SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
INNOVATIVE MEDICAL SERVICES
---------------------------
(Exact name of Registrant as specified in its charter)
CALIFORNIA 84-110928
- ---------- ---------
(State of Incorporation) (I.R.S. Employer ID No.)
1725 Gillespie Way, El Cajon, California 92020
----------------------------------------------
(Address of Principal Offices)
The Innovative Medical Services 1996 Employee Stock Option Plan and the
-----------------------------------------------------------------------
Innovative Medical Services Directors and Officers Stock Option Plan
- --------------------------------------------------------------------
(Full Title of the Plan)
Michael L. Krall
INNOVATIVE MEDICAL SERVICES
1725 Gillespie Way
El Cajon, CA 92020
------------------
(Name and address of Agent for Service)
(619)596 8600
-------------
(Telephone number, including area code of Agent for Service)
CALCULATION OF REGISTRATION FEE
Title of Amount of Max. Off. Maximum Amount of
Securities Securities Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
- ---------- ---------- --------- --------- ------------
Common Stock(1) 2,000,000 $3.0000(2) $6,000,000 $1,818.00
(1) Issueable pursuant to options granted pursuant to the plans.
(2) Estimated Price in accordance with Rule 457(h) and based upon the last
reported sale on the NASDAQ SmallCap Market on December 19, 1996.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
The documents containing the information related to the Innovative
Medical Services 1996 Employee Stock Option Plan and the Innovative Medical
Services Directors and Officers Stock Option Plan which are not being filed
as part of this Registration Statement (the "Registration Statement") and
documents incorporated by reference in response to Item 3 of Part II of
this Registration Statement, which taken together constitute a prospectus
that meets the requirements of Section 10(a) of the Securities Act of 1933
(the "Securities Act") will be sent or given to the participant by the
Registrant as specified by Rule 428(b)(1) of the Securities Act.
Item 2. Registrant Information and Employee Plan Annual Information.
As required by this Item, the Registrant shall provide to the
participant a written statement advising them of the availability without
charge, upon written or oral request, of documents incorporated by
reference in Item 3 of Part II hereof and of documents required to be
delivered pursuant to Rule 428(b) under the Securities Act. The statement
shall include the address listing the title or department and telephone
number to which the request is to be directed.
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Registrant incorporates the following documents filed with the
Securities and Exchange Commission by reference in this Registration
Statement:
(a) The Registrant's Annual Report on Form 10-KSB for the fiscal year
ended July 31, 1996.
(b) The Registrant's Quarterly Report on Form 10-QSB for the three
month period ended October 31, 1996.
(c) Description of the Common Stock as incorporated in the
Registration Statement on Form SB-2 dated August 8, 1996, SEC
file no. 333-000434
(d) All other documents filed by Registrant after the date of this
Registration Statement under Section 13(a), 13(c), 14 and 15(d)
of the Securities Exchange Act of 1934, (the
2
<PAGE>
Exchange Act) are incorporated by reference herein and in in the
Section 10 Prospectus to be a part thereof from the date of
filing of such documents.
Item 4. Not Applicable.
Item 5. Interests of Named Experts and Counsel: Not applicable.
Item 6. Indemnification of Officers and Directors.
The Company's Certificate of Incorporation provides the Company's
Officers and Directors the full extent of the protection offered by the
General Corporation Law of the State of California.
The General Corporation Law of the State of California provides that
a corporation may include a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for
any breach of the directors' duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under the
Corporation Law dealing with the liability of directors for unlawful
payment of dividend or unlawful stock purchase or redemption, or (iv) for
any transaction from which the director derived an improper personal
benefit. No such provision shall eliminate or limit the liability of a
director for any act or omission occurring prior to the date when such
provision becomes effective.
The Company's Bylaws provide that the Company may indemnify its
Officers and Directors to the full extent permitted by the General
Corporation Law of the State of California.
The General Corporation Law of the State of California provides that
a corporation may indemnify its directors and officers against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and incurred by them in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the rights
of the corporation), by reason of being or having been directors or
officers, if such directors or officers acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, they
had no reasonable cause to believe their conduct was unlawful. The
indemnification provided the General Corporation Law of the State of
California is not exclusive of any other rights arising under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
3
<PAGE>
Item 7. Exemption from Registration Claimed: Not Applicable
Item 8. Exhibits.
99.1 The Innovative Medical Services 1996 Employee Stock Option Plan
99.2 The Innovative Medical Services Directors and Officers Stock
Option Plan
5.1 Opinion of Dennis Brovarone, regarding legality of shares being
issued.
23.1 Consent of Dennis Brovarone, (See Opinion).
23.2 Consent of Steven Holland, Certified Public Accountant
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes.
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
Registration Statement;
(iii) 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.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended that are incorporated by reference into
this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement to the securities offered therein, and
the offering of such securities offered at that time shall be deemed to be
the initial bona fide
4
<PAGE>
offering thereof.
(3) 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.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions described
in Item 6, or otherwise, 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 that matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the questions whether such
indemnification is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 the City of El Cajon, California on this 19th
Day of December, 1996.
INNOVATIVE MEDICAL SERVICES
By: MICHAEL L. KRALL
---------------------------
Michael L. Krall, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
NORMAN L. ANDERSON Chairman of the Board December 19, 1996
- ----------------------
Norman L. Anderson
GARY BROWNELL Director, December 19, 1996
- ---------------------- Chief Financial Officer
Gary Brownell
EUGENE S. PEISER Director December 19, 1996
- ----------------------
Eugene S. Peiser
PATRICK GALUSKA Director December 19, 1996
- ----------------------
Patrick Galuska
DENNIS BROVARONE Director December 19, 1996
- ----------------------
Dennis Brovarone
6
INNOVATIVE MEDICAL SERVICES
1996 STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, terms have the meaning hereinafter set forth unless
the context should clearly indicate the contrary:
(a) "Board" shall mean the Board of Directors of the Company, or the
Executive Committee of such Board;
(b) "Business Days" shall mean for calculation purposes the days of
the week in which the NASDAQ System conducts and is open for regular
trading activity;
(c) "Committee" shall mean the Administrative Committee appointed by
the Board to oversee the administration of this Plan;
(d) "Company" shall mean Innovative Medical Services, a California
corporation;
(e) "Director" shall mean a member of the Board;
(f) "Fair market value" shall mean the average of the closing bid and
asked price at which the Stock is listed in the NASDAQ quotation system on
the day an Option is granted hereunder, or in the absence of any reported
quote on such day, the first preceding day on which there was such a quote
available;
(g) "Grant" means the issuance of an Option hereunder to an Optionee
entitling such Optionee to acquire Stock on the terms and conditions set
forth in a Stock Option Agreement to be entered into with the Optionee,
"Grant" may also include a direct grant of stock;
(h) "Incentive Stock Option" shall mean a compensatory Option
provided to an employee of the Company giving him or her the right to
purchase Stock at a predetermined price under a plan that meets certain
Internal Revenue Code requirements and involves registered stock;
(I) "Key Employee" shall mean a Company employee who in the judgment
of the Committee has the ability to positively affect the profitability and
economic well-being of the Company, part-time employees, independent
contractors, consultants and advisors performing bonafide services to the
Company shall also be deemed employees solely for the purpose of
participation under the Plan;
(j) "Option" shall mean the right granted to an Optionee to acquire
Stock of the Company pursuant to the Plan;
(k) "Optionee" shall mean an employee of the Company or a non-employee
Director of the Company to whom a Grant hereunder has been made;
<PAGE>
(l) "Plan" shall mean the Innovative Medical Services 1996 Stock
Option Plan, the terms of which are herein set forth;
(m) "Stock" shall mean the common stock of the Company or, in the
event the outstanding shares of stock are hereafter changed into or
exchanged for shares of different stock or securities of the Company or
some other corporation, such other stock or securities;
(n) "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee under which an Optionee may acquire Stock pursuant
to the Plan.
ARTICLE II
THE PLAN
2.1 NAME. The plan shall be known as the "Innovative Medical
Services 1996 Stock Option Plan."
2.2 PURPOSE. The purpose of the Plan is to advance the business and
development of the Company and its shareholders by affording to the Key
Employees of the Company and non-employee Directors of the Company the
opportunity to acquire a propriety interest in the Company by the grant of
Options to such persons under the terms herein set forth. By doing so, the
Company seeks to motivate, retain and attract highly competent, highly
motivated personnel whose judgment, initiative, leadership and continued
efforts will contribute to the success of the Company. The Options to be
granted hereunder are either "Incentive Stock Options" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended, for
certain Key Employees or non-statutory Options made available to non-employee
Directors. However, at no time will the Plan be considered or
operate as a "tandem" option plan or will any Key employee or non-employee
Director be subjected to a tandem option provision.
2.3 EFFECTIVE DATE. The Plan shall become effective upon its
adoption by the Board of the Company. Thereafter, the Plan shall be
submitted to the shareholders of the company for approval within 12 months
after the date said Plan is adopted by the Board.
2.4 TERMINATION DATE. The Plan shall terminate ten (10) years from
the date the Plan is adopted by the Board of the Company and at such time
any Options granted hereunder shall be void and of no further force or
effect.
ARTICLE III
PARTICIPANTS
Any Key Employee or non-employee Director of the Company, or of any of
its wholly owned subsidiaries, shall be eligible to be granted an Option
under the Plan. The Committee shall adopt criteria pursuant to which
Options shall be granted. The Committee may grant Options to any eligible
Key Employee or non-employee Director in accordance with such
determinations as the Committee may, from time to time, in its sole
discretion make. A Director
<PAGE>
of the Company or of a subsidiary who is not also an employee of the
Company will not be eligible to receive an "Incentive Stock Option"
pursuant to the Plan. Non-employee Directors are only eligible for
non-statutory Options which do not qualify under Section 422 of the Internal
Revenue Code, as amended.
ARTICLE IV
ADMINISTRATION
4.1 DUTIES AND POWERS OF THE COMMITTEE. The Plan shall be
administered by the Committee. Subject to the express provisions of the
Plan, the Committee shall have the sole discretion and authority to
determine from among eligible persons those to whom and the time or times
at which Options may be granted and the number of shares of Stock to be
subject to each Option. Subject to the express provisions of the Plan, the
Committee shall also have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations related to it and to
determine the details and provisions of each Stock Option Agreement and to
make all other determinations necessary or advisable in the administration
of the Plan.
4.2 RECORDS OF PROCEEDINGS. The Committee shall maintain written
minutes of its actions which shall be maintained among the records of the
Company.
4.3 MAJORITY. A majority of the members of the Committee shall
constitute a quorum and any action taken by a majority present at such
meeting at which a quorum is present or any action taken without a meeting
evidenced by a writing executed by all members of the Committee shall
constitute the action of the Committee.
4.4 COMPANY ASSISTANCE. The Company shall supply full and timely
information to the Committee in all matters relating to eligible Optionees,
their status, death, retirement, disability and such other pertinent facts
as the Committee may require. The Company shall furnish the Committee with
such clerical and other assistance as is necessary in the performance of
its duties. All expenses of the Committee shall be paid by the Company.
4.5 COMPOSITION OF THE COMMITTEE. The Committee shall consist of
three (3) individuals appointed by the Board from among its members.
Appointment to the Committee shall be for a term of one (1) year. Any
individual designated and serving as a member of the Committee shall be
entitled to indemnification in relation to such service by the Company to
the fullest extent called for or permitted by the Bylaws of the Company.
4.6 COMMITTEE AUTHORITY. If the Committee deems it necessary or in
the best interest of the Company or its shareholders, the Committee may
impose restrictions of the subsequent transferability of Stock issued
pursuant to Options to be granted hereunder. In the event of the
imposition of any such conditions, the Stock of the Company to be issued
pursuant to the exercise of an Option shall have any such restrictions
prominently displayed as a legend on such certificate.
<PAGE>
ARTICLE V
SHARES OF STOCK SUBJECT TO THE PLAN
5.1 LIMITATION. Subject to adjustment pursuant to the provisions of
Section 5.3 hereof, the number of shares of Stock which may be issued and
sold hereunder shall not exceed 1,000,000 shares with 900,000 shares
reserved for issuance to Key Employees pursuant to their Incentive Stock
Options and 100,000 shares reserved for issuance to non-employee Directors
pursuant to their non-statutory Options. The Company shall take such
action as necessary to reserve the aforesaid number of shares for issuance
pursuant to the Plan.
5.2 OPTIONS GRANTED UNDER THE PLAN. Shares of stock with respect to
which an Option is granted hereunder, but which lapses prior to exercise,
shall be considered available for grant hereunder. Therefore, if Options
granted hereunder shall terminate for any reason without being wholly
exercised, new Options may be granted hereunder covering the number of
shares to which such terminated Options related.
5.3 ANTI-DILUTION. In the event the Stock subject to Options
hereunder is changed into or exchanged for a different number or kind of
stock or other securities of the Company or of another organization by
reason of merger, consolidation or reorganization, recapitalization,
reclassification, combination of shares, stock split or stock dividend;
(a) The aggregate number and kind of shares of Stock subject to
Options which may be granted hereunder shall be adjusted appropriately;
(b) Rights under outstanding Options granted hereunder, both as to
the number of subject shares and the Option price, shall be adjusted
appropriately;
(c) Where dissolution or liquidation of the Company or any merger of
consolidation in which the Company is not a surviving corporation is
involved, each outstanding Option shall terminate and the Optionee holding
such Option shall have the right immediately prior to such dissolution,
liquidation, merger or combination to exercise his Option, in whole or in
part, to the extent that it shall not have been exercised without regard to
any installment exercise provision.
The manner of application of the foregoing provision shall be
determined solely by the committee and any such adjustment may provide for
the elimination of fractional share interests.
ARTICLE VI
OPTION PROVISIONS
6.1 OPTIONS. Each Option granted hereunder shall be evidenced by
minutes of a meeting of or the written consent of the Committee and by a
written Stock Option Agreement dated as of the date of grant and executed
by the Company and the Optionee, which agreement shall set forth such terms
and conditions as may be determined by the Committee consistent with the
Plan.
<PAGE>
6.2 PARTICIPATION, LIMITATIONS.
(a) Options qualifying as "incentive stock options" under Section 422
of the Internal Revenue Code, as amended, may be granted from time to time
to Key Employees of the Company to purchase shares of the Company's Stock.
(1) The maximum number of shares for which an Option or Options
may be granted under the Plan to any one Key Employee shall be 100,000.
(b) Options defined as non-statutory Options which do not satisfy the
requisites of Section 422 of the Internal Revenue Code, as amended, may be
granted from time to time only to non-employee Directors of the Company to
purchase shares of the Company's Stock.
(1) The maximum number of shares for which an Option or Options
may be granted under the Plan to any one participating non-employee
Director shall be 10,000.
6.3 OPTION PRICE. The per share Option price for the stock subject
to each Option shall be determined by the Committee, but the per share
exercise price shall not be less than the fair market value of the Stock on
the date the Option is granted.
6.4 OPTION PERIOD. Each Option granted hereunder must be granted
within five (5) years from the effective date of the Plan. The period for
the exercise of each Option shall be determined by the Committee, but in no
instance shall such period exceed five (5) years from the date of grant of
the Option. The Committee may prescribe such period after the grant of an
Option which must expire before such Option may be exercised and the
Committee deems appropriate.
6.5 OPTION EXERCISE.
(a) Options granted hereunder may not be exercised until and unless
the Optionee shall meet the conditions precedent established by the
Committee for the Key Employees and the non-employee Directors.
(b) Options may be exercised by Key Employees for whole shares only.
Key Employee Optionees may exercise their Option in whole at any time, or
in part from time to time in each year on a cumulative basis with any
portion not exercised to be carried over for exercise in subsequent years.
Options shall be exercised by written notice of intent to exercise the
Option with respect to a specified number of shares delivered to the
Company at its principal office and payment in full to the Company at said
office of the amount of the Option price for the number of shares with
respect to which the Option(s) are then being exercised.
(c) Options may be exercised by participating non-employee Directors
in whole at any time, or in part from time to time with respect to whole
shares, and can be exercised to the full extent of his Option at any time
after grant, and shall be exercised by written notice of intent to exercise
the Option with respect to a specified number of shares delivered to its
Company at its
5
<PAGE>
principal office and payment in full to the Company at said office of the
amount of the Option price for the number of shares with respect to which
the Option(s) are then being exercised.
(d) No person to whom Options are granted hereunder shall receive
Options, first exercisable during any single calendar year, for Stock, the
fair market value of which (determined at the time of the grant of the
Options) exceeds $100,000.
(e) No Option may be exercised by any Optionee unless a registration
statement, such as form S-8, covering the Stock subject thereto has been
filed with and declared effective by the Securities and Exchange Commission
and an appropriate registration or exemption therefrom, is in effect or
available in the state of residence of the exercising Optionee.
6.6 NON-TRANSFERABILITY OF OPTION. No Option or any right relative
thereto shall be transferred by an Optionee otherwise than by will or by
the laws of descent and distribution. During the lifetime of an Optionee,
the Option shall be exercisable only by him or her.
6.7 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT OR
DIRECTORSHIP.
(a) If the Key Employee's or non-employee Director's relationship
with the Company shall be terminated, with or without cause, or by the act
of the Key Employee or non-employee Director, the Optionee's right to
exercise such Options shall terminate and all rights thereunder shall
cease three (3) months after the date on which such person's association is
terminated. Provided however, that if the Optionee shall die or become
permanently and totally disabled while employed by or serving as a
non-employee Director of the Company, as solely determined by the Committee
in accordance with its policies, then either his or her personal
representatives or a transferee under the Optionee's will or pursuant to
the laws of descent and distribution, or the disabled Optionee may exercise
the Option in full one (1) year from the date of such death or disability.
In the case of an Optionee's retirement in accordance with the Company's
established retirement policy, such Option shall remain exercisable by the
Optionee for three (3) months from the date of such retirement.
(b) No transfer of an Option by the Optionee by will or the laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with a written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee
may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions of
such Option.
6.8 RIGHTS AS A SHAREHOLDER. An Optionee or a transferee of an
Option shall have no rights as a shareholder of the Company with respect to
any shares subject to any unexercised Options.
6.9 REQUIRED FILINGS. An Optionee to whom an Option is granted under
the terms of the Plan is required to file appropriate reports with the
Internal Revenue Service. As a condition of the receipt of an Option
hereunder, Optionees shall agree to make necessary filings
6
<PAGE>
with the Internal Revenue Service. The Committee shall assist and
cooperate with Optionees by providing the necessary information required
for compliance of this condition.
ARTICLE VII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate
for shares of Stock purchased upon the exercise of any Option granted
hereunder, or any portion thereof, prior to the obtaining of any approval
or clearance from any federal or state governmental agency which the
Committee shall, in its sole discretion, determine to be necessary or
advisable.
ARTICLE VIII
TERMINATION, AMENDMENT, OR MODIFICATION OF THE PLAN
The Board may at any time, upon recommendation of the Committee,
terminate, and may at any time and from time to time and in any respect
amend or modify the Plan. Provided, however, if the Plan has been
submitted to and approved by the shareholders of the Company no such action
by the Board may be taken without approval of the majority of the
shareholders of the Company which: (a) increases the total number of shares
of Stock subject to the Plan, except as contemplated in Section 5.3 hereof;
(b) changes the manner of determining the Option price; or (c) withdraws
the administration of the Plan from the Committee.
ARTICLE IX
EMPLOYMENT
9.1 EMPLOYMENT. Nothing in the Plan or any Option granted hereunder
or in any Stock Option Agreement shall confer upon a non-employee Director
receiving such Option or Stock Option Agreement the status as an employee
of the Company. Further, nothing in the Plan or any Option granted
hereunder shall in any manner create in any Optionee the right to continue
their relationship with the Company or create any vested interest in such
relationship, including employment.
9.2 OTHER COMPENSATION PLANS. The adoption of the Plan shall not
effect any other stock option, incentive, or other compensation plan in
effect for the Company or any of its subsidiaries, nor shall the Plan
preclude the Company or any subsidiary thereof from establishing any other
forms of incentive or other compensation for employees or non-employee
Directors of the Company, or any subsidiary thereof.
9.3 PLAN EFFECT. The Plan shall be binding upon the successors and
assigns of the Company.
7
<PAGE>
9.4 TENSE. When used herein nouns in the singular shall include the
plural.
9.5 HEADINGS OF SECTIONS ARE NOT PART OF THE PLAN. Headings of
articles and sections hereof are inserted for convenience and reference and
constitute no part of the Plan.
INNOVATIVE MEDICAL SERVICES
By:
---------------------------
Michael L. Krall, President
By:
---------------------------
Dennis Atchley, Secretary
8
INNOVATIVE MEDICAL SERVICES
1996 DIRECTORS AND OFFICERS
STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, terms have the meaning hereinafter set forth unless
the context should clearly indicate the contrary:
(a) "Board" shall mean the Board of Directors of the Company;
(b) "Days" shall mean for calculation purposes the days of the week
in which the NASDAQ System conducts and is open for regular trading
activity;
(c) "Company" shall mean Innovative Medical Services, a California
corporation;
(d) "Director" shall mean a member of the Board;
(e) "Grant" means the issuance of an Option hereunder to an Optionee
entitling such Optionee to acquire Stock on the terms and conditions set
forth in a Stock Option Agreement to be entered into with the Optionee;
(f) "Officer" shall mean a Executive Officer of the Company and any
Consultant or Advisor which has been confirmed by the Board as eligible to
particpate under this Plan;
(g) "Option" shall mean the right granted to an Optionee to acquire
Stock of the Company pursuant to the Plan;
(h) "Optionee" shall mean an Officer of the Company or a Director of
the Company to whom a Grant hereunder has been made;
(i) "Plan" shall mean the Innovative Medical Services 1996 Directors
and Officers Stock Option Plan, the terms of which are herein set forth;
(j) "Stock" shall mean the common stock of the Company or, in the
event the outstanding shares of stock are hereafter changed into or
exchanged for shares of different stock or securities of the Company or
some other corporation, such other stock or securities;
(k) "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee under which an Optionee may acquire Stock pursuant
to the Plan.
<PAGE>
ARTICLE II
THE PLAN
2.1 NAME. The plan shall be known as the "Innovative Medical
Services 1996 Directors and Officers Stock Option Plan."
2.2 PURPOSE. The purpose of the Plan is to advance the business and
development of the Company and its shareholders by affording to the
Directors and Officers of the Company the opportunity to acquire a
propriety interest in the Company by the grant of Options to such persons
under the terms herein set forth. By doing so, the Company seeks to
motivate, retain and attract highly competent, highly motivated Executive
Officers and Directors to lead the Company through this critical time in
its evolution and ensure the success of the Company. The Options to be
granted hereunder are non-statutory Options made available to Directors and
Officers of Innovative Medical Services.
2.3 EFFECTIVE DATE. The Plan shall become effective upon its
adoption by the Board of the Company.
2.4 TERMINATION DATE. The Plan shall terminate ten (10) years from
the date the Plan is adopted by the Board of the Company and at such time
any Options granted hereunder shall be void and of no further force or
effect.
ARTICLE III
PARTICIPANTS
Only Executive Officers and Directors of the Company shall be eligible
to be granted an Option under the Plan. The Board may grant Options to any
Director or Officer in accordance with such determinations as the Board
may, from time to time, in its sole discretion make.
ARTICLE IV
ADMINISTRATION
4.1 The Plan shall be administered by the Board of Directors of the
Company. Subject to the express provisions of the Plan, the Board shall
have the sole discretion and authority to determine from among eligible
persons those to whom and the time or times at which Options may be granted
and the number of shares of Stock to be subject to each Option. Subject to
the express provisions of the Plan, the Board shall also have complete
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations related to it and to determine the details and provisions of
each Stock Option Agreement and to make all other determinations necessary
or advisable in the administration of the Plan. The Board shall also have
the authority to delegate the administration of this Plan to a duly
appointed Compensation Committee of the Board. The Board or Compensation
Committee shall also have the authority to modify outstanding Options and
the provisions therein subject to the agreement of the Optionee.
4.2 RECORDS OF PROCEEDINGS. The Board shall maintain written minutes
of its actions which shall be maintained among the records of the Company.
<PAGE>
4.3 MAJORITY. A majority of the members of the Board shall
constitute a quorum and any action taken by a majority present at such
meeting, when properly noticed, at which a quorum is present or any action
taken without a meeting evidenced by a writing executed by all members of
the Board shall constitute the action of the Board.
4.4 COMPANY ASSISTANCE. The Company shall supply full and timely
information to the Board in all matters relating to eligible Optionees,
their status, death, retirement, disability and such other pertinent facts
as the Board may require. The Company shall furnish the Board with such
clerical and other assistance as is necessary in the performance of its
duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO THE PLAN
5.1 LIMITATION. The number of shares of Stock which may be issued
and sold hereunder shall not exceed 1,000,000 shares.
5.2 OPTIONS GRANTED UNDER THE PLAN. Shares of stock with respect to
which an Option is granted hereunder, but which lapses prior to exercise,
shall be considered available for grant hereunder. Therefore, if Options
granted hereunder shall terminate for any reason without being wholly
exercised, new Options may be granted hereunder covering the number of
shares to which such terminated Options related.
ARTICLE VI
OPTION PROVISIONS
6.1 OPTIONS. Each Option granted hereunder shall be evidenced by
minutes of a meeting of or the written consent of the Board and by a
written Stock Option Agreement dated as of the date of grant and executed
by the Company and the Optionee, which agreement shall set forth such terms
and conditions as may be determined by the Board consistent with the Plan.
6.2 LIMITATIONS.
(a) The maximum number of shares for which an Option or Options may
be granted under the Plan to any one Director or Officer shall be 200,000
in any twelve month period.
(b) The Options granted hereunder are non-statutory Options which do
not satisfy the requisites of Section 422 of the Internal Revenue Code, as
amended.
6.3 OPTION PRICE. The per share Option price for the stock subject
to each Option shall be less than eighty-five percent (85%) of the fair
market value per share on the effective date of grant or such other price
as the Board may determine.
<PAGE>
6.4 OPTION PERIOD. Each Option granted hereunder must be granted
within five (5) years from the effective date of the Plan. The period for
the exercise of each Option shall be determined by the Board, but in no
instance shall such period exceed five (5) years from the date of grant of
the Option.
6.5 OPTION EXERCISE.
(a) Options granted hereunder may not be exercised until and unless
the Optionee shall meet the conditions precedent established by the Board
for the Officers or Directors.
(b) Options may be exercised by the officer or director for in whole
or in part. Optionees may exercise their Option at any time by giving
written notice to the Company with respect to the specified option,
delivered to the Company at its principal office together with payment in
full to the Company of the amount of the Option price for the number of
shares with respect to which the Option(s) are then being exercised.
6.6 NON-TRANSFERABILITY OF OPTION. No Option or any right relative
thereto shall be transferred by an Optionee otherwise than by will or by
the laws of descent and distribution. During the lifetime of an Optionee,
the Option shall be exercisable only by him or her.
6.7 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT OR
DIRECTORSHIP.
(a) If the Officer or Director's relationship with the Company shall
be terminated, with or without cause, or by the act of the Officer or
Director, the Optionee's right to exercise such Options shall terminate
and all rights thereunder shall cease three (3) days after the date on
which such person's association is terminated, unless this provision is
modified by the Option Agreement for the Options. Provided however, that
if the Optionee shall die or become permanently and totally disabled while
employed by or serving as a non-employee Director of the Company, as solely
determined by the Board in accordance with its policies, then either his or
her personal representatives or a transferee under the Optionee's will or
pursuant to the laws of descent and distribution, or the disabled Optionee
may exercise the Option in full six (6) months from the date of such death
or disability unless this provision is modified by the Option Agreement for
the Options. In the case of an Optionee's retirement in accordance with
the Company's established retirement policy, such Option shall remain
exercisable by the Optionee for three (3) days from the date of such
retirement unless this provision is modified by the Option Agreement for
the Options.
(b) No transfer of an Option by the Optionee by will or the laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with a written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee
may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions of
such Option.
<PAGE>
6.8 RIGHTS AS A SHAREHOLDER.
(a) An Optionee or a transferee of an Option shall have no rights as
a shareholder of the Company with respect to any shares subject to any
unexercised Options.
(b) Unless this provision is modified by the to Option Agreement for
the Options, ownership rights shall vest with the Officer or Director
according to the following schedule with respect to the total number of
shares exercised:
Twenty percent (20%) immediately upon the exercise of this option
Twenty percent (20%) on the first anniversary following the date of
the exercise of this option
Twenty percent (20%) on the second anniversary following the date of
the exercise of this option
Twenty percent (20%) on the third anniversary following the date of
the exercise of this option
Twenty percent (20%) on the fourth anniversary following the date of
the exercise of this option
In the event that the association with the Company, in the case of a
Director, or the employment by Company, in the case of an Officer, is
voluntarily terminated by the Officer or Director, all shares of the Stock
for which ownership has not become vested in the Officer or Director shall
be subject to repurchase by the Company at a price of $0.10 per share.
In the event that the association with the Company, in the case of a
Director, or the employment by the Company, in the case of an Officer, is
involuntarily terminated, all shares of the Stock for which ownership has
not become vested in the Officer or Director shall be immediately vested
and the Officer or Director shall thereafter have full ownership and rights
in the Stock.
6.9 REQUIRED FILINGS. An Optionee to whom an Option is granted under
the terms of the Plan is required to file appropriate reports with the
Internal Revenue Service. As a condition of the receipt of an Option
hereunder, Optionees shall agree to make necessary filings with the
Internal Revenue Service. The Company shall assist and cooperate with
Optionees by providing the necessary information required for compliance of
this condition.
ARTICLE VII
STOCK CERTIFICATES
7.1 ISSUANCE. The Company shall issue and deliver any certificate
for shares of Stock purchased upon the exercise of any Option granted
hereunder.
7.2 TRANSFER RESTRICTIONS. Unless a registration statement covering
the shares underlying the Options is in effect at the time of execution of
an Option Agreement, the Board shall instruct the Secretary of the
Corporation to impose restrictions of the subsequent transferability of
Stock issued pursuant to Options to be granted hereunder. The Stock of the
Company to be issued pursuant to the exercise of an Option shall have such
restrictions prominently displayed as a legend on such certificate. The
Secretary of the Corporation shall further instruct the Transfer Agent to
place a stop transfer order on the shares issued pursuant to
<PAGE>
Options to be granted hereunder until such time as full ownership rights to
the shares vest in the Officer or Director according to Section 6.8 hereof.
ARTICLE VIII
TERMINATION, AMENDMENT, OR MODIFICATION OF THE PLAN
The Board may at any time terminate the plan, and may at any time and
from time to time and in any respect amend or modify the Plan. Provided,
however, if the Plan has been submitted to and approved by the shareholders
of the Company no such action by the Board may be taken without approval of
the majority of the shareholders of the Company which: (a) increases the
total number of shares of Stock subject to the Plan, except as contemplated
in Section 5.3 hereof; (b) changes the manner of determining the Option
price; or (c) withdraws the administration of the Plan from the Board.
ARTICLE IX
EMPLOYMENT
9.1 EMPLOYMENT. Nothing in the Plan or any Option granted hereunder
or in any Stock Option Agreement shall confer upon a non-employee Director
receiving such Option or Stock Option Agreement the status as an employee
of the Company. Further, nothing in the Plan or any Option granted
hereunder shall in any manner create in any Optionee the right to continue
their relationship with the Company or create any vested interest in such
relationship, including employment.
9.2 OTHER COMPENSATION PLANS. The adoption of the Plan shall not
effect any other stock option, incentive, or other compensation plan in
effect for the Company or any of its subsidiaries, nor shall the Plan
preclude the Company or any subsidiary thereof from establishing any other
forms of incentive or other compensation for employees or non-employee
Directors of the Company, or any subsidiary thereof.
9.3 PLAN EFFECT. The Plan shall be binding upon the successors and
assigns of the Company.
9.4 TENSE. When used herein nouns in the singular shall include the
plural.
9.5 HEADINGS OF SECTIONS ARE NOT PART OF THE PLAN. Headings of
articles and sections hereof are inserted for convenience and reference and
constitute no part of the Plan.
INNOVATIVE MEDICAL SERVICES
By: MICHAEL L. KRALL
---------------------------
Michael L. Krall, President
By: DENNIS ATCHLEY
---------------------------
Dennis Atchley, Secretary
DENNIS BROVARONE
ATTORNEY AND COUNSELOR AT LAW
11249 West 103rd Drive
Westminster, Colorado 80021
ph: 303 466 4092 / fax: 303 466 4826
December 18, 1996
Board of Directors
Innovative Medical Services
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen:
You have requested my opinion as to the legality of the issuance by
Innovative Medical Services, (the "Corporation") of up to 2,000,000 shares
of Common Stock (the "Shares") pursuant to a Registration Statement on Form
S-8 (the "Registration Statement") to be filed on or before December 20,
1996.
Pursuant to your request I have reviewed and examined:(1). The
Articles of Incorporation of the Corporation, as amended (the "Articles");
(2). The Bylaws of the Corporation, as certified by the Secretary of the
Corporation; (3). The minute book of the Corporation; (4). A copy of
certain resolutions of the Board of Directors of the Corporation; (5). The
Registration Statement; (6). The Corporation's Stock Option Plans covered
by the Registration Statement; and (7).Such other matters as I have deemed
revelant in order to form my opinion.
Based upon the foregoing, and subject to the qualifications set forth
below, I am of the opinion that the Shares, if issued as described in the
Registration Statement will have been duly authorized, legally issued,
fully paid and non-assessable.
This opinion is furnished by me as counsel to the Corporation and is
solely for your benefit. Neither this opinion nor copies hereof may be
relied upon by, delivered to, or quoted in whole or in part to any
governmental agency or other person without our prior written consent. My
opinion is subject to the qualification that no opinion is expressed herein
as to the application of state securities or Blue Sky laws.
Not withstanding the above, I consent to the use of this opinion in
the Registration Statement. In giving my consent, I do not admit that I
come without the category of persons whose consent is required under
Section 7 of the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
DENNIS BROVARONE
Dennis Brovarone
DENNIS BROVARONE
ATTORNEY AND COUNSELOR AT LAW
11249 West 103rd Drive
Westminster, Colorado 80021
ph: 303 466 4092 / fax: 303 466 4826
December 18, 1996
Board of Directors
Innovative Medical Services
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen:
You have requested my opinion as to the legality of the issuance by
Innovative Medical Services, (the "Corporation") of up to 2,000,000 shares
of Common Stock (the "Shares") pursuant to a Registration Statement on Form
S-8 (the "Registration Statement") to be filed on or before December 20, 1996.
Pursuant to your request I have reviewed and examined:(1). The
Articles of Incorporation of the Corporation, as amended (the "Articles");
(2). The Bylaws of the Corporation, as certified by the Secretary of the
Corporation; (3). The minute book of the Corporation; (4). A copy of
certain resolutions of the Board of Directors of the Corporation; (5). The
Registration Statement; (6). The Corporation's Stock Option Plans covered
by the Registration Statement; and (7).Such other matters as I have deemed
revelant in order to form my opinion.
Based upon the foregoing, and subject to the qualifications set forth
below, I am of the opinion that the Shares, if issued as described in the
Registration Statement will have been duly authorized, legally issued,
fully paid and non-assessable.
This opinion is furnished by me as counsel to the Corporation and is
solely for your benefit. Neither this opinion nor copies hereof may be
relied upon by, delivered to, or quoted in whole or in part to any
governmental agency or other person without our prior written consent. My
opinion is subject to the qualification that no opinion is expressed herein
as to the application of state securities or Blue Sky laws.
Not withstanding the above, I consent to the use of this opinion in
the Registration Statement. In giving my consent, I do not admit that I
come without the category of persons whose consent is required under
Section 7 of the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
DENNIS BROVARONE
Dennis Brovarone
STEVEN HOLLAND, CPA
3914 MURPHY CANYON RD., STE. A126
SAN DIEGO, CA. 92123
(619)279-1640
I have prepared the audited financial statements for Innovative Medical
Services for the fiscal year ended July 31, 1996 included in said
Company's Annual Report on Form 10-KSB. I hereby consent to their
inclusion with the Company's intended registration statement on Form S8.
STEVEN HOLLAND
- -------------------
Steven Holland, CPA
December 19, 1996
