EXHIBIT 99-1
STOCK OPTION AGREEMENT
(2004 Non-Statutory Stock option Plan)
Imaging Diagnostic Systems, Inc. (the "Company"), desiring to afford an
opportunity to the Grantee named below to purchase certain shares of common
stock of the Company's, to provide the Grantee with an added incentive as an
employee, director or consultant of the Company hereby grants to Grantee, and
the Grantee hereby accepts, an option to purchase the number of such shares
optioned as specified below, during the term ending at midnight (prevailing
local time at the Company's principal offices) on the expiration date of this
Option specified below, at the option exercise price specified below, subject to
and upon the following terms and conditions:
1. Identifying Provisions: As used in this Option, the following terms
shall have the following respective meanings.
(a) Grantee: Xxxxxxx X. Xxxxxx
(b) Date of grant: February 23, 2005
(c) Number of shares optioned: 1,500,000
(d) Option exercise price per share: $0.32
(e) Expiration Date: February 23, 2015
This Option is not intended to be an incentive stock option pursuant to Section
422 of the Internal Revenue Code ("Sec. 422 Qualified Shares").
*Note: All prior Stock Option Agreements are still in existence and valid. This
Agreement does not supersede any prior agreement(s).
2. Timing of Purchases: This Option shall vest as follows:
(a) February 23, 2006: 500,000
(b) August 23, 2006: 250,000
(c) February 23, 2007: 250,000
(d) August 23, 2007: 250,000
(e) February 23, 2008: 250,000
3. Restrictions on Exercise: The following additional provisions shall
apply to the exercise of this Option:
(a) Termination of Employment. If the Grantee's employment by the
Company or any of its subsidiaries is terminated for any reason
other than death only that portion of this Option exercisable at
the time of such termination of employment may thereafter be
exercised, and it may not be exercised more than three months
after such termination or after the expiration date of this
Option, whichever date is sooner, except as provided for in the
Grantees' Employment Agreement.
(b) Death of Grantee. If the Grantee shall die during the term of
this Option, the Grantee's legal representative or
representatives, or the person or persons entitled to do so under
the Grantee's last will and testament or under applicable
intestate laws, shall have the right to exercise this Option, but
only for the number of shares as to which the Grantee was
entitled to exercise this Option in accordance with Section 2
hereof on the date of his death, and such right shall expire and
this Option shall terminate one (1) year after the date of the
Grantee's death or on the expiration date of this Option,
whichever date is sooner. In all other respects, this Option
shall terminate upon such death.
(c) Continuity of Employment. This Option shall not be exercisable by
the Grantee in any part unless at all times beginning with the
date of grant and ending no more than one year prior to the date
of exercise, the Grantee has, except for military service leave,
sick leave or other bona fide leave of absence (such as temporary
employment by the United States Government) been in the
continuous employ of the Company, except that such period shall
be one (1) year following any termination of the Grantee's
employment by reason of his permanent and total disability.
4. Non-Transferable. The Grantee may not transfer his Option except by
will or the laws of descent and distribution. This Option shall not be
otherwise transferred, assigned, pledged, hypothecated or disposed of
in any way, whether by operation of law or otherwise, and shall be
exercisable during the Grantee's lifetime only by the Grantee or his
guardian or legal representative.
5. Adjustments and Corporate Reorganization. Subject to any required
action by the shareholders of the Company, the number of Shares
covered by each outstanding Option, and the number of Shares which
have been authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of any Option, as well as the price
per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common
Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt
of consideration." Such adjustment shall be made by the Committee,
whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of
Shares subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Option will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
Committee. The Committee may, in the exercise of its sole discretion
in such instances, declare that any Option shall terminate as of a
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date fixed by the Committee and give each Grantee the right to
exercise his Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be
exercisable. In the event of the proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company with or
into another corporation in a transaction in which the Company is not
the survivor, the Option shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Committee
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the Grantee shall have the right to
exercise the Option as to all of the Optioned Stock, including Shares
as to which the Option would not otherwise be exercisable. If the
Committee makes an Option fully exercisable in lieu of assumption or
substitution in the event of such a merger or sale of assets, the
Committee shall notify the Grantee that the Option shall be fully
exercisable for a period of 30 days from the date of such notice, and
the Option will terminate upon the expiration of such period.
6. Exercise, Payment For and Delivery of Stock: This Option may be
exercised by the Grantee or other person then entitled to exercise it
by giving four business days' written notice of exercise to the
Company specifying the number of shares to be purchased and the total
purchase price. The option price shall become immediately due upon
exercise of the option and, subject to the instrument evidencing the
grant, shall be payable in one of the following alternative forms
specified below:
(a) full payment in cash or check drawn to the Company's order;
(b) full payment in shares of Common Stock held for at least six (6)
months and valued at fair market value on the Exercise Date (as
such term is defined below);
(c) full payment in a combination of shares of Common Stock held for
at least six (6) months and valued at fair market value on the
Exercise Date and cash or check; or
(d) full payment through a broker-dealer sale and remittance
procedure provided that sale of the Optioned stock is permitted
as a result of an effective registration statement under the
Securities Act of 1933, as amended, and compliance with all
applicable securities laws, pursuant to which the Grantee (i)
shall provide irrevocable written instructions to a
Company-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to
cover the aggregate option price payable for the purchased shares
plus all applicable Federal and State income taxes required to be
withheld by the Company in connection with such purchase and (ii)
shall provide written directives to the Company to deliver the
certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction.
7. For purposes of this subparagraph (2), the Exercise Date shall be the
date on which written notice of the option exercise is delivered to
the Company. Except to the extent the sale and remittance procedure is
utilized in connection with the exercise of the option, payment of the
option price for the purchased shares must accompany such notice. The
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fair market value per share of Common Stock on any relevant date under
the Plan shall be determined in accordance with the following
provisions:
(a) If the Common Stock is not at the time listed or admitted to
trading on any national stock exchange but is traded on the
Nasdaq National Market, the fair market value shall be the
closing selling price per share of Common Stock on the date in
question, as such price is reported by the National Association
of Securities Dealers on the Nasdaq National Market System or any
successor system. If there is no reported closing selling price
for the Common Stock on the date in question, then the closing
selling price on the last preceding date for which such quotation
exists shall be determinative of fair market value.
(b) If the Common Stock is at the time listed or admitted to trading
on any national stock exchange, then the fair market value shall
be the closing selling price per share of Common Stock on the
date in question on the stock exchange determined by the
Committee to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions
on such exchange. If there is no reported sale of Common Stock on
such exchange on the date in question, then the fair market value
shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
(c) If the Common Stock is quoted on the Nasdaq Small Cap Market, or
any similar system of automated dissemination of quotations of
securities process in common use, the fair market value shall be
the mean between the closing bid and asked quotations for the
Common Stock on such date.
(d) If neither clause (a), (b) or (c) is applicable, then the fair
market value shall be the mean between the closing bid and asked
quotations for the Common Stock as reported by the National
Quotation Bureau, Inc., if at least two securities dealers have
inserted both bid and asked quotations for Common Stock on at
least five of the ten preceding business days.
8. Rights in Shares Before Issuance and Delivery. No person shall be
entitled to the privileges of stock ownership in respect of any shares
issuable upon exercise of this Option, unless and until such shares
have been issued to such person as fully paid shares.
9. Requirements of Law and of Stock Exchanges. By accepting this Option,
the Grantee represents and agrees for himself and his transferees by
will or the laws of descent and distribution that, unless a
registration statement under the Securities Act of 1933 is in effect
as to shares purchased upon any exercise of this Option, (i) any and
all shares so purchased shall be acquired for his personal account and
not with a view to or for sale in connection with any distribution,
and (ii) each notice of the exercise of any portion of this Option
shall be accompanied by a representation and warranty in writing,
signed by the person entitled to exercise the same, that the shares
are being so acquired in good faith for his personal account and not
with view to or for sale in connection with any distribution.
No certificate or certificates for shares of stock purchased upon
exercise of this Option shall be issued and delivered unless and
until, in the opinion of counsel for the Company, such securities may
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be issued and delivered without causing the Company to be in violation
of or incur liability under any federal, state or other securities
law, any requirement of any securities exchange listing agreement to
which the Company may be a party, or any other requirement of law or
of any regulatory body having jurisdiction over the Company.
10. Stock Option Plan. This Option is subject to, and the Company and the
Grantee agree to be bound by, all of the terms and conditions of the
Company's 2004 Non-Statutory Stock Option Plan under which this Option
was granted, as the same shall have been amended from time to time in
accordance with the terms thereof, provided that no such amendment
shall deprive the Grantee, without his consent, of this Option or any
of his rights hereunder. Pursuant to said Plan, the board of directors
of the Company or its Committee established for such purposes is
vested with final authority to interpret and construe the Plan and
this Option, and is authorized to adopt rules and regulations for
carrying out the Plan. A copy of the Plan in its present form is
available for inspection during business hours by the Grantee or other
persons entitled to exercise this Option at the Company's principal
office.
11. Notices. Any notice to be given to the Company shall be addressed to
the Company in care of its Secretary at its principal office, and any
notice to be given to the Grantee shall be addressed to him at the
address given beneath his signature hereto or at such other address as
the Grantee may hereafter designate in writing to the company. Any
such notice shall be deemed duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, registered or
certified, and deposited, postage and registry of certification fee
prepaid, in a post office or branch post office regularly maintained
by the United States Postal Service.
12. Laws Applicable to Construction. This Agreement has been executed and
delivered by the Company in the State of Florida, and this Agreement
shall be construed and enforced in accordance with the laws of said
State.
IN WITNESS WHEREOF, the Company has granted this Option on February 23,
2005.
IMAGING DIAGNOSTIC SYSTEMS, INC ACCEPTED
/s/ Xxx X. Xxxxxx /s/ X. X. Xxxxxx
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By: Xxx Xxxxxx By: Xxxxxxx Xxxxxx
Co-Chairman Board of Directors Chief Executive Officer
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