SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COMMISSION FILE NO. 333-42640
ENDO NETWORKS, INC.
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(Exact name of registrant as specified in its charter)
Nevada 75-2882833
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2624 Dunwin Drive, Unit #3, Mississauga, Ontario, Canada L5L 3T5
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(Address of Principal Executive Offices) (Zip Code)
ENDO NETWORKS, INC. EMPLOYEE BENEFIT AND STOCK OPTION PLAN
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(Full title of the plan)
Peter B. Day
Endo Networks, Inc.
2624 Dunwin Drive, Unit #3
Mississauga, Ontario, Canada L5L 3T5
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(Name and address of agent for service)
(905) 820-8800
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(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Amount maximum maximum Amount of
securities to to be offering price aggregate registration
be registered registered per unit offering price fee
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Common Stock 1,250,000 Published Published $41.67(1)
$0.001Par Value Shares Bid Price Bid Price
$0.11(2) $137,500
Notes to Table:
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(1) 1,250,000 shares x $0.11 (Bid Price) = $137,500
$137,500 x 1% x 1/33 = $41.67
(2) Estimated solely for the purpose of calculating the registration fee based
on the bid price of the Common Stock of the Company on the NASDAQ
Over-The-Counter Bulletin Board Exchange on June 9, 2003.
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following material is incorporated herein by reference:
(a) The Form SB-1 of the Company filed on July 30, 2000, and last
amended on October 20, 2000.
(b) The Annual Report on Form 10-KSB of the Company for the period
ending September 30, 2001.
(c) The Quarterly Report on Form 10-QSB of the Company for the
period ending December 31, 2001.
(d) The Quarterly Report on Form 10-QSB of the Company for the
period ending March 31, 2002.
(e) The Quarterly Report on Form 10-QSB of the Company for the
period ending June 30, 2002.
(f) The Annual Report on Form 10-KSB of the Company for the period
ending September 30, 2002.
(g) The Quarterly Report on Form 10-QSB of the Company for the
period ending December 31, 2002.
(h) The Quarterly Report on Form 10-QSB and Form 10-QSB/A of the
Company for the period ending March 31, 2003.
(i) All reports or other documents filed pursuant to Sections 13,
14, and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") subsequent to the date of the
Registration Statement, in each case filed by the Company
prior to the termination of the offering of the securities
offered hereby, shall be deemed to be a part hereof from the
date of the filing of such reports and documents. Any
statement contained in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be
modified or superseded for the purposes of this Registration
Statement to the extent that a statement contained herein or
in any other subsequently filed document, which also is or
is deemed to be incorporated herein by reference, modifies
or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
No answer to this item is required because the class of securities to
be offered is registered under Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws limit the liability of its directors to the
maximum extent permitted by Nevada law. Thus, the directors of the Company are
not personally liable for monetary damages for any action taken, or any failure
to take any action, unless the director has breached or failed to perform the
duties of his office and the breach or failure to perform constitutes
self-dealing, willful misconduct, or recklessness. Such limitation does not
apply to any responsibility of liability pursuant to criminal statute or
liability for the payment of taxes pursuant to local, state, or federal law. In
addition, the Company's Bylaws authorize the Company to maintain liability
insurance for its directors and officers.
2
At present, there is no pending litigation or proceeding, and the
Company is not aware of any threatened litigation or proceeding, involving any
director, officer, employee, or agent where indemnification will be required or
permitted under the Company's Bylaws.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
No answer to this item is required because no restricted securities
are to be re-offered or resold pursuant to this Registration Statement.
ITEM 8. EXHIBITS.
(1) Endo Networks, Inc. Employee Benefit and Stock Option Plan.
(2) Opinion of T. Alan Owen & Associates, P.C.
(3) Consent of T. Alan Owen & Associates, P.C. (included in opinion
letter filed as Exhibit 2)
(4) Power of Attorney (see page 5 of this Registration Statement)
ITEM 9. UNDERTAKINGS.
The registrant hereby undertakes:
(a) to file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement;
(b) that for purposes of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offer thereof; and
(c) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby further undertakes that, for purposes
of determining any liability under the Act, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing or an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby further undertakes that, insofar as
indemnification for liabilities arising under the Act may be permitted to
directors, officers, and controlling persons of the registrant, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Mississauga, Ontario, Canada.
ENDO NETWORKS, INC.,
a Nevada corporation
By: /s/ Peter B. Day
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Peter B. Day, President and Secretary
June 9, 2003
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Peter B. Day as such person's true and
lawful attorney-in-fact and agent, with full power of substitution, for such
person, and in such person's name, place, and stead, in any and all capacities,
to sign any and all amendments or post-effective amendments to this Registration
Statement, and to file the same with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
ENDO NETWORKS, INC.,
a Nevada corporation
/s/ Peter B. Day
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Peter B. Day, President and Secretary
Date: June 9, 2003
STATE OF _________________ )
)
COUNTY OF _______________ )
BEFORE ME, the undersigned authority, on this day personally appeared
Peter B. Day, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 9th day of June, 2003.
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Notary Public in and for
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My Commission Expires:
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4
EXHIBIT INDEX
(PURSUANT TO ITEM 601 OF REGULATION S-K)
EXHIBIT NO. EXHIBIT
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(1) ENDO NETWORKS, INC. EMPLOYEE BENEFIT AND STOCK OPTION PLAN.
(2) Opinion of T. Alan Owen & Associates, P.C., Attorneys at Law.
(3) Consent of T. Alan Owen & Associates, P.C. (included in opinion
letter filed as Exhibit 2)
(4) Power of Attorney
5
EXHIBIT (1)
ENDO NETWORKS, INC. EMPLOYEE BENEFIT
AND STOCK OPTION PLAN
SECTION I
PURPOSE
1.1 This Employee Benefit and Stock Option Plan (the "Plan") is
intended to provide a means for the granting of awards (with each such award
being referred to as an "Award") of stock and/or options to selected employees
of and consultants to ENDO NETWORKS, INC. (the "Company") and such of its
domestic or foreign, present or future, affiliated companies as shall be
designated from time to time by the Company's Board of Directors (the "Board")
(each such employee or consultant, upon receipt of an Award, shall be deemed to
be a "Participant" in the Plan). This Plan is designed to: (a) provide
incentives and rewards to those employees who are in a position to contribute to
the long term growth and profitability of the Company; (b) assist the Company
and such affiliated companies (the "Affiliates") to attract, retain, and
motivate personnel with experience and ability; and (c) make the Company's
compensation program more competitive with those of other major employers. The
Company expects that by providing such Awards it will benefit from the added
interest which such personnel will have in the success of the Company and/or the
Affiliates as a result of their proprietary interest.
1.2 For purposes of this Plan, an Affiliate shall mean any corporation
defined as a subsidiary corporation under Section 424(f) of the United States
Internal Revenue Code of l986 (the "Code").
SECTION II
ADMINISTRATION
2.1 This Plan shall be administered by the Board. Subject to the
express provisions of this Plan, the Board shall have full power and authority,
in its discretion, to grant Awards; to determine to whom and the time when
Awards will be granted; to designate Awards as payment for services rendered to
the Company, incentive stock options, nonqualified stock options, or stock
appreciation rights; to determine the purchase price of the common stock covered
by each option and the term of each option; to determine the terms and
provisions of the option agreements (which need not be identical) entered into
in connection with Awards under this Plan; to interpret this Plan; to supervise
the administration of this Plan; to prescribe, amend, and rescind rules and
regulations relating to this Plan; and to make all other proper determinations
and take any other action deemed necessary or desirable to the proper operation
or administration of this Plan. The Board may authorize such of the Company's
officers or other persons to perform such functions with respect to the
execution and administration of this Plan (other than the interpretation of this
Plan and the adoption of rules governing its execution and administration) as
the Board shall determine from time to time.
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 1
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2.2 All decisions made by the Board pursuant to the powers vested in it
by this Plan document shall be final and binding on all persons (including
Participants, the Company, and any shareholder and/or employee of the Company or
an Affiliate). No member of the Board shall be liable for any action or
determination made in good faith with respect to this Plan or any Award granted
under it.
2.3 Neither the Board, the Company, nor any officers or employees of
the Company shall have any duty to advise Participants of any rules,
interpretations, or determinations by the Board, and each Participant shall be
bound by such rules, interpretations, or determinations upon communication
thereof to such Participant, effective as of such date (prior to, subsequent to,
or concurrent with such communication) that each such rule, interpretation, or
determination shall have been intended to be effective by the Board.
SECTION III
SCOPE AND DURATION
3.1 Awards under this Plan may be granted in the form of stock
issuances, incentive stock options (the "ISOs") as provided in Section 422 of
the Code, or in the form of nonqualified stock options (the "NQSOs").
3.2 The total number of shares of common stock of the Company (the
"Stock") as to which stock issuances or Options may be granted under this Plan
shall be 1,250,000, subject to adjustment as provided in Section XI hereof. The
total number of shares of Stock which may be awarded under the Plan to any
single Participant in any one fiscal year shall not exceed ten per cent (10%) of
the total shares of Stock allotted to the Plan. The total number of shares of
Stock which may be awarded under the Plan to all Participants in aggregate in
any one fiscal year shall not exceed thirty per cent (30%) of the total shares
of Stock allotted to the Plan. Issuance of Stock for services rendered to the
Company or upon exercise of an Option shall reduce the total number of shares of
Stock available under this Plan. There shall not be counted against this total
any shares of Stock covered by an Option that has lapsed unexercised or has been
forfeited as hereinafter provided.
3.3 Subject to adjustments provided for in Section XI hereof, shares of
Stock as to which issuances may be made or Options under this Plan may be
granted may be made available by the Company from authorized but unissued shares
of Stock or from shares reacquired by the Company (including shares purchased in
the open market).
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 2
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SECTION IV
ELIGIBLE EMPLOYEES
The persons who shall be eligible to receive Awards under this Plan
shall be limited to such employees or consultants (including officers and
directors who are employees) of the Company or an Affiliate, without limitation
as to length of service, who are from time to time recommended to, and
authorized by, the Board for Awards under this Plan. The directors of the
Company shall not be eligible to participate in the Plan as directors, but
directors otherwise qualified shall be eligible to participate. An employee who
has been granted an Option hereunder may be granted an additional Option or
Options, if the Board shall so determine.
SECTION V
GRANTING AWARDS
5.1 Subject to the limitations of this Plan, the Board, at any time and
from time to time, and after such consultation with and consideration of the
recommendations of management as the Board deems desirable, shall select from
the eligible employees and/or consultants those persons to be granted Awards and
determine the time when each award shall be granted, the number of shares of
Stock to be subject to an issuance or an Option and the terms and conditions,
consistent with this Plan, upon which Stock issuances are to be made or Options
are to be awarded. The Board shall make Awards to the employees and/or
consultants so selected for the number of shares of Stock or Options and upon
the terms and conditions so determined. No Stock or Options shall be issued or
distributed under this Plan unless and until all legal requirements applicable
to the issuance or transfer of such Options and/or Stock have been complied with
to the satisfaction of the Board.
5.2 No Awards shall be granted under this Plan after its termination on
December 31, 2012, but Awards granted prior to such termination may extend
beyond that date, and the terms of this Plan shall continue to apply to such
Awards.
SECTION VI
TERMS AND CONDITIONS OF OPTION
6.1 General. Each Option granted pursuant to this Plan shall be subject
to all of the terms and conditions hereinafter provided in this Section VI, all
other terms and conditions as may be provided in any other Section of this Plan,
and such other terms and conditions ("Discretionary Conditions") as may be
specified by the Board with respect to the Option and the Stock covered thereby
at the time of the making of the Award or as may be specified thereafter by the
Board in the exercise of its powers under this Plan. Without limiting the
foregoing, it is understood that the Board may, at any time and from time to
time after the granting of an Award under this Plan, specify such additional
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 3
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terms and conditions with respect to such Award as maybe deemed necessary or
appropriate to ensure compliance with any and all applicable laws and
regulations, including, but not limited to, terms and conditions for compliance
with Federal and state securities laws, methods of withholding or providing for
the payment of required taxes, and approvals by any governmental agencies or
national securities exchanges as maybe required. The terms and conditions with
respect to any Award, or with respect to any Award to any Participant, need not
be identical with the terms and conditions with respect to any Award to that
Participant or to any other Participant.
6.2 Option Agreement. Receipt of an Option shall be subject to
execution of a written agreement (the "Option Agreement") between the Company
and the Participant, in a form approved by the Board, which shall set forth the
number of Options Awarded, the number of shares of Stock that may be purchased
pursuant to such Options, the applicable Option Price (as defined herein) and
such other terms and conditions provided in this Plan as may be deemed
appropriate by the Board, including, but not limited to, any Discretionary
Conditions. The Option Agreement shall be subject to, and shall be deemed
amended to include, such additional Discretionary Conditions as the Board may
thereafter specify in the exercise of its powers under this Plan. A fully
executed original counterpart of such Option Agreement shall be provided to the
Company and the Participant. Each Option Agreement shall identify the Options
represented thereby as ISOs or NQSOs.
6.3 Option Price. The purchase price of the Stock covered by each
Option shall be determined by the Board, but in no event shall the Option Price
of ISOs be less than 100% of the Fair Market Value of such Stock on the date the
Option is granted, nor shall the Option Price of NQSOs be less than 75% of the
Fair Market Value of such Stock on the date the Option is granted. For this
purpose, "Fair Market Value" of a share shall be the closing "Bid" price as
reported in the Wall Street Journal (or if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) system, on the applicable date (the "Valuation Date") if the shares
were traded on a stock exchange on the Valuation Date; if the shares were not so
traded, Fair Market Value shall be the mean of closing Bid price on the
Valuation Date. If there were no sales or reported Bid prices on the Valuation
Date, the Board shall determine the Fair Market Value as of the last trading day
preceding the Valuation Date for which there was a sale or reported Bid prices
or if no such prices are available, then such other appropriate method for
determining fair market value.
6.4 Term of Option.
A. The duration of each Option granted under this Plan shall
be for not more than 10 years from the date of grant, as the Board shall
determine, subject to earlier termination as provided in Sections VIII, IX, and
X hereof. The Board may, in its discretion, extend the period within which any
particular Option may be exercised beyond the expiration date originally
provided in said Option even if any such extension may cause an ISO to become
treated as a NQSO. However, no Option shall, in any event, be exercised after
the expiration of the full term of the Option as may be specified in the Option.
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 4
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B. Subject to the provisions of this Plan, an Option may be
exercised, at any time or from time to time (subject, in the case of ISOs, to
such restrictions as may be imposed from time to time by the Code), as and when
determined by the Board by giving written notice to the Company of the exercise
of the Option. Except as provided in Sections VIII and IX hereof, no Option may
be exercised at any time unless the Participant is then a consultant to or a
regular full-time employee of the Company or an Affiliate. To the extent an
Option is not exercised within its term, the Option shall automatically
terminate at the end of such term. Notwithstanding the foregoing provisions,
failure to exercise an ISO within the periods of time prescribed under Sections
421 and 422 of the Code shall cause an ISO to cease to be treated as an
"Incentive Stock Option" for the purposes of Section 422 of the Code. In the
Option Agreement or after an Option is granted the Board may, on such terms and
conditions as it may determine to be appropriate and notwithstanding the
provisions of this paragraph 6.4B, extend the time at which the Option or any
portion thereof may be exercised.
C. The Option Price for the shares as to which an Option is
exercised shall be paid to the Company in full on the date of exercise. A
Participant shall pay for such shares of Stock (i) in cash, (ii) by certified or
cashier's check payable to the order of the Company, or (iii) by such other mode
of payment as the Board may approve, including payment through a broker in
accordance with procedures permitted by Regulation T of the Federal Reserve
Board. Furthermore, the Board may provide in an Option Agreement that payment
may be made in whole or in part in shares of Stock held by the Participant,
unless otherwise provided in the Option Agreement, for more than six months (or
such shorter period of time as shall not, in the Board's sole discretion, have
an adverse effect on the Company's financial statements), provided, however,
that the Option Price may not be paid for with shares of Stock if such method of
payment would result in liability under Section 16(b) of the Exchange Act to the
Participant. If payment is made in whole or in part in shares of Stock, then the
Participant shall deliver to the Company certificates owned by such Participant,
free of all liens, claims, and encumbrances of every kind and have an aggregate
Fair Market Value on the date of delivery that is at least as great as the
Option Price of the shares of Stock (or relevant portion thereof) with respect
to which such Option is to be exercised by payment in shares of Stock, endorsed
in blank or accompanied by stock powers duly endorsed in blank by the
Participant. In the event that certificates for shares of Stock delivered to the
Company represent a number of shares of Stock in excess of the number of shares
of Stock required to make payment for the Option Price of the shares of Stock
(or relevant portion thereof) with respect to which such Option is to be
exercised by payment in shares of Stock, the stock certificate issued to the
Participant shall represent (i) the shares of Stock in respect of which payment
is made, and (ii) such excess number of shares of Stock. Notwithstanding the
foregoing, the Board may impose from time to time such limitations and
prohibitions on the use of shares of Stock to exercise an Option as it deems
appropriate. Stock acquired by the Participant which is identified as having
been obtained through an ISO under this Plan and still subject to ISO holding
requirements as defined in Section 422 of the Code, may not be tendered in
payment of the Option Price.
6.5 Date of Grant. The date on which an Award shall be deemed to have
been granted under this Plan shall be the date of the Board's authorization of
the Award or such later date as may be determined by the Board at the time the
Award is authorized. Notice of the determination shall be given to each
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 5
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Participant to whom an Award is so granted within a reasonable time after the
date of such grant.
6.6 Rights as a Shareholder. No Participant shall have any rights to
dividends or other rights of a shareholder with respect to shares of Stock
subject to an Option until the Participant has given notice of exercise of the
Option, has paid in full the Option Price for such shares of Stock, and has
otherwise complied with this Plan, the Option Agreement, and such rules and
regulations as may be established by the Board.
6.7 Incentive Stock Options.
A. In the case of an ISO, each Option Agreement shall contain
such other terms, conditions, and provisions as the Board determines necessary
or desirable in order to qualify such Option as a tax favored option (within the
meaning of Section 422 of the Code or any amendment or substitute thereto or
regulation thereunder) including without limitation, each of the following,
except that any of these provisions maybe omitted or modified if it is no longer
required in order to have an option qualify as a tax-favored option within the
meaning of Section 422 of the Code or any substitute therefor:
i. The Option must be expressly designated as an ISO
by the Board and in the Option Agreement; and
ii. The aggregate fair market value (determined as of
the date the Option is granted) of the shares of Stock with respect to which
ISOs are first exercisable under the terms of the Option Agreement by any
Participant during any calendar year (under all plans of the Company) shall not
exceed $100,000.
B. ISOs shall also comply with any other restrictions and
limitations imposed by Section 422 of the Code not otherwise provided in the
Plan.
C. In the event of amendments to the Code or applicable rules
or regulations relating to ISOs awarded subsequent to the date hereof, the
Company may amend the provisions of this Plan and the Company and the
Participants holding ISOs may agree to amend outstanding Option Agreements to
conform to such amendments.
6.8 Substitute Options. Options may be granted under the Plan from time
to time in substitution for stock options held by employees of other
corporations who are about to become and who do concurrently with the grant of
such Options become employees of the Company or a subsidiary as a result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary, or the acquisition by the Company or a subsidiary of the assets of
the employing corporation, or the acquisition by the Company or a subsidiary of
stock of the employing corporation. The terms and conditions of the substitute
Options so granted may vary from the terms and conditions set forth in this
Section VI of the Plan to such extent as the Board at the time of grant may deem
appropriate to conform, in whole or in part, to the provisions of the stock
options in substitution for which they are granted.
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 6
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6.9 Investment Purpose.
A. Each Option under this Plan shall be granted on the
condition that the purchases of shares of Stock hereunder shall be for
investment purposes, and not with a view toward resale or distribution, except
that in the event that Stock subject to such Option is registered under the
Securities Act of l933, as amended, or in the event of a resale of such Stock
without registration thereunder would otherwise be permissible, such condition
shall be inoperative if in the opinion of counsel for the Company such condition
is not required under the Securities Act of l933 or any other applicable law,
regulation, or rule of any governmental agency.
B. The Board may require each person purchasing shares of
Stock pursuant to exercise of an Option to represent to and agree with the
Company in writing that such shares are being acquired for investment and
without a view to distribution thereof. The certificates for shares of Stock so
purchased may include any legend which the Board deems appropriate to reflect
any restriction on transfer. The Board also may impose, in its discretion, as a
condition of any Option, any restrictions on the transferability of shares of
Stock acquired through the exercise of such Option as it may deem fit. Without
limiting the generality of the foregoing, the Board may impose conditions
restricting absolutely the transferability of shares of Stock acquired through
the exercise of Options for such periods as the Board may determine and,
further, in the event a Participant's employment by the Company or an Affiliate
terminates during the period in which such shares of Stock are nontransferable,
the Participant may be required, if required by the related Option Agreement, to
sell such Stock back to the Company at such price and on such other terms as the
Board may have specified in the Option Agreement.
C. A Participant shall give prompt notice to the Company of
any disposition of shares of Stock acquired upon exercise of an ISO if such
disposition occurs within either two (2)years after grant or one (1) year after
receipt of such shares by the Participant.
6.10 Replacement Options. The Board, in its absolute discretion, may
grant to holders of outstanding Options, in exchange for the surrender and
cancellation of such Options, new Options having Option Prices lower (or higher)
than the Option Price provided in the Options so surrendered and canceled and
containing such other terms and conditions as the Board may deem appropriate.
SECTION VII
NONTRANSFERABILITY OF AWARDS; GOVERNMENT REGULATIONS
7.1 Awards Not Transferable. Options granted under this Plan shall not
be assignable or transferable by the Participant other than by will or by the
laws of descent and distribution. During the lifetime of a Participant, Options
may be exercised only by the Participant. Options exercisable after the death of
a Participant may be exercised by the legatees, personal representatives, or
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BENEFIT AND STOCK OPTION PLAN -- Page 7
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distributees of the Participant. However, if an Option is originally granted to
a business entity such as a corporation, partnership, limited liability company,
or trust, then such Option shall be transferrable by the Participant.
7.2 Government Regulations. This Plan, the granting of Awards under
this Plan, and the issuance or transfer of shares of Stock (and/or the payment
of money) pursuant thereto are subject to all applicable Federal and state laws,
rules, and regulations (including without limitation the law, rules, and
regulations of the Exchange Act) and to such approvals by any regulatory or
governmental agency (including without limitation "no action" positions of the
Securities and Exchange Commission) which may, in the opinion of counsel for the
Company, be necessary or advisable in connection therewith. Without limiting the
generality of the foregoing, no Awards may be granted under this Plan, and no
shares of Stock shall be issued by the Company, nor cash payments made by the
Company, pursuant to or in connection with any such Award, unless and until, in
each such case, all legal requirements applicable to the issuance or payment
have, in the opinion of counsel to the Company, been complied with in full. In
connection with any Stock issuance or transfer, the person acquiring the Stock
shall, if requested by the Company, give assurances satisfactory to counsel to
the company in respect of such matters as the Company may deem desirable to
assure compliance with all applicable legal requirements. The Company shall not
be required to deliver any shares of Stock under the Plan prior to:
i. The admission of such shares to listing or for quotation on
any stock exchange or automated quotation system on which shares of
Stock may then be listed or quoted; and
ii. The completion and effectiveness of such registration or
other qualification of such shares under any state or Federal law,
rule, or regulation, as the Board shall determine to be necessary or
advisable.
SECTION VIII
RIGHTS UPON TERMINATION OF EMPLOYMENT
In the event that a Participant ceases to be an employee of or
consultant to the Company or any subsidiary for any reason other than death or
disability (within the meaning of Section 22(e)(3) of the Code or any substitute
therefore), the Participant shall have the right to exercise the Option during
its term or within such other period, and subject to such terms and conditions,
as may be specified by the Board.
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 8
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SECTION IX
DEATH OR DISABILITY OF PARTICIPANT
If, prior to the end of the Option Period, the Participant shall cease
to be employed by the Company or an Affiliate by reason of death or disability,
each Option shall remain exercisable for a period of one year from the date of
cessation of employment to the extent that it was exercisable at the time of
cessation of employment, or within such other period, and subject to such terms
and conditions, as may be specified by the Board. As used in this Section IX and
elsewhere in this Plan, the term "disability" means a physical or mental
impairment sufficient to constitute a disability within the meaning of Section
22(e)(3) of the Code.
SECTION X
FORFEITURE UPON OCCURRENCE OF CERTAIN ACTS
Notwithstanding any other provision of this Plan, no payment of any
Award shall be made, and all rights of the Participant who received such Award
(or his designated beneficiary or legal representatives) to the payment thereof
under this Plan, shall be forfeited if, prior to the time of such payment, the
Participant (i) shall be employed without the Company's or Affiliate's consent
by a competitor of, or shall be engaged in any activity in competition with, the
Company or an Affiliate; (ii) divulges without the consent of the Company any
secret or confidential information belonging to the Company or any subsidiary;
(iii) has engaged in fraud, embezzlement, theft, commission of a felony, or
other dishonest conduct in the course of his employment with the Company or any
subsidiary; or (iv) has committed any act which, in the sole judgment of the
Board, has been substantially detrimental to the interests of the Company or any
subsidiary. The Company shall give a Participant written notice of the
occurrence of any such event prior to making any such forfeiture. The
determination of the Board as to the occurrence of any of the events specified
in the foregoing clauses (i), (ii), (iii), and (iv) of this Section X shall be
exclusive and binding upon all persons for all purposes. Any Award shall be
subject to forfeiture for the reasons provided in this Section in such manner as
shall be provided by the Board.
SECTION XI
STOCK ADJUSTMENTS UPON CHANGES
11.1 In the event that the shares of Stock shall be changed into or
exchanged for a different number or kind of shares of Stock of the Company or of
shares of another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, stock split, combination of shares, or
otherwise), or if the number of such shares of Stock shall be increased through
the payment of a stock dividend, then there shall be substituted for or added to
each share of Stock subject to, or which may become subject to, an Option under
this Plan, the number and kind of shares into which each outstanding share of
Stock shall be exchanged, or to which each such share shall be entitled, as the
case may be. Outstanding Options shall also be appropriately amended as to
option Price and other terms as may be necessary to reflect the foregoing
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 9
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events. In the event there shall be any other change in the number or kind of
outstanding shares of the Stock, or of any shares into which such shares shall
have been changed, or for which the Board shall, in its sole discretion,
determine that such change equitably requires an adjustment in any Option
theretofore granted or which may be granted under this Plan, such adjustments
shall be made in accordance with such determination.
Subject to any required action by the shareholders of the Company, the
number of shares of Stock covered by each outstanding Option and the number of
shares of Stock 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 an Option, as well as the price per share of
Stock covered by each such outstanding Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Stock resulting
from a stock split (forward or reverse), stock dividend, combination or
reclassification of the Stock, or any other increase or decrease in the number
of issued shares of 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 Board, 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 of Stock subject to an Option.
11.2 Fractional shares resulting from any adjustment in Options
pursuant to this Section XI may be settled in cash or otherwise as the Board
shall determine. Notice of any adjustment shall be given by the Company to each
holder of an Option which shall have been so adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of this Plan.
11.3 The Board shall have the power, in the event of any merger or
consolidation of the Company with or into any other corporation, or the merger
or consolidation of any other corporation with or into the Company, or the sale
of all or substantially all of the assets of the Company, or an offer to
purchase made by a party other than the Company to all shareholders of the
Company for all or any substantial portion of the outstanding Stock, to amend
all Outstanding Options to permit the exercise of all such options prior to the
effectiveness of any such merger, consolidation, or sale or the expiration of
any such offer to purchase and to terminate such Options as of such
effectiveness or expiration.
11.4 In making the adjustments provided for by this Section XI,
consideration shall be given to applicable tax laws in order to avoid a
premature lapse or disqualifying disposition of an Option due solely to such
adjustment.
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 10
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SECTION XII
EFFECTIVE DATE, TERMINATION, AND AMENDMENT OF THE PLAN
12.1 This Plan shall become effective on January 3, 2003, provided that
the Company's shareholders shall have adopted and ratified the Plan at the
Company's next occurring Annual Meeting of Shareholders or at a prior meeting.
Once effective, this Plan shall terminate on December 31, 2012, but Awards
theretofore granted may extend beyond that date in accordance with their terms.
No Option granted pursuant to this Plan may be exercised before the Plan is
approved by the shareholders of the Company. However, Stock issuances for
services rendered to the Company, prior to ratification of the Plan by the
shareholders, shall be valid.
12.2 The Board may, insofar as permitted by law from time to time and
at any time, with respect to any shares of Stock at the time not subject to
Options, terminate, suspend, alter, amend, or discontinue this Plan, in whole or
in part, except that no such modification, alteration, amendment, or
discontinuation shall, without the Participant's consent, impair the rights of
any Participant under any Award granted to such Participant except in accordance
with the provisions of this Plan and/or the Option Agreement applicable to any
such Award and except, further, that no modification, alteration, or amendment
shall, without the approval by the holders of a majority of the then-outstanding
voting stock of the Company represented and entitled to vote at a shareholders'
meeting:
i. Increase the total number of shares of Stock reserved for
the purposes of this Plan, except as provided in Section XI of this
Plan;
ii. Decrease the Option Price of any ISO to less than 100% of
Fair Market Value on the date of grant of any Option;
iii. Decrease the Option Price of any NQSO to less than 75% of
Fair Market Value on the date of grant of any Option; or
iv. Materially increase the benefits accruing to Participants
under this Plan.
SECTION XIII
MISCELLANEOUS
13.1 No Rights to Continued Employment or Award. This Plan does not,
directly or indirectly, create any right for the benefit of any employee or
class of employees to receive any Awards under this Plan, or create in any
employee or class of employees any right with respect to continuation of
employment by the Company or an Affiliate, and it shall not be deemed to
interfere in any way with the Company's or an Affiliate's right to terminate or
otherwise modify an employee's employment at any time.
13.2 Failure to Comply with Terms and Conditions. Notwithstanding any
other provision of this Plan, no payment or delivery with respect to any Award
shall be made, and all rights of the Participant who receives such Award (or his
designated beneficiary or legal representative) to such payment or delivery
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 11
-----------------------------
under this Plan shall be forfeited, at the discretion of the Board, if, prior to
the time of such payment or delivery, the Participant breaches a restriction or
any of the terms, restrictions, and/or conditions of this Plan and/or Agreement.
13.3 No Prohibition on Corporate Action. No provision of this Plan
shall be construed to prevent the Company or any officer or director thereof
from taking any corporate action deemed by the Company or such officer or
director to be appropriate or in the Company's best interest, whether or not
such action could have an adverse effect on the Plan or any options granted
hereunder, and no Participant or Participant's estate, personal representative,
or beneficiary shall have any claim against the Company or any officer or
director thereof as a result of the taking of such action.
13.4 Parties in Interest. The provisions of this Plan and the terms and
conditions of any Award shall, in accordance with their terms, be binding upon,
and inure to the benefit of, all successors of each Participant, including.
without limitation, such Participant's estate and the executors, administrators,
or trustees thereof, heirs and legatees, and any receiver.
13.5 Designation of Beneficiary. Each Participant may designate a
beneficiary or beneficiaries (on a form supplied by the Company) to exercise his
Award(s) in the event of his death, and may change such designation from time to
time and at any time prior to the death of such Participant.
13.6 Non-Uniform Determination. The Board's determinations under the
Plan (including without limitation determinations of the persons to receive
Awards, the form, amount, and timing of such Awards, the terms and provisions of
such Awards, and the agreements evidencing same) need not be uniform and may be
made selectively among persons who receive, or are eligible to receive, Awards
under the Plan whether or not such persons are similarly situated.
13.7 Use of Proceeds. The proceeds received by the Company from the
exercise of any Option issued pursuant to the Plan or from the grant of any
other Award under the Plan shall be used for the general corporate purposes of
the Company.
13.8 Governing Law. All questions pertaining to construction, validity,
and effect of the provisions of under this Plan and the rights of all persons
hereunder shall be governed by and construed in accordance with the laws of the
State of Nevada, without consideration of conflict of laws principles.
13.9 Other Provisions.
A. No Participant or other person shall have any right with
respect to the Plan, the Stock reserved for issuance under the Plan, or in any
Award, contingent or otherwise, until written evidence of the Award shall have
been delivered to the recipient and all the terms, conditions, and provisions of
the Plan and the Award applicable to such recipient (and each person claiming
under or through him) have been met.
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 12
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B. To the extent that Rule 16b-3 under the Exchange Act
applies to Awards granted under this Plan, it is the intent of the Company that
the Plan comply in all respects with the requirements of Rule 16b-3, that any
ambiguities or inconsistencies in construction of the Plan be interpreted to
give effect to such intention, and that if any provision of the Plan is found
not to be in compliance with Rule 16b-3, such provision shall be deemed null and
void to the extent required to permit the plan to comply with Rule 16b-3.
C. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Award under the Plan, and
rights to the payment of Awards shall be no greater than the rights of the
Company's general creditors.
D. By accepting any Award or other benefit under the Plan,
each Participant and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and ratification of, and
consent to, any action taken under the Plan by the Company or the Board.
E. The adoption of the Plan shall not affect any other stock
option, compensation, or inceptive plan in effect for the Company or any
Affiliate and the Plan shall not preclude the Board from establishing any other
forms of incentive or compensation for employees of the Company or any
Affiliate.
F. The masculine pronoun shall include the feminine and
neuter, and the singular shall include the plural, where the context so
indicates.
SECTION XIV
INDEMNIFICATION
With respect to the administration of the Plan, the Company shall
indemnify each present and future member of the Board against, and each member
of the Board shall be entitled without further act on his part to
indemnification from the Company for, all expenses (including the amount of
judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of, any
action, suit, or proceeding in which he may be involved by reason of his being
or having been a member of the Board, whether or not he continues to be such a
member of the Board at the time of incurring such expenses; provided, however,
that such indemnity shall not include any expenses incurred by any such member
of the Board (i) in respect of matters as to which he shall be finally adjudged
in any such action, suit, or proceeding to have been guilty of gross negligence
or willful misconduct in the performance of his duty as such member of the
Board; or (ii) in respect of any matter in which any settlement is effected for
an amount in excess of the amount approved by the Company on the advice of its
legal counsel; and provided further that no right of indemnification under the
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 13
-----------------------------
provisions set forth herein shall be available to or enforceable by any such
member of the Board unless within 60 days after institution of any such action,
suit, or proceeding he shall have offered the Company in writing the opportunity
to handle and defend same at its own expense. The foregoing right of
indemnification shall inure to the benefit of the heirs, executors, or
administrators of each such member of the Board and shall be in addition to all
other rights to which such member of the Board may be entitled as a matter of
law, contract, or otherwise.
SECTION XV
TAX WITHHOLDING
The Company shall have the right to withhold from amounts due
Participants or to collect from Participants directly, the amount which the
Company deems necessary to satisfy any taxes required by law to be withheld at
any time by reason of participation in the Plan and the obligations of the
Company under the Plan shall be conditional on payment of such taxes. The
Participant may, prior to the due date of any taxes, pay such amounts to the
Company in cash or, with the consent of the Board, in shares of Stock (which
shall be valued at their Fair Market Value on the date of payment). There is no
obligation under this Plan that any Participant be advised of the existence of
the tax or the amount required to be withheld. Without limiting the generality
of the foregoing, in any case where the Company determines that a tax is or will
be required to be withheld in connection with the issuance or transfer of shares
of Stock under this Plan, the Company may, pursuant to such rules as the Board
may establish, reduce the number of such shares of Stock so issued or
transferred by such number of shares as the Company may deem appropriate, in its
sole discretion, to accomplish such withholding or make such other arrangements
as it deems satisfactory. Notwithstanding any other provision of this Plan, the
Board may impose such conditions on the payment of any withholding obligation as
may be required to satisfy applicable regulatory requirements, including,
without limitation, Rule 16b-3 (or successor provision) under the Exchange Act.
TO RECORD the adoption of this Plan, the Board has caused this
instrument to be executed on this 9th day of June, 2003.
ENDO NETWORKS, INC.,
a Nevada corporation
By: /s/ Peter B. Day
---------------------------------
Peter B. Day, President
By: /s/ Peter B. Day
---------------------------------
Peter B. Day, Treasurer
By: /s/ Peter B. Day
---------------------------------
Peter B. Day, Secretary
ENDO NETWORKS, INC. EMPLOYEE
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BENEFIT AND STOCK OPTION PLAN -- Page 14
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EXHIBIT (2) (3)
T. ALAN OWEN & ASSOCIATES, P. C.
Attorneys at Law
One Arlington Centre
1112 East Copeland Road
Suite 420
Arlington, Texas 76011
TELEPHONE TELEFAX
(817) 460-4498 (817) 795-0154
(817) 461-6079 -- Metro
June 9, 2003
The Board of Directors
Endo Networks, Inc.
2624 Dunwin Drive, Unit #3
Mississauga, Ontario L5L 3TS
Canada
RE: Endo Networks, Inc. Employee Benefit and Stock Option Plan
Gentlemen:
I have acted as counsel to Endo Networks, Inc. (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, of a registration
statement on Form S-8 (the "Registration Statement") relating to the offer and
sale by the Company of up to 1,250,000 shares (the "Shares") of the Company's
$0.001 par value Common Stock, pursuant to the Endo Networks, Inc. Employee
Benefit and Stock Option Plan (the "Plan") dated June 9, 2003.
As counsel to the Company, I have supervised all corporate proceedings
in connection with the preparation and filing of the Registration Statement. I
have also examined the Company's Certificate of Incorporation and Bylaws, as
amended to date, the corporate minutes and other proceedings, and the records
relating to the authorization, sale, and issuance of the Shares, and such other
documents and matters of law as I deemed necessary or appropriate in order to
render this opinion.
Based upon the foregoing, it is my opinion that each of the Shares,
when issued in accordance with the terms and conditions of the Plan, will be
duly authorized, legally and validly issued and outstanding, fully paid, and
nonassessable.
I hereby consent to the use of this opinion in the Registration
Statement.
Sincerely,
/s/ T. Alan Owen
-----------------
T. Alan Owen
TAO/jac
Endo Networks-Form S-8 Opin L2 (M-3)
EXHIBIT 4
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Peter B. Day as such person's true and
lawful attorney-in-fact and agent, with full power of substitution, for such
person, and in such person's name, place, and stead, in any and all capacities,
to sign any and all amendments or post-effective amendments to this Registration
Statement, and to file the same with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as such person might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
ENDO NETWORKS, INC.,
a Nevada corporation
/s/ Peter B. Day
------------------------------------------
Peter B. Day, President and Secretary
Date: June 9, 2003
STATE OF _________________ )
)
COUNTY OF _______________ )
BEFORE ME, the undersigned authority, on this day personally appeared
Peter B. Day, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 9th day of June, 2003.
------------------------------------------
Notary Public in and for
------------------
My Commission Expires:
-----------------------