SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
{ } Filed by the Registrant
{ } Filed by party other than the Registrant
{X } Preliminary Proxy Statement
{ } Confidential, For Use of the Commission Only (as permitted
by Rule 14a-6 (e)(2))
{ } Definitive Proxy Statement
{ } Definitive Additional Materials
{ } Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12
MERIDIAN HOLDINGS, INC
Payment of Filing Fee (Check appropriate box):
{X } No fee required.
{ } Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
{ } Fee paid previously with preliminary materials
{ } Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1
Meridian Holdings, Inc.
900 Wilshire Boulevard, Suite 500
Los Angeles, California 90017
February 5, 2005
RE: NOTICE OF ANNUAL MEETING FOR THE YEAR ENDING DECEMBER 2004
Dear Meridian Holdings Stockholder:
On behalf of the Board of Directors, it is a pleasure to invite you to attend
the 2004 Annual Meeting of Stockholders to be held at 1:00 p.m. Standard Pacific
time, on March 5, 2005, at 900 Wilshire Blvd., Suite 500 Los Angeles,
California 90017 for the following purposes:
1. To elect four members of the Company's Board of Directors to serve for
a one-year term;
2. To ratify the appointment of Madsen Associates CPA's, Inc., as the
Company's independent certified public accountant for the fiscal year ending
December 31, 2003 and 2004 respectively; and
3. To consider and vote upon a proposal to re-approve the Company's 2001 Joint
Incentive and Non-Qualified Stock Option Plan for the 2005 fiscal year,
with retro-active re-pricing of the option shares based on a 12 months average
of the fair market value of the Stock for each of the option period (2001-2004)
4. To transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
Members of management will report on the Company's operations, followed by a
period for questions and discussion.
The Board of Directors has fixed the close of business on December 31, 2004 as
the record date for determining those stockholders entitled to notice of, and to
vote at, the annual meeting. A list of stockholders entitled to vote at the
annual meeting may be examined at the offices of the Company situated at 900
Wilshire Boulevard, Suite 500, Los Angeles, California 90017 during the ten-day
period preceding the Annual Meeting.
We hope you can attend the meeting. Regardless of the number of shares you own,
your vote is very important. Please ensure that your shares will be represented
at the meeting by signing and returning your proxy now, even if you plan to
attend the meeting.
Thank you for your continued support of the Company.
Sincerely,
/s/ ANTHONY C. DIKE
--------------------------------
Anthony C. Dike,
Chairman of the Board & CEO
2
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
MERIDIAN HOLDINGS, INC.
PROXY - ANNUAL MEETING OF STOCKHOLDERS - MARCH 5, 2005
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Meridian Holdings, Inc. (the "Company") hereby
constitutes and appoints Anthony C. Dike, lawful attorneys and proxies of the
undersigned, with full power of substitution, for and in the name, place and
stead of the under- signed, to vote at the Annual Meeting of Stockholders of the
Company to be held at 900 Wilshire Blvd., Suite 500 Los Angeles, California,
90017, March 5, 2005 at 1:00 P.M. (local time), and any adjournment(s) thereof,
with all powers the undersigned would possess if personally present and to vote
thereat, as provided below, the number of shares the undersigned would be
entitled to vote if personally present for the following purposes:
(Check One) FOR AGAINST ABSTAIN
ITEM 1: To elect the following
four nominees as directors of the Company
to serve until the next Annual Meeting
of Stockholders:
Michael Muldavin ( ) ( ) ( )
James Truher ( ) ( ) ( )
Randy Simpson ( ) ( ) ( )
Marcellina Offoha ( ) ( ) ( )
ITEM 2: To ratify the reappointment of
Madsen Associates, CPA's, Inc., as the independent
auditor for the fiscal year ending
December 31, 2003 and 2004 respectively; ( ) ( ) ( )
ITEM 3: To consider and vote upon a proposal
to re-approve the Company's 2001 Joint Incentive
and Non-Qualified Stock Option Plan for the
2005 fiscal year, with retro-active re-pricing
of the option shares based on a 12 months average
of the fair market value of the Stock for each
of the option period (2001-2004) ( ) ( ) ( )
ITEM 4: In his discretion, on such other matters as may properly come before
the meeting or any adjournments thereof; all as more particularly described in
the Company's Proxy Statement dated February 5, 2005, relating to such meeting,
receipt of which is hereby acknowledged.
Every properly signed proxy will be voted in accordance with the specifications
made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH ITEM
LISTED ABOVE. All prior proxies are hereby revoked. This Proxy will also be
voted in accordance with the discretion of the proxies or proxy on any other
business. Receipt is hereby acknowledged of the Notice of Special Meeting and
Proxy Statement.
(LABEL CONTAINING NAME, ADDRESS
AND NUMBER OF SHARES GOES HERE)
____________________________________ _________________________________
Signature Signature (if jointly held)
____________________________________ _________________________________
Print Name Print Name
____________________________________ _________________________________
Dated Dated
(Please sign exactly as name appears hereon. When signing as attorney, executor,
administrator, trustee, guardian, etc., give full title as such. For joint
accounts, each joint owner should sign.)
3
--------------------------------------------------
THIS IS AN IMPORTANT MEETING AND ALL STOCKHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE STOCKHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY FORM AS PROMPTLY AS POSSIBLE.
STOCKHOLDERS WHO EXECUTE A PROXY FORM MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY, AND VOTE THEIR SHARES IN PERSON. YOUR BOARD RECOMMENDS THAT
YOU VOTE IN FAVOR OF THE NOMINEES FOR DIRECTORS AND FOR THE OTHER PROPOSALS TO
BE CONSIDERED AT THE ANNUAL MEETING. PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY FORM PROMPTLY USING THE ENCLOSED ENVELOPE
--------------------------------------------------
4
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held March 5, 2005 1:00 P.M.
MERIDIAN HOLDINGS, INC.
900 Wilshire Blvd. Suite 500
Los Angeles, CA 90017
To the Stockholders of Meridian Holdings, Inc.
The annual meeting of stockholders of Meridian Holdings, Inc a California
corporation (the "Company"), will be held at 1:00 p.m. Standard Pacific time, on
March 5, 2005, at 900 Wilshire Blvd., Suite 500, Los Angeles, California
90017 for the following purposes:
1. To elect four members of the Company's Board of Directors to serve for
a one-year term;
2. To ratify the appointment of Madsen Associates CPA's, Inc., as the
Company's independent certified public accountant for the fiscal year ending
December 31, 2003 and 2004 respectively; and
3. To consider and vote upon a proposal to re-approve the Company's 2001 Joint
Incentive and Non-Qualified Stock Option Plan for the 2005 fiscal year,
with retro-active re-pricing of the option shares based on a 12 months average
of the fair market value of the Stock for each of the option period (2001-2004)
4. To transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
Members of management will report on the Company's operations, followed by a
period for questions and discussion.
The Board of Directors has fixed the close of business on December, 31, 2004 as
the record date for determining those stockholders entitled to notice of, and to
vote at, the Annual Meeting. A list of stockholders entitled to vote at the
Annual Meeting may be examined at the offices of the Company situated at 900
Wilshire Boulevard, Suite 500, Los Angeles, California 90017 during the ten-day
period preceding the Annual Meeting. Whether or not you expect to attend the
meeting, please complete, date and sign the enclosed proxy and mail it promptly
in the enclosed envelope in order to ensure representation of your shares. No
postage need be affixed if the proxy is mailed in the United States.
By order of the Board of Directors,
/s/ ANTHONY C. DIKE
----------------------
Anthony C. Dike
Secretary
Los Angeles, California
February 5, 2005
5
MERIDIAN HOLDINGS, INC
900 Wilshire Boulevard, Suite 500
Los Angeles, California 90017
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 5, 2005
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Meridian Holdings, Inc., a Colorado corporation
(the "Company"), of proxies from the holders of the Company's common stock,
no par value, (the "Common Stock"), for use at the 2004 Annual Meeting
of Stockholders of the Company to be held at 1:00 p.m. Standard Pacific time,
on March 5, 2005, at 900 Wilshire Blvd, Suite 500, Los Angeles California
90017 or at any adjournment(s) or postponement(s) thereof (the "Meeting"),
pursuant to the enclosed Notice of Annual Meeting. The approximate date
that this Proxy Statement and the enclosed form of proxy are first being sent to
holders of Common Stock is February 5, 2005. Stockholders should review the
information provided herein in conjunction with any other Company's reports,
which accompanies this Proxy Statement.
GENERAL INFORMATION
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any stockholder giving the proxy so desire. Any stockholder who executes
and delivers a proxy may revoke it at any time prior to its use by (1) giving
written notice of such revocation to the Company, care of the Secretary,
Meridian Holdings Inc., 900 Wilshire Boulevard, Suite 500, Los Angeles,
California 90017; (2) executing and delivering a proxy bearing a later date to
the Secretary of the Company; or (3) appearing at the Meeting and voting in
person.
Shares represented by properly executed proxies will be voted at the Annual
Meeting as specified, unless such proxies are subsequently revoked as provided
above. If no choice is specified on a valid, unrevoked proxy, the shares will be
voted as recommended by the Board. Proxies will also authorize the shares
represented thereby to be voted on any matters not known as of the date of this
Proxy Statement that may properly be presented for action at the Annual Meeting.
On December 31, 2004, the record date for determination of stockholders of
the Company entitled to vote at the Annual Meeting (the "Record Date"), there
were 14,870,650 shares of the Company's common stock outstanding (the "Common
Stock"), each share of which entitles the holder thereof to one vote on all
matters. The holders of a majority of the Common Stock present in person or
represented by proxy will constitute a quorum for transaction of business at the
Annual Meeting.
This Proxy Statement and the Form of Proxy will be sent to the Company's
stockholders on or about February 5, 2005.
The cost of preparing, assembling and mailing this Proxy Statement, the
notice of Annual Meeting of Stockholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies by telephone, telegram or personal interview. The Company's
employees will receive no compensation for soliciting proxies other than their
regular salaries. Brokers, banks, nominees, fiduciaries and other custodians
will be requested to solicit beneficial owners of shares and will be reimbursed
for their expenses.
6
PURPOSES OF THE MEETING
At the Meeting, the Company's stockholders will consider and vote upon the
following matters:
1. To elect four members of the Company's Board of Directors to serve for
a one-year term;
2. To ratify the appointment of Madsen Associates CPA's, Inc., as the
Company's independent certified public accountant for the fiscal year ending
December 31, 2003 and 2004 respectively; and
3. To consider and vote upon a proposal to re-approve the Company's 2001 Joint
Incentive and Non-Qualified Stock Option Plan for the 2005 fiscal year,
with retro-active re-pricing of the option shares based on a 12 months average
of the fair market value of the Stock for each of the option period (2001-2004)
4. To transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (a) for the election of the four nominees for director named
below, and (b) in favor of all other proposals described in the Notice of Annual
Meeting. In the event that a stockholder specifies a different choice by means
of the enclosed proxy, his shares will be voted in accordance with the
specification so made.
ITEM 1 ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of directors constituting the
Company's Board of Directors shall be fixed by the Board of Directors,
provided that the number of directors shall not be fewer than one nor more
than nine. The Board of Directors has fixed at five the number of directors
that will constitute the Board. Each director elected at the Meeting will serve
until his or her term expires and until his or her successor has been duly
elected and qualified. The following members of the board of directors:
James W. Truher, Michael Muldavin and Marcellina Offoha, Ph.D. proxies will
be voted for such persons absent contrary instructions.
The Board of Directors has no reason to believe that any nominee will
refuse to act or be unable to accept election; however, in the event that a
nominee for director is unable to accept election or if any other unforeseen
contingency arises, proxies will be voted for the remaining nominees, if any,
and for such other person as may be designated by the Board of Directors, unless
it is directed by a proxy to do otherwise.
Certain information concerning the nominees for election as directors
is as follows:
James W. Truher. Mr. Truher, age 70 years---Mr. Truher has been a
Director of the Company since August 19, 1999. Mr. Truher has over 40 years
Management and engineering experience in the telecommunications industry. He is
currently, the Chairman of Superwire.Com, an internet services and content
provider company. Mr. Truher owns Columbia Management Corp., a
telecommunications services and investment company. In 1988, Mr. Truher
founded and served as Chairman of the Board and Chief Executive Officer of
SelecTel Corporation, which prior to a merger with a public company, was
an AT&T Co-Marketing Partner and System Integration company. Mr. Truher then
served as Chairman and Chief Executive Officer of two publicly traded NASDAQ
telecom companies and has worked extensively with foreign PTT telephone
companies. In 1981, Mr.Truher founded and was the Chief Executive Officer
of Polaris Intelcom, the first shared tenant service company in California.
Marcellina Offoha, Ph.D.---Ms. Offoha, age 50, became a director of the
Company in October 1999, Ms. Offoha has extensive experience in teaching and
counseling. Ms. Offoha has taught at several universities such as Shaw
University, Ithaca College, State University of New York, Philadelphia College
of Pharmacy & Science, Temple University, and Morgan State University. Ms.
7
Offoha holds a Ph.D. in Sociology from Temple University, Philadelphia,
Pennsylvania.
Mr. Michael Muldavin, age 82 is the Chairman of Sandock Fund, Sandock
Investment Trust and Benchmark Company Group.
He was formerly the associate dean and clinical professor of medicine at
The University of California, Irvine, College of Medicine. He was also a
Medical Economist for California State Department of Public Health, and
assisted in the drafting of Medi-Cal legislation in 1967-1968 period.
Earlier in his career as a WWII veteran, he served as the Chief of
Labor Administration in Japan, under General MacArthur.
Mr. Muldavin holds a Bachelors of Science degree in Mathematics and
Engineering, Masters of Science degree in Economics and Public Health, Juris
Doctorate degree with specialization in administrative law, all degrees from
Harvard University. He also holds a Masters in Public Health degree from
UCLA School of Public Health.
Mr. Randy Simpson, age 50, a Certified Public Accountant with nearly 30
years' experience, began his career with Ernst & Young's Salt Lake City office.
He has served in a variety of finance and accounting capacities, including
chief financial officer for Rocky Mountain Helicopters (medical helicopters)
and controller (Gulf Energy). In conjunction with his independent accounting
practice, he has provided registration work and financial advisory assistance
to a number of North American public companies. He received a BS in marketing
and an MS in accounting from Utah State University.
The election of the nominees requires the affirmative vote of a majority of the
shares of Common Stock represented at the Annual Meeting and entitled to vote
thereon.
The business of the Company is managed under the direction of the Board. The
Board presently consists of five directors, four of which are outside
members and one of which is an officer of the Company. The Board members will
serve until their successors are elected at the 2004 Annual Meeting, unless
they earlier resign or are removed as provided in the Bylaws.
Term and Classification of Board of Directors
The Board of Directors has determined that there will be two Class of
Directors and the full Board shall consist of five directors. Class A
Directors are elected every three years and Class B Directors are elected each
year for one-year term. The stockholders will elect four Class B directors
for the coming year.
REPORT OF THE BOARD OF DIRECTORS
The Board of Directors, which consists of five directors, four of which are
outside members and one of which is an officer of the Company, establishes the
general compensation policies of the Company and the compensation plans and
specific compensation levels for executive officers. The Company does not have a
separate Compensation Committee of its Board of Directors. The Company's
objective is to ensure that executive compensation be directly linked to ongoing
improvement in corporate performance and increasing shareholder value. The
following objectives are guidelines for compensation decisions:
Job Classification.
The Company assigns a job grade to each salaries position, and each job grade
has a salary range, which is based on national salary surveys. These salary
ranges are reviewed annually to determine parity with national compensation
trends, and to ensure that the Company maintains a competitive compensation
structure.
Competitive Salary Base.
Actual salaries are based on individual performance contributions within a
competitive salary range for each position established through job evaluation
and market comparisons. The salary of each corporate officer is reviewed
8
annually by the Board of Directors.
Stock Option Programs.
The purposes of the Company's ESOP and SOP are to provide additional
incentives to employees to work to maximize shareholder value. The ESOP
is open to all full-time employees of the Company and the SOP is open to
participation by key employees and other persons as determined by the
Board, based upon a subjective evaluation of the key employee's ability to
influence the Company's long-term growth and profitability. Stock options
under the ESOP may be granted at the current market price at the time of the
grant or under the SOP at prices as determined by the Board. With specific
reference to the Chief Executive Officer, the Board attempts to exercise
great latitude in setting salary and bonus levels and granting stock options.
Philosophically, the Board attempts to relate executive compensation to
those variables over which the individual executive generally has control. The
Chief Executive Officer has the primary responsibility for improving
shareholder value for the whole Company.
The Board believes that it's objectives of linking executive compensation to
corporate performance results in alignment of compensation with corporate goals
and shareholder interest. When performance goals are met or exceeded,
shareholders' value is increased and executives are rewarded commensurately. The
Board believes that compensation levels during 2003/2004 adequately reflect the
Company's compensation goals and policies. In 1993, the Internal Revenue Code
was amended to add section 162(m), which generally disallows a tax deduction for
compensation paid to a company's senior executive officers in excess of $1
million per person in any year. Excluded from the $1 million limitation is
compensation which meets pre-established performance criteria or results from
the exercise of stock options which meet certain criteria. While the Company
generally intends to qualify payment of compensation under section 162(m), the
Company reserves the right to pay compensation to its executives from time to
time that may not be tax deductible.
The Company will compensate the members of the Board of Directors for each
meeting he/she attends, in the amount of $250 cash or equivalent in the form of
the Company's Common Stock at the fair market value.
COMMITTEES OF THE BOARD OF DIRECTORS
FUNCTIONS OF COMMITTEES
AUDIT AND ETHICS COMMITTEE:
- Has general powers relating to accounting disclosure and auditing
matters;
- Recommends the selection and monitors the independence of our
independent auditors;
- Reviews the scope and timing of the independent auditors' work;
- Reviews the financial accounting and reporting policies and principles
appropriate for the Corporation, and recommendations to improve
existing practices;
- Reviews the financial statements to be included in the Corporation's
Annual Report on Form 10-KSB
- Reviews accounting and financial reporting issues, including the
adequacy of disclosures;
- Monitors compliance with the Code of Ethics and Standards of Conduct;
- Reviews and resolves all matters presented to it by our Ethics office;
- Reviews and monitors the adequacy of our policies and procedures, and
the organizational structure for ensuring general compliance with
environmental, health and safety laws and regulations;
- Reviews with the General Counsel the status of pending claims,
litigation and other legal matters;
9
- Meets separately and independently with the Chief Financial officer,
Internal Audit and our independent auditors.
It is composed of Messrs. Simpson, Truher, and Ms. Offoha
EXECUTIVE COMMITTEE:
The Executive Committee may exercise the power of the Board of
Directors in the management of the business and affairs of the Corporation at
any time when the Board of Directors is not in session. The Executive
Committee shall, however, be subject to the specific direction of the Board of
directors and all actions must be by unanimous vote. It is composed of Messrs.
Dike, Truher, and Wesley Bradford.
Meetings of the Board of Directors
During the fiscal year ended December 31, 2004, the Company's Board of
Directors acted five times by a unanimous written consent in lieu of a
meeting. Each member of the Board participated in each action of the Board.
AUDIT AND ETHICS COMMITTEE REPORT
Management has the primary responsibility for the financial reporting process
and the audited consolidated financial statements, including the systems of
internal controls. The Corporation's independent auditor, Madsen Associate,
is responsible for expressing an opinion on the quality and conformity
of consolidated financial statements with accounting principles generally
accepted in the United States. In our capacity as members of the Audit and
Ethics Committee and on behalf of the Board of Directors, we oversee the
Corporation's financial reporting process and monitor compliance with its
Code of Ethics and Business Conduct. The Audit Committee has adopted a
written charter, which has been approved by the Board of Directors.
The members of the Audit and Ethics Committee are independent as defined by
the listing standards of the National Association of Securities Dealers(NASD)
In connection with our oversight responsibilities, we have:
- discussed with the internal and independent auditors the overall scope
and plans for their audits;
- reviewed and discussed the audited consolidated financial statements
included in Meridian Holdings 2004 Annual Report with management and
the independent auditors;
- discussed with the independent auditors the matters (including the
quality of the financial statements and clarity of disclosures)
required to be discussed under the American Institute of Certified
Public Accountants' Statement on Auditing Standards No. 61,
Communications with Audit Committees, which generally requires that
certain matters related to the performance of an audit be communicated
to the audit committee;
- received from the independent auditors and reviewed the written
disclosures and the letter required from the independent auditors
as required by the Independence Standards Board, and have discussed
with them their independence from management and the Corporation;
- considered the nature of the non-audit services performed by the
independent auditors and the compatibility of those services with
their independence; and
- met with the internal and independent auditors, with and without
management present, to discuss the results of their examinations,
their evaluations of the Corporation's internal controls, and the
overall quality of the Corporation's financial reporting.
Based on the reviews and discussions referred to above, we recommended to the
Board of Directors (and the Board has approved) the inclusion of the audited
10
Consolidated financial statements referred to above in the Corporation's
Annual Report on Form 10-KSB for the year ended December 31, 2003 and 2004,
for filing with the Securities and Exchange Commission. The Committee and
the Board have also recommended, subject to stockholder approval, the
selection of Madsen Associates CPA'S, Inc., as the Corporation's independent
auditor for fiscal year ended December 31, 2003 and 2004 respectively.
Members of the Audit and Ethics Committee:
Randy Simpson Chairman James Truher
Marcellina Offoha
Executive Officers
The executive officers of the Company are as follows:
Anthony C. Dike, Chairman/CEO
Wesley Bradford Chief Medical Officer
EXECUTIVE COMPENSATION
The table below shows information concerning the annual and long-term
compensation for services in all capacities to the Company for the Chief
Executive Officer and other full-time employee executive officers of the
Company:
Annual Compensation
Name Year Salary Bonus Stock Option All Other
Compensation
Stock Awards
Anthony C. Dike (1) 2004 $144,000 0 150,000 0
Wesley Bradford (2) 2004 $ 35,000 0 100,000 100,000
1. As of December 31, 2003, Anthony C. Dike has not received any salary from
the registrant, and has deferred such payment until the registrant can afford
to pay after meeting all other obligations.
2. Dr. Bradford's salary is based on a part-time employment, with a base salary
and other non-cash compensation such as stock and stock option award. He is also
a member of the Board of Directors of InterCare DX, Inc., an affiliated entity.
Indemnification
The Company's Certificate of Incorporation eliminates or limits the
personal financial liability of the Company's directors, except in situations
where there has been a breach of the duty of loyalty, failure to act in good
faith, intentional misconduct or knowing violation of the law. In addition, the
Company's by-laws include provisions to indemnify its officers and directors and
other persons against expenses, judgments, fines and amounts paid in settlement
in connection with threatened, pending or completed suits or proceedings against
such persons by reason of serving or having served as officers, directors or in
other capacities, except in relation to matters with respect to which such
persons shall be determined to have acted not in good faith, unlawfully or not
in the best interest of the Company.
11
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES
ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE
COMPANY PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED 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.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the SEC initial reports of ownership and reports of changes in ownership of
equity securities of the Company with the Securities and Exchange Commission
("SEC"). Such persons also are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such forms that were furnished to the Company and representations that no other
reports were required, during the fiscal year ended December 31, 2004, the
Company's officers, directors and greater than 10% stockholders complied with
all filing requirements under Section 16(a) applicable to such persons.
MARKET FOR COMMON STOCK
The Company's Common Stock is traded on the Bulletin Board maintained by the
National Association of Securities dealers, Inc. under the symbol "MEHO." The
price range of the Company's Common Stock has varied significantly in the past
months ranging from a high bid of $1.25 and a low bid of $0.04 per share. The
above prices represent inter-dealer quotations without retail mark-up, mark-down
or commission, and may not necessarily represent actual transactions.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors has set the close of business on December
31, 2004 as the record date (the "Record Date") for determining stockholders
of the Company entitled to notice of and to vote at the Meeting. As of the
record date, 14,870,650 shares of Common Stock were issued and outstanding, all
of which are entitled to be voted at the meeting. Each share of Common Stock
is entitled to one vote on all matters to be acted upon at the Meeting,
and neither the Company's Certificate of Incorporation nor its Bylaws
provides for cumulative voting rights.
The attendance, in person or by proxy, of the holders of a majority of
the shares of Common Stock entitled to vote at the meeting is necessary to
constitute a quorum. The affirmative vote of a plurality of the shares of Common
Stock present and voting at the meeting is required for the election of
Directors. The affirmative vote of a majority of the outstanding shares of
Common Stock present and voting at the meeting is required to pass upon the
proposals to ratify the appointment of Madsen Associates CPA's, Inc., as
the Company's independent certified public accountant for the fiscal year ending
December 31, 2003 and 2004 respectively; and to consider and vote upon a
proposal to re-approve the Company's 2001 Joint Incentive and Non-Qualified
Stock Option Plan for the 2005 fiscal year, with retro-active re-pricing of
the option shares based on a 12 months average of the fair market value of the
Stock for each of the option period (2001-2004). Abstentions and broker
non-votes (hereinafter defined) will be counted as present for the purpose
of determining the presence of a quorum.
For the purpose of determining the vote required for approval of matters to be
voted on at the meeting, shares held by stockholders who abstain from voting
will be treated as being "present" and "entitled to vote" on the matter, and,
therefore, an abstention has the same legal effect as a vote against the matter.
However, in the case of a broker non-vote or where a stockholder withholds
authority from his or her proxy to vote the proxy as to a particular matter,
such shares will not be treated as "present" or "entitled to vote" on the
matter, and, therefore, a broker non-vote or the withholding of a proxy's
authority will have no effect on the outcome of the vote on the matter.
A "broker non-vote" refers to shares of Common Stock represented at the Meeting
9
in person or by proxy by a broker or nominee where such broker or nominee
(1) has not received voting instructions on a particular matter from the
beneficial owners or persons entitled to vote and;
(2) the broker or nominee does not have discretionary voting power on such
matter.
As of the Record Date, the directors of the Company owned in the
aggregate 9,162,460 shares of Common Stock constituting approximately 62% of
the outstanding shares of Common Stock entitled to vote at the Meeting. The
directors have advised the Company that they intend to vote all of their shares
in favor of each of the proposals to be presented at the Meeting. See "Security
Ownership of Certain Beneficial Owners," "Security Ownership of Management" and
"Election of Directors -- Certain Transactions."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of December 31, 2004 to the extent
known to the Company, certain information regarding the ownership of the
Company's Common Stock by (i) each person who is known by the Company to own of
record or beneficially more than five percent of the Company's Common Stock,
(ii) each of the Company's directors and executive officers and (iii) all
directors and executive officers as a group. Except as otherwise indicated, the
shareholders listed in the table have sole voting and investment powers with
respect to the shares indicated.
Name and Address of Amount and Nature of
Beneficial Owner Title Beneficial Ownership Status Percent of Class
------------------------- -------- -------------------- -------- -----------------
Anthony C. Dike, M.D. (1,2,3) Director 8,590,270 Active 58%
Michael Muldavin (2) Director 125,000 Active 1%
James W. Truher (2) Director 165,900 Active 1%
Randy Simpson (2) Director 125,000 Active 1%
Marcellina Offoha, Ph.D (2) Director 157,190 Active 1%
All directors and Officers as
a group (five persons) 9,162,460 62%
Other Beneficial Owners
CGI Communications Services, Inc. 961,501 6%
Other public shareholders 4,746,689 32%
Total Number of Shares Outstanding 14,870,650 100%
1. Includes 330,000 shares pledged to secure the asset purchased by the
registrant from the Israeli Bankruptcy court. The said asset has been abandoned,
every efforts are being made to recover these shares from the Israeli receiver.
Meanwhile, a stop transfer order has been place on these securities.
2. The numbers shown include the shares of our Common Stock actually owned
as of December 31, 2004 and the underlying options and warrants representing
shares person has the right or will have the right to acquire based on the 2004
stock option plan table.
3. Anthony C. Dike, is the sole Director of MMG Investments, Inc, and an indirect
beneficial owner of 267,000 shares of Common stock held by MMG Investments, Inc.
13
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE FOR
ELECTION OF THE NOMINEES AS THE MEMBERS OF THE BOARD OF DIRECTORS FOR THE YEAR
2005
ITEM II.
PROPOSAL TO RATIFY THE REAPPOINTMENT OF MADSEN ASSOCIATES CPA'S, INC.
AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
INFORMATION REGARDING OUR CERTIFIED PUBLIC ACCOUNTANT
Audit and Audit Related Fees
We estimate that the audit fees to be incurred by us with Madsen Associates
CPA's, Inc., for fiscal 2003 and 2004 audit services to be approximately
$15,000.
All Other Fees
We estimate that all other fees incurred by us with Madsen Associates CPA's,
Inc., for the fiscal year 2003 and 2004 to be $5,000. These other fees consisted
of fees for review of our last three quarterly financial statements for the
fiscal year ended December 31, 2004 and all the subsequent periods for 2005
fiscal year.
The Board wishes to obtain from the stockholders a ratification of the Board's
action in appointing the accounting firm Madsen Associates CPA's, Inc., as
the Certified Independent Accountants for the fiscal year 2003 and 2004
respectively, and such ratification requires the affirmative vote of a
majority of the shares of Common Stock present or represented by proxy and
entitled to vote at the Annual Meeting. The Board has approved the engagement
of Madsen Associates CPA's, Inc. for audit services. Madsen Associates CPA's,
Inc., is expected to be present at the Annual Meeting and will be afforded the
opportunity to make a statement if he desires to do so. Madsen Associates CPA's,
Inc., will also be available to respond to appropriate questions.
In the event the appointment of Madsen Associates CPA's, Inc., as independent
auditors for fiscal year 2003 and 2004 respectively, is not ratified by the
stockholders the adverse vote will be considered as a direction to the Board
to select other auditors for the following year. However, because of the
difficulty in making any substitution of auditors so long after the beginning
of the current year, it is contemplated that the appointment for the fiscal year
2003 and 2004 respectively, will be permitted to stand unless the Board finds
other good reason for making a change.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE
FOR RATIFICATION OF THE APPOINTMENT OF MADSEN ASSOCIATES CPA'S, INC. AS
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2003 AND 2004 RESPECTIVELY.
ITEM III.
PROPOSAL TO APPROVE THE COMPANY'S 2005 STOCK OPTION PLAN
The Board of Directors of the Company has re-adopted the Company's 2001 Joint
Incentive and Non-Qualified Stock Option Plan for the 2005 fiscal year,
with retro-active re-pricing of the option shares based on a 12 months average
of the fair market value of the Stock for each of the option period (2001-2004).
The 2005 Plan will not become effective, however, unless approved by the holders
of a majority of the shares of Common Stock present or represented and
voting thereon at the meeting. The text of the 2005 Plan is set forth in
Exhibit A hereto.
The Company has no other stock option plan.
Under the 2005 Plan, options to purchase up to 2,000,000 shares of Common Stock
may be granted to key employees of the Company and directors, consultants and
other individuals providing services to the Company through July , 2015. Such
options may be intended to qualify as "incentive stock options" with respect
14
to employees within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended, or they may be intended not to qualify under such Section
422 ("non-qualified stock options").
The 2005 Plan will be administered by the Option Committee of the Board
of Directors (the "Committee"). The 2005 Plan allows the Board of Directors of
the Company to designate a committee of at least two non-employee directors to
administer the 2005 Plan for the purpose of complying with Rule 16b-3(d)(1)
under the Securities Exchange Act of 1934, as amended, with respect to future
grants under the 2005 Plan. The Committee will determine the persons who are to
receive options and the number of shares to be subject to each option. In
selecting individuals for options and determining the terms thereof, the
Committee may consider any factors that it deems relevant, including present and
potential contributions to the success of the Company. Because the officers and
the employees of the Company who may participate in the 2005 Plan and the amount
of their options will be determined on a discretionary basis by the Committee or
the full Board of Directors, it is not possible to state the names or positions
of, or the number of options that may be granted to, the Company's officers and
employees. Options granted under the 2005 Plan must be exercised within a period
fixed by the Committee, which may not exceed ten years from the date of
grant, or, in the case of incentive stock options granted to a holder of more
than 10% of the total combined voting power of all classes of stock of the
Company, five years from the date of grant of the option. Options may be
made exercisable immediately or in installments, as determined by the
Committee.
Options granted under the 2005 Plan are not transferable other than by
will or the laws of descent and distribution during the lifetime of the Optionee
and may be exercised only by the Optionee. The 2005 Plan provides that, in the
case of an incentive stock option, the exercise price of an option may not be
less than the fair market value of the Common Stock on the date of grant of the
option, and, if the Optionee is a holder of more than 10% of the total combined
voting power of all classes of stock of the Company, the exercise price of an
option may not be less than 110% of the fair market value of the Common Stock on
the date of grant of the option. The exercise price may be paid in cash, shares
of Common Stock owned by the Optionee, or a combination of cash and shares.
Stock options granted under the 2005 Plan may include the right to
acquire a reload option. If a participant pays all or part of the purchase price
of an option with shares of the Company's Common Stock held by the participant
for at least six months, then upon exercise of the option, the participant is
granted a reload option to purchase, at the fair market value as of the date of
grant of the reload option, the number of whole shares used by a participant in
the payment of the purchase price. A reload option is not exercisable until
the earlier of one year from the date of grant or the first day after the
expiration date of the option being exercised.
The 2005 Plan provides that in the event of changes in the corporate
structure of the Company or certain events affecting the Common Stock, the
Board, or the Committee, may, in its discretion, make adjustments with respect
to the number or kind of shares that may be issued under the 2005 Plan or that
may be covered by outstanding options, or in the exercise price per share, or in
the vesting of any options, or any combination of such terms. The 2005 Plan
provides that in connection with any merger or consolidation in which the
Company is not the surviving corporation and that results in the holders of the
outstanding voting securities of the Company (determined immediately prior to
such merger or consolidation) owning less than a majority of the outstanding
voting securities of the surviving corporation (determined immediately
following such merger or consolidation), any sale or transfer by the Company
of all or substantially all of its assets or any tender offer or exchange
offer for the acquisition, directly or indirectly, by any person or group of all
or a majority of the then outstanding voting securities of the Company,
all outstanding options fully vested under the 2005 Plan will become
exercisable in full on and after (i) 15 days prior to the effective date of
such merger, consolidation, sale, transfer or acquisition or (ii) the date of
commencement of such tender offer or exchange offer, as the case may be. In any
such situation, the board is authorized to give option holders the right to
immediately exercise all of their options, whether fully vested or unvested.
For Federal income tax purposes, an Optionee will not recognize any
15
income upon the grant of a non-qualified stock option or an incentive stock
option.
Upon the exercise of a non-qualified stock option, the Optionee will
realize ordinary income equal to the excess (if any) of the fair market value of
the shares purchased upon such exercise over the exercise price. The Company
will be entitled to a deduction from income in the same amount and at the same
time as the Optionee realizes such income. Upon the sale of shares purchased
upon such exercise, the Optionee will realize capital gain or loss measured by
the difference between the amount realized on the sale and the fair market value
of the shares at the time of exercise of the option.
In contrast, upon the exercise of an incentive stock option, an
Optionee will not realize income, and the Company will not be entitled to a
deduction relating thereto. However, the difference between the fair market
value of the shares on the date of exercise and the exercise price constitutes
an item of tax preference for purposes of the calculating an alternative minimum
tax, which, under certain circumstances, could cause tax liability as a result
of an exercise. If the Optionee retains the shares issued to him upon exercise
of an incentive stock option for more than one year after the date of issuance
of such shares and two years after the date of grant of the option, then any
gain or loss realized on a subsequent sale of such shares will be treated as
long-term capital gain or loss. If, on the other hand, the Optionee sells the
shares issued upon exercise within one year after the date of issuance or within
two years after the date of grant of the option, then the Optionee will realize
ordinary income, and the Company will be entitled to a deduction from income, to
the extent of the excess of the fair market value of the shares on the date of
exercise or the amount realized on the sale (whichever is less) over the
exercise price. Any excess of the sale price over the fair market value of such
shares on the date of exercise will be treated as capital gain.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE
TO APPROVE THE 2005 STOCK-OPTION PLAN AS PRESENTED.
OTHER BUSINESS
The Board of Directors of the Company does not know of any other matters
that may be brought before the Meeting. However, should any additional matters
properly come before the meeting, it is the intention of the persons named in
the accompanying proxy to vote on such matters in accordance with their best
judgment. The enclosed proxy confers discretionary authority to take action with
respect to any additional matters, which may come before the meeting.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of
1934, as amended, any proposals of stockholders intended to be considered by the
Company for inclusion in the proxy materials for the 2004 Annual Meeting of
Stockholders must be received by the Company by January 31, 2005. Such
proposals should be directed to Meridian Holdings, Inc., Attention: Secretary,
900 Wilshire Blvd., Suite 500 Los Angeles, CA 90017. No stockholder proposals
were received for inclusion in this Proxy Statement.
STOCKHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING
Any proposals of stockholders intended to be considered by the Company for
inclusion in the proxy materials for the 2004 Annual Meeting of Stockholders
must be received by the Company by January 31, 2005. Such proposals should be
directed to Meridian Holdings, Inc., Attention: Secretary, 900 Wilshire Blvd,
Suite 500 Los Angeles, CA 90017. No stockholder proposals were received for
inclusion in this Proxy Statement.
OTHER MATTERS
The Company is not aware of any other business to be represented at the Annual
Meeting. However, should any additional matters properly come before the
meeting, it is the intention of the persons named in the accompanying proxy to
vote on such matters in accordance with their best judgment. The enclosed proxy
confers discretionary authority to take action with respect to any additional
matters which may come before the meeting.
16
PROXY SOLICITATION
All expenses in connection with solicitation of proxies will be borne by the
Company. In addition to solicitation by mail, proxies may be solicited
personally by telephone, telecopy or telegraph by Company officers and
employees. Brokers, banks, nominees, fiduciaries and other custodians will be
requested to solicit beneficial owners of shares and will be reimbursed for
their expenses.
ADDITIONAL INFORMATION AVAILABLE
The Company files an Annual Report on Form 10-KSB with the Securities and
Exchange Commission. Stockholders may obtain a copy of this report
(without exhibits), without charge, by writing to Corporate Meridian Holdings,
Inc. 900 Wilshire Blvd, Suite 500, Los Angeles CA 90017
/s/ ANTHONY C. DIKE
----------------------
Anthony C. Dike, MD, Chairman & CEO
/s/ Michael Muldavin
----------------------
Michael Muldavin, Director
/s/ James Truher
----------------------
James Truher Director
/s/ Randy Simpson
----------------------
Randy Simpson, Director
/s/ Marcellina Offoha
----------------------
Marcellina Offoha, Ph.D, Director
By order of the
Board of Directors
Anthony C. Dike, MD
Chairman of the Board
17
EXHIBIT 99.1
STOCK OPTION PLAN
OF
MERIDIAN HOLDINGS, INC.
SECTION 1 - DESCRIPTION OF PLAN. The Stock Option Plan (the "Plan"), of
---------------------------------
Meridian Holdings, Inc., (the "Company"), a corporation organized under the laws
of the State of Colorado. Under this Plan, key employees of the Company or any
present and future subsidiaries of the Company to be selected as below set
forth, may be granted options (the "Options") to purchase shares of the Common
Stock, based on the average of the preceding 12 months fair-market value
of the Company's Common Stock("Common Stock"). For purposes of this Plan,
the term "subsidiary" mean any corporation 50% or more of the voting stock of
which is owned by the Company or by a subsidiary (as so defined) of the Company.
It is intended that the Options under this Plan will either qualify for
treatment as incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and be designated "Incentive Stock
Options" or not qualify for such treatment and be designated "Non-qualified
Stock Options".
SECTION 2 - PURPOSE OF PLAN. The purpose of the Plan and of granting
--------------------------------
options to specified employees is to further the growth, development and
financial success of the Company and its subsidiaries by providing additional
incentives to certain key employees holding responsible positions by assisting
them to acquire shares of Common Stock and to benefit directly from the
Company's growth, development and financial success.
SECTION 3 - ELIGIBILITY. The persons who shall be eligible to receive
---------------------------
grants of Options under this Plan shall be the directors, officers, key
employees and consultants of the Company or any of its subsidiaries. A person
who holds an Option is herein referred to as an "Optionee". More than one Option
may be granted to any one Optionee, however no Optionee may be granted options
to purchase an aggregate number of shares of Common Stock amounting to thirty
percent (30%) or more of the total number of shares that may be issued pursuant
to this Plan upon the exercise of Options granted hereunder.
For Incentive Stock Options, the aggregate fair market value (determined
at the time the Option is granted) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by any Optionee
during any calendar year (under all Incentive Stock Option plans of the Company
or any subsidiary which are qualified under Section 422 of the Code) shall not
exceed $5,000,000.00 .
SECTION 4 -- ADMINISTRATION. The Plan shall be administered by a
-------------------------------
committee (the "Option Committee") to be composed of at least two
"disinterested" (as such term is used in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934) members of the Board of Directors of the
Company (the "Board"). Members of the Option Committee shall be appointed, both
initially and as vacancies occur, by the Board, to serve at the pleasure of the
Board. The entire Board may serve as the Option Committee, if by the terms of
this Plan all Board members are otherwise eligible to serve on the Option
Committee. No person may serve as a member of the Option Committee if such
person (a) is eligible to receive an Option under the Plan or under any other
plan of the Company entitling the participants to acquire Common Stock or stock
options of the Company or any of its affiliates (other than plans excepted by
Rule 16b-3(c)(2)), or (b) was so eligible at any time within the preceding
one-year period. The Option Committee shall meet at such times and places as it
determines and may meet through a telephone conference call. A majority of its
members shall constitute quorum, and the decision of a majority of those present
at any meeting at which a quorum is present shall constitute the decision of the
Option Committee. A memorandum signed by all of its members shall constitute
the decision of the Option Committee without necessity, in such event, for
holding an actual meeting. The Option Committee is authorized and empowered to
administer the Plan and, subject to the Plan, including the provisions of
Section 17, (i) to select the Optionees, to specify the number of shares of
18
Common Stock with respect to which Options are granted to each Optionee, to
specify the Option Price and the terms of the Options, and in general to grant
Options; (ii) to determine the dates upon which Options shall be granted and the
terms and conditions thereof in a manner consistent with this Plan, which terms
and conditions need not be identical as to the various Options granted; (iii) to
interpret the Plan; (iv) to prescribe, amend and rescind rules relating to the
Plan (v) to accelerate the time during which an Option may be exercised,
notwithstanding the provisions of the Option Agreement (as defined in Section
12) stating the time during which it may be exercised; (vi) to accelerate the
date by which any unexercised but vested portion of an Option terminates,
thereby requiring the Optionee to exercise the vested unexercised portion of
such Option or forfeit it, but in no event shall such date be less than two (2)
weeks later than the date the Optionee is informed of such acceleration; and
(vii) to determine the rights and obligations of participants under the Plan.
The interpretation and construction by the Option Committee of any provision of
the Plan or of any Option granted under it shall be final. No member of the
Option Committee shall be liable for any action or determination made in good
faith with respect to the Plan of any Option granted under it.
SECTION 5 -- SHARES SUBJECT TO THE PLAN. The aggregate number of shares
-----------------------------------------
of Common Stock which may be purchased pursuant to the exercise of Options
(whether Incentive Stock Options or Non-qualified Stock Options) granted under
the Plan shall not exceed 2,000,000 shares. Upon the expiration or termination
for any reason of an outstanding Option which shall not have been exercised in
full or upon the repurchase by the Company of shares of Common Stock issued
pursuant to rights of repurchase, any shares of Common Stock then remaining
unissued which shall have been reserved for issuance upon such exercise or which
shall have been repurchased shall again become available for the granting of
additional Options under the Plan.
SECTION 6 -- OPTION PRICE. Expect as provided in Section 11, the purchase
--------------------------
price per share (the "Option Price") of the shares of Common Stock underlying
each Option shall be not less than the fair market value of such shares on the
date of granting of the Option. Such fair market value shall be determined by
the Option Committee on the basis of reported closing sales price on such date
or, in the absence of reported sales price on such date, on the basis of the
average of reported closing bid and asked prices on such date. In the absence
of either reported sales price or reported bid and asked prices, the Option
Committee shall determine such market value on the basis of the best available
evidence.
SECTION 7 -- EXERCISE OF OPTIONS. Subject to all other provisions of
-------------------------------------
this Plan, each Option shall be exercisable for the full number of shares of
Common Stock subject thereto, or any part thereof, in such installments and at
such intervals as the Option Committee may determine in granting such Option,
provided that (i) each Option shall become fully exercisable no later than five
(5) years from the date the Option is granted, (ii) the number of shares of
Common Stock subject to each Option shall become exercisable at the rate of at
least 20% per year each year until the Option is fully exercisable, and (iii) no
option may be exercisable subsequent to its termination date. Each Option shall
terminate and expire, and shall no longer be subject to exercise, as the Option
Committee may determine in granting such Option, but in no event later than ten
years after the date of grant thereof. The Option shall be exercised by the
Optionee by giving written notice to the Company specifying the number of shares
to be purchased and accompanied by payment of the full purchase price therefor
in cash, by check or in such other form of lawful consideration as the Board may
approve from time to time, including, without limitation and in the sole
discretion of the Board, the assignment and transfer by the Optionee to the
Company of outstanding shares of the Company's Common Stock theretofore held by
Optionee.
SECTION 8 -- ISSUANCE OF COMMON STOCK. The Company's obligation to issue
--------------------------------------
shares of its Common Stock upon exercise of an Option granted under the Plan is
expressly conditioned upon the completion by the Company of any registration or
other qualification of such shares under any state and/or federal law or ruling
or regulations or the making of such investment or other representations and
19
undertakings by the Optionee (or his or her legal representative, heir or
legatee, as the case may be) in order to comply with the requirements of any
exemption from any such registration or other qualification of such shares which
the Company in its sole discretion shall deem necessary or advisable. Such
required representations and undertakings may include representations and
agreements that such Optionee (or his or her legal representative, heir or
legatee): (a) is purchasing such shares for investment and not with any present
intention of selling or otherwise disposing thereof; and (b) agrees to have a
legend placed upon the face and reverse of any certificates evidencing such
shares (or, if applicable, and appropriate data entry made in the ownership
records of the Company) setting forth (i) any representations and undertaking
which such Optionee and undertaking which such Optionee has given to the Company
or a reference thereof, and (ii) that, prior to effecting any sale or other
disposition of any such shares, the Optionee must furnish to the Company an
opinion of counsel, satisfactory to the Company and its counsel, to the effect
that such sale or disposition will not violate the applicable requirements of
state and federal laws and regulatory agencies. The Company will make a
reasonable good faith effort to comply with such state and/or federal laws,
rulings or regulations as may be applicable at the time the Optionee (or his or
her legal representative, heir or legatee, as the case may be) wishes to
exercise an Option, provided that the Optionee (or his or her legal
representative, heir or legatee) also makes a reasonable good faith effort to
comply with said laws, rulings and regulations; however, there can be no
assurance that either the Company or the Optionee (or his or her legal
representative, heir or legatee), each in the respective exercise of their
reasonable good faith business judgment, will in fact comply with said laws,
ruling and regulations.
SECTION 9 -- NONTRANSFERABILITY. No Option shall be assignable or
-----------------------------------
transferable, except that an Option may be transferable by will or by the laws
of descent and distribution or pursuant to qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder, provided such Option explicitly so provides. During
the lifetime of an Optionee, any Option granted to him or her shall be
exercisable only by him or her. After the death of an Optionee, the Option
granted to him (if so transferable) may be exercised, prior to its termination,
only by his or her legal representative, his legatee or a person who acquired
the right to exercise the Option by reason of the death of the Optionee.
SECTION 10 -- RECAPITALIZATION, REORGANIZATION, MERGER OR CONSOLIDATION.
--------------------------------------------------------------------------
If the outstanding shares of Common Stock of the Company are increased,
decreased, or exchanged for different securities through reorganization, merger,
consolidation, recapitalization, reclassification, stock split, stock dividend
or like capital adjustment, a proportionate adjustment shall be made (a) in the
aggregate number of shares of Common Stock which may be purchased pursuant to
the exercised of Options granted under the Plan, as provided in Section 5, and
(b) in the number, price, and kind of shares subject to any outstanding Option
granted under the Plan.
Upon the dissolution or liquidation of the Company or upon any
reorganization, merger, or consolidation in which the Company does not survive
or in which the equity ownership of the Company prior to such transaction
represents less than 50% of the equity ownership of the Company subsequent to
the transaction, the Plan and each outstanding Option shall terminate; provided
that the Company will give written notice thereof each Optionee at least thirty
(30) days prior to the date of such dissolution, liquidation, reorganization,
merger or consolidation, and in such event (a) the Company may, but shall not be
obligated to, with respect to each Optionee who is not tendered an option by the
surviving corporation in accordance with all of the terms of provision (b)
immediately below, grant the right, until ten days before the effective date of
such dissolution, liquidation, reorganization, merger or consolidation, to
exercise, in whole or in part, any unexpired Option or Options issued to him or
her, without regard to the surviving entity.
SECTION 12 -- OPTION AGREEMENT. Each Option granted under the Plan
-----------------------------------
shall be evidenced by a written stock option agreement executed by
the Company and accepted by the Optionee, which (a) shall contain each of
20
the provisions and agreements herein specifically required to be contained
therein, (b) shall contain terms and conditions permitting such Option to
qualify for treatment as an incentive stock option under Section 422 of the
Code if the Option is designated an Incentive Stock Option,
(c) may contain the agreement of the Optionee to resell any Common Stock
issued pursuant to the exercise of Options granted under the Plan to the
Company (or its assignee) for the Option Price of such Options to the extent
any vesting restrictions apply to such Common Stock, or for the then fair
market value of such Common Stock if no such restrictions then apply,
(d) may contain the agreement of the Optionee granting a right of
first refusal to the Company (or its assignee) on transfers of Common Stock no
subject to vesting restrictions, and (e) may contain such other terms and
conditions as the Option Committee deems desirable and which are not
inconsistent with the Plan. With regard to agreements of the Optionee
contemplated by items (c) and (d) of the previous sentence, the Company's rights
pursuant to a right of first refusal and, notwithstanding any other termination
provisions, the Company's right to repurchase vested shares shall terminate upon
the closing of the first sale of the Common Stock of the Company to the public
pursuant to a registration statement filed with, and declared effective by the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
with gross proceeds to the Company as seller of not less than $7.5 million
before deducting underwriting commissions, or upon the liquidation or
dissolution of the Company.
SECTION 13 -- RIGHTS AS A SHAREHOLDER. An Optionee or a transferee of an
---------------------------------------
Option shall have no rights as a shareholder with respect to any shares covered
by this Option until exercise thereof, except that each Optionee shall have the
right to receive a copy of the Company's audited financial statements (if
available) no later than 120 days following the end of each fiscal year of the
Company. No adjustment shall be made for dividends (Ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
of which the record date is prior to the exercise date, except as expressly
provided in Section 10.
SECTION 14 -- TERMINATION OF OPTIONS. Each Option granted under the Plan
-------------------------------------
shall set forth a termination date thereof, which date shall be not later than
ten years from the date such Option is granted. In any event all Options shall
terminate an expire upon the first to occur of the following events:
(a) the expiration of three months from the date of an Optionee's
termination of employment (other than by reason of death), except that if an
Optionee is then disabled (within the meaning of Section 22(e)(3) of the Code),
the expiration of one year from the date of such Optionee's termination of
employment; or
(b) the expiration of one year from the date of the death of an Optionee if
his or her death occurs while he or she is, or not later than three months after
he or she has ceased to be, employed by the Company or any of its subsidiaries
in a capacity in which he or she would be eligible receive grants of Options
under the Plan; or
(C) the termination of the Option pursuant to Section 10 of the Plan.
The termination of employment of an Optionee by death or otherwise shall
not accelerate or otherwise affect the number of shares to which an Option may
be exercised and such Option may only be exercised with respect to that number
of shares which could have been purchased under the Option had the Option been
exercised by the Optionee on the date of such termination.
SECTION 15 -- WITHHOLDING OF TAXES. The Company may deduct and withhold
------------------------------------
from the wages, salary, bonus and other compensation paid by the Company to the
Optionee the requisite tax upon the amount of taxable income, if any, recognized
by the Optionee in connection with the exercise in whole or in part of any
Option or the sale of Common Stock issued to the Optionee upon exercise of the
Option, all as may be required from time to time under any federal or state laws
and regulations. This withholding of tax shall be required from time to time
under any federal or state tax laws and regulations. This withholding of tax
21
shall be made from the Company's concurrent or next payment of wages, salary,
bonus or other income to the Optionee or by payment to the Company by the
Optionee of required withholding tax, as the Option Committee may determine.
SECTION 16 -- EFFECTIVENESS AND TERMINATION OF PLAN. The Plan shall be
------------------------------------------------------
effective on the date on which it is adopted by the Board; provided, however,
(a) the Plan shall be approved by the shareholders of the Company within 12
months of such date of adoption by the Board, (b) no Option shall be exercised
pursuant to the Plan until the Plan has been approved by the shareholders of the
Company, and (c) no Option may be granted hereunder on or after that date which
is ten years form the effective date of the Plan. The Plan shall terminate when
all Options granted hereunder either have been fully exercised, and all shares
of Common Stock which may be purchased pursuant to the exercise of such Options
have been so purchased, or have expired; provided, however, that the Board may
in its absolute discretion terminated the Plan at any time. No such
termination, other than as provided for in Section 10 hereof, shall in any way
affect any Option then outstanding.
SECTION 17 -- AMENDMENT OF PLAN. The Board may (a) make such changes in
the terms and conditions of granted Options as it deems advisable, provided each
Optionee affected by such change consents thereto, and (b) make such amendments
to the Plan as it deems advisable. Such amendments and changes shall include,
but not be limited to, acceleration of the time at which an Option may be
exercised, but may not, without the written consent or approval of the holders
of a majority of that voting stock of the Company which is represented and is
entitled to vote at a duly held shareholders meeting (a) increase the maximum
number of shares subject to Options, except pursuant to Section 10 of the Plan
(b) decrease the Option Price requirement contained in Section 6 (except as
contemplated by Section 11) of the Plan (c) change the designation of the class
of employees eligible to receive Options (d) modify the limits set forth in
Section 3 of the Plan regarding the value of Common Stock for which any Optionee
may be granted Options, unless the provisions of Section 422(d) of the Code are
likewise modified or (e) in any manner materially increased the benefits
accruing to participants under the Plan.
BE IT RESOLVED:
The terms and conditions of this Stock Option Plan are accepted by the
Corporation on this 31st day of December 2004.
/S/ ANTHONY C. DIKE
-------------------------
Anthony C. Dike
Chief Executive Officer SEAL
22
EXHIBIT 99.2
STOCK OPTION AGREEMENT
AGREEMENT, made this ____ day of ______, 2005, by and between
Meridian Holdings, Inc., a Colorado corporation, hereinafter referred to as
the "Company" and , an individual, hereinafter referred to as
the "Optionee".
WITNESSETH:
WHEREAS, pursuant to the resolution adopted by the Board of Directors of the
Company, the Company has entered into an Employment Agreement with the Optionee
and, pursuant to the Agreement, the Company has agreed to grant to the Optionee
an Option to purchase shares of common stock of the Company at the prices per
share hereinafter set forth, such option to be for the term and upon the terms
and conditions hereinafter stated;
NOW THEREFORE, in good consideration of the promises, the mutual covenants
herein contained and other good and valuable consideration, the parties hereto
agree as follows:
1. OPTION. The Company hereby grants to the Optionee the right and option
-------
(hereinafter referred to as the "Option") to purchase all or any part of an
aggregate of 100,000 shares of common stock of the Company (hereinafter referred
to as the "Shares") on the terms and conditions herein set forth.
2. TERM. The term of the Option shall commence on the January 1, 2005 and
-----
shall expire Sixty (60) months from such date on September 1, 2010, save and
except that upon termination of the Agreement, the Option granted herein shall
cease and expire ninety (90) days from the date of terminating the Agreement.
3. PURCHASE PRICE. The purchase price of the Option shall be
----------------
______dollars ($XXXX.) the receipt and sufficiency of which is hereby
acknowledged. The Optionee has the right to purchase Shares in accordance
with the 2005 Stock Option Plan, which purchase price shall be payable in
full, in cash or note, upon exercise of the Option in accordance with the terms
and conditions here provided.
4. SECURITIES TO BE REGISTERED. Both the Option and the Shares covered by
the Option shall be "registered securities" as defined for the General Rules and
Regulations under the Securities Act of 1933, as amended (the "Act").
5. EXERCISE. The Option shall be exercisable in whole or in part at any
time and from time to time during the term of the Option by written notice
delivered to the Company at 900 Wilshire Boulevard, Suite 500, Los Angeles,
California 90017. The notice shall state the number of Shares with respect to
which the Option is being exercised, shall contain a representation and
agreement by the Optionee in form and substance substantially as set forth in
the Notice of Exercise, shall be signed by the Optionee and shall be accompanied
by payment. The Option shall not be exercised at any time when its exercise or
the delivery of the Shares referred to in the notice would be a violation of any
law, governmental regulation or ruling. The Option shall be exercisable only by
the Optionee.
6. ASSIGNMENT AND TRANSFER. The Option and the rights and obligations of
parties hereunder shall inure to the benefit of and shall be binding upon their
successors and assigns.
7. OPTIONEE AS SHAREHOLDER. Optionee shall have all rights as a shareholder
with respect to the Shares covered by the Option on and subsequent to the date
of issuance of a stock certificate or stock certificates to it. Adjustments
will be made for dividends or other rights with respect to which the record date
is on or subsequent to the date such stock certificates were issued.
8. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of a change
in the capital structure of the Company as a result of any stock dividend, stock
23
split, combination or reclassification of shares, recapitalization or
consolidation of, the number of shares covered by the Option shall be
appropriately adjusted to ensure the same absolute benefit to the Optionee.
9. NOTICES. All notices required or permitted to be given under this
Agreement shall be sufficient if in writing and delivered or sent by registered
or certified mail to the principal office of each party.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties have executed this instrument on the day and
year first written above.
ATTEST:
Meridian Holdings, Inc.
By: /S/ ANTHONY C. DIKE
----------------------
ANTHONY C. DIKE
CHIEF EXECUTIVE OFFICER
CHAIRMAN OF OPTION COMMITTEE
24
EXHIBIT 99.3
WRITTEN CONSENT
OF THE BOARD OF DIRECTOR OF
Meridian Holdings, Inc..
----------------------
a Colorado Corporation
Pursuant to the authority of Colorado Corporation Code , the undersigned,
being the Board of Directors of Meridian Holdings, Inc., a Colorado corporation,
does hereby adopt and consent to the following recitals and resolution:
Item 1: Approval of Proxy Statement for 2005 annual shareholder meeting
WHEREAS, it has been presented to the board of directors, a draft copy of
the Proxy Statement for review and approval, with the following items listed for
voting by the shareholders of Record as of December 31, 2004:
1. To elect four members of the Company's Board of Directors to serve for
a one-year term;
2. To ratify the appointment of Madsen Associates CPA's, Inc., as the
Company's independent certified public accountant for the fiscal year ending
December 31, 2003 and 2004 respectively; and
3. To consider and vote upon a proposal to re-approve the Company's 2001 Joint
Incentive and Non-Qualified Stock Option Plan for the 2005 fiscal year,
with retro-active re-pricing of the option shares based on a 12 months average
of the fair market value of the Stock for each of the option period (2001-2004)
4. To transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements thereof.
WHEREAS, it is deemed advisable and in the best interest of this corporation and
its shareholders that the items listed in the proxy statement be considered
and voted upon by the shareholders.
NOW THEREFORE BE IT RESOLVED, and it is, that the above listed items be
approved for inclusion in the 2005 Proxy statement to be voted upon by the
shareholders.
RESOLVED FURTHER, that the directors and officers of this corporation, and
any of them, be, and they hereby are, authorized, empowered and directed for
and on behalf of this corporation and in its name to execute, deliver and
cause the performance of all such further documents and to take such further
actions as such officer, or any of them, may in their discretion deem
necessary, appropriate or advisable in order to carry out and perform the
intent of the foregoing resolution.
This Written Consent shall be filed in the minute book of this corporation
and shall become part of the records of this corporation.
Dated as of December 31 , 2004.
/s/ ANTHONY C. DIKE
----------------------
Anthony C. Dike, MD, Chairman & CEO
/s/ Michael Muldavin
----------------------
Michael Muldavin, Director
/s/ James Truher
----------------------
James Truher Director
/s/ Randy Simpson
----------------------
Randy Simpson, Director
/s/ Marcellina Offoha
----------------------
Marcellina Offoha, Ph.D, Director
25
12