as by law may not be delegated by the Board of Directors to an
Executive Committee.
Section 5.03. Proceedings. The Executive Committee may fix its own
presiding and recording officer or officers, and may meet at such place or
places, at such time or times and upon such notice (or without notice) as
it shall determine from time to time. It shall keep a record of its
proceedings and shall report such proceedings to the Board of Direcotrs at
the meeting of the Board of Directors next following.
Section 5.04. Quorum and Manner of Acting. A majority of the
Directors comprising the Executive Committee shall constitute a quorum for
the transaction of business at any of its meetings. If less than a quorum
is present, a majority of the Directors present may adjourn the meeting
from time to time without further notice. The act of majority of the
Directors present at which a quorum is present shall be the act of the
Executive Committee.
Section 5.05. Resignations. Any member of the Executive Committee
may resign at any time by delivering a written resignation either to the
President or to the Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 5.06. Removal. The Board of Directors may at any time remove
any member of the Executive Committee either for or without cause.
Section 5.07. Vacancies. If any vacancy shall occur in the Executive
Committee by reason of disqualification, death, resignation, removal or
otherwise, the remaining members shall, until the filling of such vacancy,
constitute the then total membership of the Executive Committee and,
provided that two or more members are remaining, continue to act. Such
vacancy may be filled at any meeting of the Board of Directors.
Section 5.08. Compensation. The Board of Directors may allow a fixed
sum and expenses of attendance to any member of the Executive Committee who
is not an active salaried employee of the corporation for attendance at
each meeting of the Executive Committee.
ARTICLE VI. EXECUTION OF INSTRUMENTS, BORROWING OF
MONEY AND DEPOSIT OF CORPORATE FUNDS.
Section 6.01. Execution of Instruments. The Board of Directors may
authorize in writing any officer or agent to execute and deliver any
contract or other instrument in the name and on behalf of the corporation.
Any such authorization may be general or confined to specific instances.
Section 6.02. Loans. No loan or advance shall be contracted on
behalf of the corporation, no negotiable paper or other evidence of its
obligation under any loan or advance shall be issued in its name, and no
property of the corporation shall be mortgaged, pledged, hypothecated or
transferred as security for the payment of any loan, advance, indebtedness
or liability of the corporation unless and except as authorized by the
Board of Directors. Any such authorization may be general or confined to
specific instances.
Section 6.03. Deposits. All monies of the corporation not otherwise
employed shall be deposited from time to time to its credit in such banks
or trust companies or with such bankers or other depositories as the Board
of Directors may select, or as from time to time may be selected by any
officer or agent authorized to do so by the Board of Directors.
Section 6.04. Checks, Drafts, etc. All notes, drafts, acceptances,
checks, endorsements and evidences of indebtedness of the corporation shall
be signed by such officer or officers or such agent or agents of the
corporation and in such manner as the Board of Directors from time to time
may determine. Endorsements for deposit to the credit of the corporation
in any of its duly authorized depositories shall be made is such manner as
the Board of Directors may determine from time to time.
Section 6.05. Bonds and Debentures. Every bond or debenture issued
by the corporation shall be evidenced by an appropriate instrument which
shall be signed by the President or a Vide-President and by the Treasurer
or by the Secretary, and sealed with the seal of the corporation. The seal
may be facsimile, engraved or printed. Where suc bond or debenture is
authenticated with the manual signature of an authorized officer of the
corporation or other trustee designated by the indenture of trust or other
agreement under which such security is issued, the signature of any of the
corporation's officers named therein may be facsimile. In case any officer
who signed, or whose facsimile signature has been used on any such bond or
debenture, shall cease to be an officer of the corporation for any reason
before the same has been delivered by the corporation, such bond or
debenture may nevertheless be adopted by the corporation and issued and
delivered as though the person who signed it or whose facsimile signature
had been used thereon had not ceased to be such an officer.
Section 6.06. Sale, Transfer, etc. of Securities. Sales, transfers,
endorsements and assignments of shares of stocks, bonds and other
securities owned by or standing in the name of the corporation and the
execution and delivery on behalf of the corporation of any and all
instruments in writing incident to any such sale, transfer, endorsement or
assignment, shall be effected by the President, or by any Vice-President,
together with the Treasurer or Secretary, or by any officer or agent
thereunto authorized by the Board of Directors.
Section 6.07. Proxies. Proxies to vote with respect to shares of
stock of other corporations owned by, or standing in the name of the
corporation, shall be executed and delivered on behalf of the corporation
by the President or any Vice-President and the Secretary of the corporation
of by any officer or agent thereunto authorized by the Board of Directors.
ARTICLE VII. CAPITAL STOCK.
Section 7.01. Certificate of Stock. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by the
President and the Secretary-Treasurer and sealed with the seal (which may
be facsimile, engraved or printed) of the corporation, certifying the
number and kind, class or series of shares owned by him in the corporation;
provided, however, that where such a certificate is signed by (a) a
transfer agent or an assistant transfer agent, or (b) registered by a
registrar, the signature of any such President or Secretary-Treasurer may
be a facsimile. In case any officer who shall have signed, or whose
facsimile signature or signatures shall have been used on any such
certificates, shall cease to be such officer of the corporation, for any
reason, before the delivery of such certificate by the corporation, such
certificate may nevertheless be adopted by the corporation and be issued
and delivered as though the person who signed it or whose facsimile
signature or signatures shall have been used thereon had not ceased to be
such officer. Certificates representing shares of stock of the corporation
shall be in such form as provided in the statutes of the state of
incorporation. There shall be entered upon the stock books of the
corporation at the time of issuance of each share, the number of the
certificate issued, the name and address of the person owning the shares
represented thereby, the number and kind, class or series of such shares
and the date of issuance thereof.
Section 7.02. Transfer of Stock. Transfers of shares of the stock of
the corporation shall be made on the books of the corporation upon order of
the holder of record thereof, or of his attorney thereunto duly authorized
by a power of attorney duly executed in writing and filed with the
Secretary-Treasurer of the corporation or any of its transfer agents, and
upon surrender to the Secretary-Treasurer or other authorized agent of the
certificate or certificates properly endorsed or accompanied by proper
instruments of transfer, representing such shares. The corporation and
transfer agents and registrars, if any, shall be entitled to treat the
holder of record of any share or shares of stock as the absolute owner
thereof for all purposes and accordingly shall not be bound to recognize an
legal, equitable or other claim to or interest in such share or shares on
the part of any other person whether or not it or they shall have express
or other notice thereof.
Section 7.03. Regulations. Subject to the provisions of the Aricte
VII, the Board of Directors may make such rules and regulations as it may
deem expedient concerning the issuance, transfer, redemption and
registration of certificates for shares of stock of the corporation.
Section 7.04. Maintenance of Stock Book at Principal Place of
Business. A stock book (or books where more than one kind, class or series
of stock is outstanding) shall be kept at the principal place of business
of the corporation in the State of Utah, containing the names,
alphabetically arranged, of original stockholders of the corporation, their
address, their interest, the amount paid on their shares of stock, and all
transfers thereof and the number and class of the shares held by each.
Such stock books shall at any reasonable time be subject to inspection by
persons entitled by law to inspect the same.
Section 7.05. Transfer Agent and Registrars. The Board of Directors
may appoint one or more transfer agents and one or more registrars with
respect to the certificates representing shares of stock of the
corporation, and may require all such certificates to bear the signature of
either or both. The Board of Directors may from time to time define the
respective duties of such transfer agents and registrars. No certificate
of stock shall be valid until countersigned by a transfer agent, if at the
date appearing thereon the corporation had a transfer agent for such stock,
and until registered by a registrar, if at such date the corporation had a
registrar for such stock.
Section 7.06. Closing of Transfer Books and Fixing of Record Date.
The Board of Directors shall have power to close the transfer books and fix
the record date as provided in Section 2.05.
Section 7.07. Lost or Destroyed Certificates. The corporation may
issue a new certificate to replace any certificate theretofore issued by
it, alleged to have been lost or destroyed. The Board of Directors may, in
its discretion, require the owner of the lost or destroyed certificate or
his legal representatives, to give the corporation a bond in such sum and
with such sureties as the Board of Directors may direct to indemnify the
corporation and its transfer agents and registrars, if any, against claims
that may be made against it or any such transfer agents or registrars on
account of the issuance of such new certificate. A new certificate may be
issued without requiring and bond, in the discretion of the Board of
Directors.
ARTICLE VIII. FISCAL YEAR.
The fiscal year of the corporation shall be fixed and may be varied by
resolution of the Board of Directors.
ARTICLE IX. DIVIDENDS.
The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and
upon the terms and conditions provided by law.
ARTICLE X. AMENDMENTS.
Any by-law of the corporation, whether adopted by the Board of
Directors or the shareholders, shall be subject to amendment, alteration or
repeal, and new by-laws may be made, except that:
a. No by-laws adopted or amended by the shareholders shall be altered
or repealed by the Board of Directors.
b. No amendment shall be made hereto which in any way affects the
shareholders rights to cumulative voting for the election of Directors as
set forth in Section 2.8, supra, unless approved and adopted by 100% of the
shareholders.
c. No other amendments shall be made hereto unless 100% of the
original sharheolders then holding shares shall so approve.
ARTICLE XI. SHAREHOLDERS' TRANSFER OF SHARES.
Any holder of the capital stock of this corporation shall have the
right to transfer his shares according to his desires on the open market
with complete freedom of transfer, except as such transfers may be
restricted by the state of incorporation or by any state where shares are
being transferred either by the state itself or by the Federal Government
if such restriction is imposed.
It is contemplated by the Directors of the corporation that the shares
of stock of this corporation shall be freely traded on an over-the-counter
market in the corporation's early years, and these Articles shall not be
construed as to contain anything which will restrict such open trading for
certificates of shares of this corporation.
ARTICLE XII. DEADLOCK.
In the event that the Board of Directors becomes deadlocked on some
issue, the determination of which is necessary for the purposes of carrying
on the business of the corporation in the best possible manner, and for the
purpose of preventing an involuntary dissolution of the corporation, the
shareholders, officers and Directors of the corporation hereby agree to
abide by the following arrangements and solution.
Each conflicting side shall select a third party to act on its behalf
no later than ten days from the date any such deadlock shall occur.
Thereafter, but no later than five full business days from the date of
their selection, the third parties shall select an additional individual to
cast the tie breaking vote. The tie breaking vote shall take place in no
event later than 20 days from the date of deadlock.
Any individual may be selected under the above plan, and it matters
not what relationship he may have to any of the parties involved.
All shareholders, officers and Directors hereby agree to be bound by
the decision which results pursuant to the above plan. In the event one
side refuses to abide by the decision reached as a result of the
aforementioned plan, the opposing side may recover damages, if any may be
shown to have resulted therefrom, from the side refusing to so abide.
ARTICLE XIII. GENERAL BY-LAWS.
Section 13.1. Meetings on Legal Holidays. If the day the annual
meeting of the shareholders or the day of any regular meeting of the Board
of Directors is a legal holiday, such meeting shall be held on the next
following business day.
Section 13.2. Manner of Giving Notice. Whenever, under the
provisions of applicable law or of these By-laws, notice is required or
permitted to be given to a shareholder, or a Director, or an officer, such
notice may be given (a) by personal delivery, or (b) by mail, or (c) by
telegram. A notice by mail shall be deemed to be delivered when the notice
is deposited in the United States mail, properly addressed, with postage
thereon prepaid.
A notice given by telegram shall be deemed to be delivered when the
telegram, properly addressed, is delivered to the telegraph company for
prepaid transmission.
The proper address for a shareholder shall be that appearing on the
records of the corporation. The proper address for a Director shall be
either his customary business address or the address or the corporate
address. The proper address for an officer shall be the corporate address.
Section 13.3. Attendance Constitutes Waiver of Notice. Attendance by
a shareholder at a shareholders meeting, or attendance by a Director at a
Directors meeting, shall constitute a waiver of notice of such meeting,
except where such shareholder or such Director, as the case may be, attends
such meeting for the express purpose of objecting to the transaction of any
business because the meeting was not lawfully called or convened.
Section 13.4. General Waiver of Notice. Any shareholder with respect
to a meeting of shareholders, or any Director with respect to a meeting of
the Board of Directors, may waive notice of such meeting by signing a
written notice of waiver with respect thereto and such signed waiver shall
be deemed equivalent to the giving of notice.
Section 13.5. Preemptive Rights. There shall be no preemptive rights
regarding the shares of this corporation.
The foregoing initial By-laws of the corporation were adopted by the
Board of Directors on the 6th day of May, 1970.
/s/ Ralph W. Taylor
/s/ Wilbur W. Hish
/s/ Grant L. Anderson
/s/ William J. Brennan
/s/ John S. Bonnett
|
AMENDMENT TO CORPORATE BY-LAWS |
The following Article X, By-Laws Clear Air, Incorporated adopted May6,
1970 by unanimous vote of the directors of the corporation is hereby
amended to read as follows:
ARTICLE X. AMENDMENTS.
Any by-law of the corporation, whether adopted by the Board of
Directors or adopted by the shareholders, shall be subject to amendment,
alteration or repeal, and new by-laws may be made, by a majority vote of
the Board of Directors of the corporation or by a majority vote of the
shareholders voting in a shareholders' meeting or appearing by proxy at
said meeting except that:
a. No by-law adopted by the shareholders shall be altered or
repealed except that said by-law is first submitted for vote to the
shareholders who will then be given an opportunity to vote on the repeal of
said by-law or its alteration.
b. No amendment shall be made hereto which in any way affects
the shareholder's rights of voting as is explained in Section 2.08 - Manner
of Voting.
The foregoing amendment to Article X, By-Laws of Clear Air,
Incorporated was adopted by the Board of Directors on the 10th day of
January 1972.
/s/ Ralph W. Taylor
/s/ Wilbur W. Hish
/s/ Grant L. Anderson
/s/ William J. Brennan
/s/ John S. Bonnett
|
SECOND AMENDMENT TO CORPORATE BY-LAWS |
OF
CLEAR AIR, INC.
Adopted 1972
The following amendments to the original By-Laws of Clear Air, Inc.
adopted May 6, 1970 were adopted by a majority vote of the Directors of the
Corporation as provided by Utah Code Annotated, 16-10-25, on the date
indicated on the last page of these amendments as follows:
ARTICLE II. SHAREHOLDERS.
Section 2.01. Annual Meetings. The date, time and place of the
annual meeting of the corporation may be changed by a majority vote of the
Board of Directors as long as an annual meeting of shareholders is held
each year.
ARTICLE III. BOARD OF DIRECTORS.
Section 3.02. Number, Tenure and Qualifications. The number of
Directors of the corporation may be fixed and varied by amending these By-
Laws which, until amended, require that the number of Directors of this
corporation shall be five. Each Director shall hold office until the next
annual meeting of shareholders or until his successor shall have been
elected and qualified in the event of resignation or inability to serve.
Directors need not be residents of the state of Utah or shareholders of the
corporation.
ARTICLE IV. OFFICERS.
Section 4.09. The Vice-President and Executive Vice-President. The
corporation shall have a Vice-President, or if there be more than one,
Vice-Presidents, as selected by the Board of Directors and they shall
perform the duties and exercise the powers of the President during periods
of temporary absence or disability. The Board of Directors of the
corporation may also select an Executive Vice-President and such Executive
Vice-President shall have the same powers and duties as a Vice-President,
but shall have the title of Executive Vice-President rather than that of
Vice-President.
ARTICLE VII. CAPITAL STOCK.
Section 7.05. Transfer Agent and Registrars. The Board of Directors
may appoint one or more transfer agents and, at their election, may appoint
one or more registrars if they deem it advisable and necessary to have a
registrar, with respect to the certificates representing shares of stock of
the corporation, and may require all such certificates to bear the
signature of either or both. The Board of Directors may from time to time
define the respective duties of such transfer agents and, if selected,
registrars. No certificate of stock shall be valid until countersigned by
a transfer agent, if at the date appearing thereon the corporation had a
transfer agent for such stock, and until registered by a registrar, if on
such date the corporation had a registrar for such stock.
The foregoing amendments shall constitute replacement amendments for
the Section so amended so that the Section appearing in this set of
amendments shall be the Section controlling the activities of the
corporation and its officers and Directors rather than the Section which
heretofore appeared in the initial By-Laws of the corporation and any
intervening amendment prior to the date of these amendments of the By-Laws.
The above amendments were adopted by the Board of Directors on the 4th
day of August, 1972.
/s/ Ralph W. Taylor /s/ Grant L. Anderson /s/ William W. Hish |
PHCO 2002 Stock Option Plan
Section 1. Purpose; Definitions.
1.1 Purpose. The purpose of the Pacific Health Care Organization, Inc. (the "Company") PHCO 2002 Stock Option Plan (the "Plan") is to enable the Company to offer to its key employees, officers, directors, consultants, advisors and sales representatives whose past, present and/or potential contributions to the Company and its Subsidiaries have been, are or will be important to the success of the Company, an opportunity to acquire a proprietary interest in the Company. The various types of long- term incentive awards which may be provided under the Plan will enable the Company to respond to changes in compensation practices, tax laws, accounting regulations and the size and diversity of its business.
1.2 Definitions. For purposes of the Plan, the following terms shall be defined as set forth below:
(a) "Agreement" means the agreement between the Company and the Holder setting forth the terms and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto and the regulations promulgated thereunder.
(d) "Committee" means the Stock Option Committee of the Board or any other committee of the Board, which the Board may designate to administer the Plan or any portion thereof. If no Committee is so designated, then all references in this Plan to "Committee" shall mean the Board.
(e) "Common Stock" means the Common Stock of the Company, par value $.001 per share.
(f) "Company" means Pacific Health Care Organization, Inc., a corporation organized under the laws of the State of Utah.
(g) "Deferred Stock" means Stock to be received, under an award made pursuant to Section 9, below, at the end of a specified deferral period.
(h) "Disability" means disability as determined under procedures established by the Committee for purposes of the Plan.
(i) "Effective Date" means the date set forth in Section 13.1, below.
(j) "Employee" means any employee, director, general partner, trustee (where the registrant is a business trust), officer or consultant or advisor.
(k) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder,
means, as of any given date: (i) if the Common Stock is listed on a
national securities exchange or quoted on the Nasdaq National Market or
Nasdaq SmallCap Market, the last sale price of the Common Stock in the
principal trading market for the Common Stock on the last trading day
preceding the date of grant of an award hereunder, as reported by the
exchange or Nasdaq, as the case may be; (ii) if the Common Stock is not
listed on a national securities exchange or quoted on the Nasdaq National
Market or Nasdaq SmallCap Market, but is traded in the over-the-counter
market, the closing bid price for the Common Stock on the last trading day
preceding the date of grant of an award hereunder for which such quotations
are reported by the OTC Bulletin Board or the National Quotation Bureau,
Incorporated or similar publisher of such quotations; and (iii) if the fair
market value of the Common Stock cannot be determined pursuant to clause
(i) or (ii) above, such price as the Committee shall determine, in good
faith.
(l) "Holder" means a person who has received an award under the Plan.
(m) "Incentive Stock Option" means any Stock Option intended to
be and designated as an "incentive stock option" within the meaning of
Section 422 of the Code.
(n) "Nonqualified Stock Option" means any Stock Option that is not an Incentive Stock Option.
(o) "Normal Retirement" means retirement from active employment with the Company or any Subsidiary on or after age 65.
(p) "Other Stock-Based Award" means an award under Section 10, below, that is valued in whole or in part by reference to, or is otherwise based upon, Stock.
(q) "Parent" means any present or future parent corporation of the Company, as such term is defined in Section 424(e) of the Code.
(r) "Plan" means PHCO 2002 Stock Option Plan, as hereinafter amended from time to time.
(s) "Restricted Stock"means Stock, received under an award made
pursuant to Section 8, below, that is subject to restrictions under said
Section 8.
(t) "SAR Value" means the excess of the Fair Market Value (on the exercise date) of the number of shares for which the Stock Appreciation Right is exercised over the exercise price that the participant would have otherwise had to pay to exercise the related Stock Option and purchase the relevant shares.
(u) "Stock" means the Common Stock of the Company.
(v) "Stock Appreciation Right" means the right to receive from the Company, on surrender of all or part of the related Stock Option, without a cash payment to the Company, a number of shares of Common Stock equal to the SAR Value divided by the exercise price of the Stock Option.
(w) "Stock Option" or "Option" means any option to purchase shares of Stock which is granted pursuant to the Plan.
(x) "Stock Reload Option" means any option granted under Section 6.3, below, as a result of the payment of the exercise price of a Stock Option and/or the withholding tax related thereto in the form of Stock owned by the Holder or the withholding of Stock by the Company.
(y) "Subsidiary" means any present or future subsidiary corporation of the Company, as such term is defined in Section 424(f) of the Code.
SECTION 2. ADMINISTRATION.
2.1 Committee Membership. The Plan shall be administered by the Board or a Committee. Committee members shall serve for such terms as the Board may in each case determine, and shall be subject to removal at any time by the Board.
2.2 Powers of Committee. The Committee shall have full authority,
subject to Section 4, below, to award, pursuant to the terms of the Plan:
(i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock,
(iv) Deferred Stock, (v) Stock Reload Options and/or (vi) Other Stock-Based
Awards. For purposes of illustration and not of limitation, the Committee
shall have the authority (subject to the express provisions of this Plan):
(a) to select the officers, key employees, directors, consultants, advisors and sales representatives of the Company or any Subsidiary to whom Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Reload Stock Options and/or Other Stock-Based Awards may from time to time be awarded hereunder.
(b) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder (including, but not limited to, number of shares, share price, any restrictions or limitations, and any vesting, exchange, surrender, cancellation, acceleration, termination, exercise or forfeiture provisions, as the Committee shall determine);
(c) to determine any specified performance goals or such other factors or criteria which need to be attained for the vesting of an award granted hereunder;
(d) to determine the terms and conditions under which awards granted hereunder are to operate on a tandem basis and/or in conjunction with or apart from other equity awarded under this Plan and cash awards made by the Company or any Subsidiary outside of this Plan;
(e) to permit a Holder to elect to defer a payment under the Plan under such rules and procedures as the Committee may establish, including the crediting of interest on deferred amounts denominated in cash and of dividend equivalents on deferred amounts denominated in Stock;
(f) to determine the extent and circumstances under which Stock and other amounts payable with respect to an award hereunder shall be deferred which may be either automatic or at the election of the Holder; and
(g) to substitute (i) new Stock Options for previously granted Stock Options, which previously granted Stock Options have higher option exercise prices and/or contain other less favorable terms, and (ii) new awards of any other type for previously granted awards of the same type, which previously granted awards are upon less favorable terms.
2.3 Interpretation of Plan.
(a) Committee Authority. Subject to Section 4 and 12, below, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of the Plan and any award issued under the Plan (and to determine the form and substance of all Agreements relating thereto), to otherwise supervise the administration of the Plan. Subject to Section 12, below, all decisions made by the Committee pursuant to the provisions of the Plan shall be made in the Committee's sole discretion and shall be final and binding upon all persons, including the Company, its Subsidiaries and Holders.
(b) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term or provision of the Plan relating to
Incentive Stock Options (including but not limited to Stock Reload Options
or Stock Appreciation rights granted in conjunction with an Incentive Stock
Option) or any Agreement providing for Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Holder(s) affected,
to disqualify any Incentive Stock Option under such Section 422.
SECTION 3. STOCK SUBJECT TO PLAN.
3.1 Number of Shares. The total number of shares of Common Stock reserved and available for distribution under the Plan shall be one million (1,000,000) shares. Shares of Stock under the Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares. If any shares of Stock that have been granted pursuant to a Stock Option cease to be subject to a Stock Option, or if any shares of Stock that are subject to any Stock Appreciation Right, Restricted Stock, Deferred Stock award, Reload Stock Option or Other Stock-Based Award granted hereunder are forfeited or any such award otherwise terminates without a payment being made to the Holder in the form of Stock, such shares shall again be available for distribution in connection with future grants and awards under the Plan. Only net shares issued upon a stock-for-stock exercise (including stock used for withholding taxes) shall be counted against the number of shares available under the Plan.
3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of any merger, reorganization, consolidation, recapitalization, dividend (other than a cash dividend), stock split, reverse stock split, or other change in corporate structure affecting the Stock, such substitution or adjustment shall be made in the aggregate number of shares reserved for issuance under the Plan, in the number and exercise price of shares subject to outstanding Options, in the number of shares and Stock Appreciation Right price relating to Stock Appreciation Rights, and in the number of shares and Stock Appreciation Right price relating to Stock Appreciation Rights, and in the number of shares subject to, and in the related terms of, other outstanding awards (including but not limited to awards of Restricted Stock, Deferred Stock, Reload Stock Options and Other Stock- Based Awards) granted under the Plan as may be determined to be appropriate by the Committee in order to prevent dilution or enlargement of rights, provided that the number of shares subject to any award shall always be a whole number.
SECTION 4. ELIGIBILITY.
Awards may be made or granted to key employees, officers, directors, consultants, advisors and sales representatives who are deemed to have rendered or to be able to render significant services to the Company or its Subsidiaries and who are deemed to have contributed or to have the potential to contribute to the success of the Company. No Incentive Stock Option shall be granted to any person who is not an employee of the Company or a Subsidiary at the time of grant.
SECTION 5. REQUIRED SIX-MONTH HOLDING PERIOD.
Any equity security issued under this Plan may not be sold prior to six months from the date of the grant of the related award without the approval of the Company.
SECTION 6. STOCK OPTIONS.
6.1 Grant and Exercise. Stock Options granted under the Plan may be of two types: (i) Incentive Stock Options and (ii) Nonqualified Stock Options. Any Stock Option granted under the Plan shall contain such terms, not inconsistent with this Plan, or with respect to Incentive Stock Options, not inconsistent with the Code, as the Committee may from time to time approve. The Committee shall have the authority to grant Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock Options and which may be granted alone or in addition to other awards granted under the Plan. To the extent that any Stock Option intended to qualify as an Incentive Stock Option does not so qualify, it shall constitute a separate Nonqualified Stock Option. An Incentive Stock Option may be granted only within the ten-year period commencing from the Effective Date and may only be exercised within ten years of the date of grant or five years in the case of an Incentive Stock Option granted to an optionee ("10% Stockholder") who, at the time of grant, owns Stock possessing more than 10% of the total combined voting power of all classes of stock of the Company.
6.2 Terms and Conditions. Stock Options granted under the Plan shall be subject to the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock purchasable under an Incentive Stock Option shall be determined by the Committee at the time of grant and may not be less than 100% of the Fair Market Value of the Stock as defined above; provided, however, that the exercise price of an Incentive Stock Option granted to a 10% Stockholder shall not be less than 110% of the Fair Market Value of the Stock. The exercise price per share of Stock purchasable under any options granted that are not Incentive Stock Option, shall be determined by the Committee at the time of grant.
(b) Option Term. Subject to the limitations in Section 6.1, above, the term of each Stock Option shall be fixed by the Committee.
(c) Exercisability. Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee and as set forth in Section 11, below. If the Committee provides, in its discretion, that any Stock Option is exercisable only in installments, i.e., that it vests over time, the Committee may waive such installment exercise provisions at any time at or after the time of grant in whole or in part, based upon such factors as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment,
exercise and waiting period provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part at any time during the
term of the Option, by giving written notice of exercise to the Company
specifying the number of shares of Stock to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, which shall
be in cash or, unless otherwise provided in the Agreement, in shares of
Stock (including Restricted Stock and other contingent awards under this
Plan) or, partly in cash and partly in such Stock, or such other means
which the Committee determines are consistent with the Plan's purpose and
applicable law. Cash payments shall be made by wire transfer, certified or
bank check or personal check, in each case payable to the order of the
Company; provided, however, that the Company shall not be required to
deliver certificates for shares of Stock with respect to which an Option is
exercised until the Company has confirmed the receipt of good and available
funds in payment of the purchase price thereof. Payments in the form of
Stock shall be valued at the Fair Market Value of a share of Stock on the
day prior to the date of exercise. Such payments shall be made by delivery
of stock certificates in negotiable form which are effective to transfer
good and valid title thereto to the Company, free of any liens or
encumbrances. Subject to the terms of the Agreement, the Committee may, in
its sole discretion, at the request of the Holder, deliver upon the
exercise of a Nonqualified Stock Option a combination of shares of Deferred
Stock and Common Stock; provided that, notwithstanding the provision of
Section 9 of the Plan, such Deferred Stock shall be fully vested and not
subject to forfeiture. A Holder shall have none of the rights of a
stockholder with respect to the shares subject to the Option until such
shares shall be transferred to the Holder upon the exercise of the Option.
(e) Transferability. Unless otherwise determined by the Committee, no Stock Option shall be transferable by the Holder other than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the Holder's lifetime, only by the Holder.
(f) Termination by Reason of Death. If a Holders' employment by the Company or a Subsidiary terminates by reason of death, any Stock Option held by such Holder, unless otherwise determined by the Committee at the time of grant and set forth in the Agreement, shall be fully vested and may thereafter be exercised by the legal representative of the estate or by the legatee of the Holder under the will of the Holder, for a period of one year (or such other greater or lesser period as the Committee may specify at grant) from the date of such death or until the expiration of the stated term of such Stock Option, which ever period is the shorter.
(g) Termination by Reason of Disability. If a Holder's employment by the Company or any Subsidiary terminates by reason of Disability, any Stock Option held by such Holder, unless otherwise determined by the Committee at the time of grant and set forth in the Agreement, shall be fully vested and may thereafter be exercised by the Holder for a period of one year (or such other greater or lesser period as the Committee may specify at the time of grant) from the date of such termination of employment or until the expiration of the stated term of such Stock Option, whichever period is the shorter.
(h) Other Termination. Subject to the provisions of Section 14.3, below, and unless otherwise determined by the Committee at the time of grant and set forth in the Agreement, if a Holder is an employee of the Company or a Subsidiary at the time of grant and if such Holder's employment by the Company or any Subsidiary terminates for any reason other than death or Disability, the Stock Option shall thereupon automatically terminate, except that if the Holder's employment is terminated by the Company or a Subsidiary without cause or due to Normal Retirement, then the portion of such Stock Option which has vested on the date of termination of employment may be exercised for the lesser of three months after termination of employment or the balance of such Stock Option's term.
(i) Additional Incentive Stock Option Limitation. In the case of an Incentive Stock Option, the aggregate Fair Market Value of Stock (determined at the time of grant of the Option) with respect to which Incentive Stock Options become exercisable by a Holder during any calendar year (under all such plans of the Company and its Parent and Subsidiary) shall not exceed $100,000.
(j) Buyout and Settlement Provisions. The Committee may at any time, in its sole discretion, offer to buy out a Stock Option previously granted, based upon such terms and conditions as the Committee shall establish and communicate to the Holder at the time that such offer is made.
(k) Stock Option Agreement. Each grant of a Stock Option shall be confirmed by and shall be subject to the terms of, the Agreement executed by the Company and the Holder.
6.3 Stock Reload Option. The Committee may also grant to the Holder (concurrently with the grant of an Incentive Stock Option and at or after the time of grant in the case of a Nonqualified Stock Option) a Stock Reload Option up to the amount of shares of Stock held by the Holder for at least six months and used to pay all or part of the exercise price of an Option and, if any, withheld by the Company as payment for withholding taxes. Such Stock Reload Option shall have an exercise price equal to the Fair Market Value as of the date of the Stock Reload Option grant. Unless the Committee determines otherwise, a Stock Reload Option may be exercised commencing one year after it is granted and shall expire on the date of expiration of the Option to which the Reload Option is related.
SECTION 7. STOCK APPRECIATION RIGHTS.
7.1 Grant and Exercise. The Committee may grant Stock Appreciation Rights to participants who have been, or are being granted, Options under the Plan as a means of allowing such participants to exercise their Options without the need to pay the exercise price in cash. In the case of a Nonqualified Stock Option, a Stock Appreciation Right may be granted either at or after the time of the grant of such Nonqualified Stock Option. In the case of an Incentive Stock Option, a Stock Appreciation Right may be granted only at the time of the grant of such Incentive Stock Option.
7.2 Terms and Conditions. Stock Appreciation Rights shall be subject to the following terms and conditions:
(a) Exercisability. Stock Appreciation Rights shall be exercisable as determined by the Committee and set forth in the Agreement, subject to the limitations, if any, imposed by the Code, with respect to related Incentive Stock Options.
(b) Termination. A Stock Appreciation Right shall terminate and shall no longer be exercisable upon the termination or exercise of the related Stock Option.
(c) Method of Exercise. Stock Appreciation Rights shall be exercisable upon such terms and conditions as shall be determined by the Committee and set forth in the Agreement and by surrendering the applicable portion of the related Stock Option. Upon such exercise and surrender, the Holder shall be entitled to receive a number of Option Shares equal to the SAR Value divided by the exercise price of the Option.
(d) Shares Affected Upon Plan. The granting of a Stock Appreciation Rights shall not affect the number of shares of Stock available for awards under the Plan. The number of shares available for awards under the Plan will, however, be reduced by the number of shares of Stock acquirable upon exercise of the Stock Option to which such Stock Appreciation right relates.
SECTION 8. RESTRICTED STOCK.
8.1 Grant. Shares of Restricted Stock may be awarded either alone or in addition to other awards granted under the Plan. The Committee shall determine the eligible persons to whom, and the time or times at which, grants of Restricted Stock will be awarded, the number of shares to be awarded, the price (if any) to be paid by the Holder, the time or times within which such awards may be subject to forfeiture (the "Restriction Period"), the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the awards.
8.2 Terms and Conditions. Each Restricted Stock award shall be subject to the following terms and conditions:
(a) Certificates. Restricted Stock, when issued, will be represented by a stock certificate or certificates registered in the name of the Holder to whom such Restricted Stock shall have been awarded. During the Restriction Period, certificates representing the Restricted Stock and any securities constituting Retained Distributions (as defined below) shall bear a legend to the effect that ownership of the Restricted Stock (and such Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions provided in the Plan and the Agreement. Such certificates shall be deposited by the Holder with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Stock and any securities constituting Retained Distributions that shall be forfeited or that shall not become vested in accordance with the Plan and the Agreement.
(b) Rights of Holder. Restricted Stock shall constitute issued
and outstanding shares of Common Stock for all corporate purposes. The
Holder will have the right to vote such Restricted Stock, to receive and
retain all regular cash dividends and other cash equivalent distributions
as the Board may in its sole discretion designate, pay or distribute on
such Restricted Stock and to exercise all other rights, powers and
privileges of a holder of Common Stock with respect to such Restricted
Stock, with the exceptions that (i) the Holder will not be entitled to
delivery of the stock certificate or certificates representing such
Restricted Stock until the Restriction Period shall have expired and unless
all other vest requirements with respect thereto shall have been fulfilled;
(ii) the Company will retain custody of the stock certificate or
certificates representing the Restricted Stock during the Restriction
Period; (iii) other than regular cash dividends and other cash equivalent
distributions as the Board may in its sole discretion designate, pay or
distribute, the Company will retain custody of all distributions ("Retained
Distributions") made or declared with respect to the Restricted Stock (and
such Retained Distributions will be subject to the same restrictions, terms
and conditions as are applicable to the restricted Stock) until such time,
if ever, as the Restricted Stock with respect to which such Retained
Distributions shall have been made, paid or declared shall have become
vested and with respect to which the Restriction Period shall have expired;
(iv) a breach of any of the restrictions, terms or conditions contained in
this Plan or the Agreement or otherwise established by the Committee with
respect to any Restricted Stock or Retained Distributions will cause a
forfeiture of such Restricted Stock and any Retained Distributions with
respect thereto.
(c) Vesting; Forfeiture. Upon the expiration of the Restriction Period with respect to each award of Restricted Stock and the satisfaction of any other applicable restrictions, terms and conditions (i) all or part of such Restricted Stock shall become vested in accordance with the terms
of the Agreement, subject to Section 11, below, and (ii) any Retained Distributions with respect to such Restricted Stock shall become vested to the extent that the Restricted Stock related thereto shall have become vested, subject to Section 11, below. Any such Restricted Stock and Retained Distributions that do not vest shall be forfeited to the Company and the Holder shall not thereafter have any rights with respect to such Restricted Stock and Retained Distributions that shall have been so forfeited.
SECTION 9. DEFERRED STOCK.
9.1 Grant. Shares of Deferred Stock may be awarded either alone or in addition to other awards granted under the Plan. The Committee shall determine the eligible persons to whom and the time or times at which grants of Deferred Stock shall be awarded, the number of shares of Deferred Stock to be awarded to any person, the duration of the period (the "Deferral Period") during which, and the conditions under which, receipt of the shares will be deferred, and all the other terms and conditions of the awards.
9.2 Terms and Conditions. Each Deferred Stock award shall be subject to the following terms and conditions:
(a) Certificates. At the expiration of the Deferral Period (or the Additional Deferral Period referred to in Section 9.2 (d) below, where applicable), shares certificates shall be issued and delivered to the Holder, or his legal representative, representing the number equal to the shares covered by the Deferred Stock award.
(b) Rights of Holder. A person entitled to receive Deferred Stock shall not have any rights of a stockholder by virtue of such award until the expiration of the applicable Deferral Period and the issuance and delivery of the certificates representing such Stock. The shares of Stock issuable upon expiration of the Deferral Period shall not be deemed outstanding by the Company until the expiration of such Deferral Period and the issuance and delivery of such Stock to the Holder.
(c) Vesting; Forfeiture. Upon the expiration of the Deferral Period with respect to each award of Deferred Stock and the satisfaction of any other applicable restrictions, terms and conditions all or part of such Deferred Stock shall become vested in accordance with the terms of the Agreement, subject to Section 11, below. Any such Deferred Stock that does not vest shall be forfeited to the Company and the Holder shall not thereafter have any rights with respect to such Deferred Stock.
(d) Additional Deferral Period. A Holder may request to, and the Committee may at any time, defer the receipt of an award (or an installment of an award) for an additional specified period or until a specified event (the "Additional Deferral Period"). Subject to any exceptions adopted by the Committee, such request must generally be made at least one year prior to expiration of the Deferral Period for such Deferred Stock awards (or such installment).
SECTION 10. OTHER STOCK-BASED AWARDS.
10.1 Grant and Exercise. Other Stock-Based Awards may be awarded, subject to limitations under applicable law, that are denominated or payable, in value in whole or in part by reference to, or otherwise based on, or related to, shares of Common Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, purchase rights, shares of Common Stock awarded which are not subject to any restrictions or conditions, convertible or exchangeable debentures, or other rights convertible into shares of Common Stock and awards valued by reference to the value of securities of or the performance of specified subsidiaries. Other Stock-Based Awards may be awarded either alone or in addition to or in tandem with any other awards under this Plan or any other plan of the Company.
10.2 Eligibility for Other Stock-Based Awards. The Committee shall determine the eligible persons to whom and the time or times at which grants of such other stock-based awards shall be made, the number of shares of Common Stock to be awarded pursuant to such awards, and all other terms and conditions of the awards.
10.3 Terms and Conditions. Each Other Stock-Based Award shall be subject to such terms and conditions as may be determined by the Committee and to Section 11, below.
SECTION 11. ACCELERATED VESTING AND EXERCISABILITY.
If (i) any person or entity other than the Company and/or any stockholders of the Company as of the Effective Date acquire securities of the Company (in one or more transactions) having 25% or more of the total voting power of all the Company's securities then outstanding and (ii) the Board of Directors of the Company does not authorize or otherwise approve such acquisition, then, the vesting periods of any and all Options and other awards granted and outstanding under the Plan shall be accelerated and all such Options and awards will immediately and entirely vest, and the respective holders thereof will have the immediate right to purchase and/or receive any and all Stock subject to such Options and awards on the terms set forth in this Plan and the respective agreements respecting such Options and awards.
SECTION 12. AMENDMENT AND TERMINATION.
Subject to Section 4 hereof, the Board may at any time, and from time to time, amend, alter, suspend or discontinue any of the provisions of the Plan, but no amendment, alteration, suspension or discontinuance shall be made which would impair the rights of a Holder under any Agreement theretofore entered into hereunder, without the Holder's consent.
SECTION 13. TERM OF PLAN.
13.1 Effective Date. The Plan shall be effective as of August 13, 2002. ("Effective Date").
13.2 Termination Date. Unless terminated by the Board, this Plan shall continue to remain effective until such time no further awards may be granted and all awards granted under the Plan are no longer outstanding. Notwithstanding the foregoing, grants of Incentive Stock Options may only be made during the ten-year period following the Effective Date.
SECTION 14. GENERAL PROVISIONS.
14.1 Written Agreements. Each award granted under the Plan shall be confirmed by, and shall be subject to the terms of the Agreement executed by the Company and the Holder. The Committee may terminate any award made under the Plan if the Agreement relating thereto is not executed and returned to the Company within 10 days after the Agreement has been delivered to the Holder for his or her execution.
14.2 Unfunded Status of Plan. The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Holder by the Company, nothing contained herein shall give any such Holder any rights that are greater than those of a general creditor of the Company.
14.3 Employees.
(a) Engaging in Competition With the Company. In the event a Holder's employment with the Company or a Subsidiary is terminated for any reason whatsoever, and within one year after the date thereof such Holder accepts employment with any competitor of, or otherwise engages in competition with, the Company, the Committee, in its sole discretion, may require such Holder to return to the Company the economic value of any award which was realized or obtained by such Holder at any time during the period beginning on that date which is six months prior to the date of such Holder's termination of employment with the Company.
(b) Termination for Cause. The Committee may, in the event a Holder's employment with the company or a Subsidiary is terminated for cause, annul any award granted under this Plan to return to the Company the economic value of any award which was realized or obtained by such Holder at any time during the period beginning on that date which is six months prior to the date of such Holder's termination of employment with the Company.
(c) No Right of Employment. Nothing contained in the Plan or in any award hereunder shall be deemed to confer upon any Holder who is an employee of the Company or any Subsidiary any right to continued employment with the Company or any Subsidiary, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any Holder who is an employee at any time.
14.4 Investment Representations. The Committee may require each person acquiring shares of Stock pursuant to a Stock Option or other award under the Plan to represent to and agree with the Company in writing that the Holder is acquiring the shares for investment without a view to distribution thereof.
14.5 Additional Incentive Arrangements. Nothing contained in the Plan shall prevent the Board from adopting such other or additional incentive arrangements as it may deem desirable, including, but not limited to, the granting of Stock Options and the awarding of stock and cash otherwise than under the Plan; and such arrangements may be either generally applicable or applicable only in specific cases.
14.6 Withholding Taxes. Not later than the date as of which an amount must first be included in the gross income of the Holder for Federal income tax purposes with respect to any option or other award under the Plan, the Holder shall pay to the Company, or made arrangements satisfactory to the Committee regarding the payment of, any Federal, state and local taxes of any kind required by law to be withheld or paid with respect to such amount. If permitted by the Committee, tax withholding or payment obligations may be settled with Common Stock, including Common Stock that is part of the award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditioned upon such payment or arrangements and the Company or the Holder's employer (if not the Company) shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Holder from the Company or any Subsidiary.
14.7 Governing Law. The Plan and all awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Utah (without regard to choice of law provisions).
14.8 Other Benefit Plans. Any award granted under the Plan shall not be deemed compensation for purposes of computing benefits under any retirement plan of the Company or any Subsidiary and shall not affect any benefits under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation (unless required by specific reference in any such other plan to awards under this Plan).
14.9 Non-Transferability. Except as otherwise expressly provided in the Plan, no right or benefit under the Plan may be alienated, sold, assigned, hypothecated, pledged, exchanged, transferred, encumbranced or charged, and any attempt to alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void.
14.10 Applicable Laws. The obligations of the Company with
respect to all Stock Options and awards under the Plan shall be subject to
(i) all applicable laws, rules and regulations and such approvals by any
governmental agencies as may be required, including, without limitation,
the Securities Act of 1933, as amended, and (ii) the rules and regulations
of any securities exchange on which the Stock may be listed.
14.11 Conflicts. If any of the terms or provisions of the Plan or an Agreement (with respect to Incentive Stock Options) conflict with the requirements of Section 422 of the Code, then such terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of said Section 422 of the Code. Additionally, if this Plan or any Agreement does not contain any provision required to be included herein under Section 422 of the Code, such provision shall be deemed to be incorporated herein and therein with the same force and effect as if such provision had been set out at length herein and therein. If any of the terms or provision of any Agreement conflict with any terms or provision of the Plan, then such terms or provision shall be deemed inoperative to the extent they so conflict with the requirements of the Plan. Additionally, if any Agreement does not contain any provision required to be included therein under the Plan, such provision shall be deemed to be incorporated therein with the same force and effect as if such provision had been set out at length therein.
14.12 Non-Registered Stock. The shares of Stock to be distributed under this Plan have not been, as of the Effective Date, registered under the Securities Act of 1933, as amended, or any applicable state or foreign securities laws and the Company has no obligation to any Holder to register the Stock or to assist the Holder in obtaining an exemption from the various registration requirements, or to list the Stock on a national securities exchange.
Exhibit 21.1
Subsidiaries of Registrant
The Company has two subsidiaries, which are both wholly owned, they are:
Medex Healthcare, Inc. - a California corporation.
Workers' Compensation Assistance, Inc. - a California corporation.