SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TURBODYNE TECHNOLOGIES INC.
(Exact Name of Registrant as Specified in Its Charter)
CANADA
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
3110
(Primary Standard Industrial Classification Code Number)
21700 OXNARD STREET, SUITE 1550
WOODLAND HILLS, CALIFORNIA 91367
(Address of Principal Executive Offices) (Zip Code)
TURBODYNE TECHNOLOGIES, INC. 1997 STOCK OPTION PLAN
(Full Title of the Plan)
LEON NOWEK, CHIEF FINANCIAL OFFICER
TURBODYNE TECHNOLOGIES, INC.
21700 OXNARD STREET, SUITE 1550
WOODLAND HILLS, CALIFORNIA 91367
(Name and Address of Agent for Service)
(818) 593-2282
(Telephone Number, Including Area Code, of Agent for Service)
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Copies to:
JULIE M. KAUFER, ESQ.
TROOP MEISINGER STEUBER & PASICH, LLP
10940 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
(310) 824-7000
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CALCULATION OF REGISTRATION FEE
===============================================================================
Title of Proposed Proposed
Securities Maximum Maximum Amount of
to be Amount to be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
- -------------------------------------------------------------------------------
Common Stock 2,840,000 Shares $2.9375(1) $8,342,500(1) $2,462
Common Stock 231,000 Shares $4.93(2) $1,138,830(2) $336
Common Stock 475,000 Shares $6.22(2) $2,954,500(2) $872
Common Stock 305,000 Shares $6.22(2) $1,897,100(2) $560
Common Stock 480,000 Shares $4.50 $2,160,000 $638
Common Stock 230,000 Shares $3.29(2) $756,700(2) $223
---------------- ------------- -------
4,561,000 Shares $17,249,630 $5,092
===============================================================================
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(h)(1) under the Securities Act of 1933, as amended, and
based upon the average of the high and low prices of the Common Stock on the
Nasdaq Small Cap Market on February 3, 1998.
(2) Based on the exercise price for the relevant options pursuant to Rule
457(h)(1) under the Securities Act of 1933, as amended, and based upon the
conversion ratio of .6908 U.S. Dollars per Canadian Dollar, as listed in the
Wall Street Journal on February 4, 1998.
<PAGE>
PART I*
INFORMATION REQUIRED IN SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
* Information required by Part I to be contained in the Section
10(a) prospectus is omitted from the Registration Statement in
accordance with Rule 428 under the Securities Act of 1933, as
amended, and the Note to Part I of Form S-8.
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) The Company's Annual Report on Form 20-F for the fiscal year ended
December 31, 1996, as amended, filed with the Commission on July 14,
1997.
(b) The Company's Current Reports on Form 6-K, dated July 8, 1997, July
30, 1997, July 31, 1997, August 1, 1997, September 10, 1997 and
December 1, 1997.
(c) The description of the Common Stock contained in the Registration
Statement on Form 20-F filed by the Company pursuant to Section 12 of
the Exchange Act, and any amendment or report filed for the purpose
of updating such description.
(d) All documents subsequently filed by Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated
by reference in this Registration Statement and to be part hereof
from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
The securities to be offered are registered under Section 12 of the
Exchange Act of 1934, as amended.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) The Company's By-Laws provide that, subject to the limitations
contained in the Canada Business Corporation Act (the "Act"), the
Corporation shall indemnify a director or officer, a former director
or officer, or a person who acts or acted at the Corporation's
request as a director or officer of a body corporate of which the
Corporation is or was a shareholder or creditor, and his heirs and
legal representatives against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment,
reasonably incurred by him in respect of any civil, criminal or
administrative action or proceeding to which he is made a party by
reason of being or having been a director or officer of the
Corporation or such body corporate, if:
(1) he acted honestly and in good faith with a view to the best
interests of the Corporation; and
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(2) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable
grounds for believing that his conduct was lawful.
(b) The Act provides that except in respect of an action by or on behalf
of the corporation or body corporate to procure a judgment in its
favor, a corporation may indemnify a director or officer of the
corporation, a former director or officer of the corporation or a
person who acts or acted at the corporation's request as a director
or officer of a body corporate of which the corporation is or was a
shareholder or creditor, and his heirs and legal representative,
against all costs, charges and expenses, including an amount paid to
settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding
to which he is made a party by reason of being or having been a
director or officer of such corporation or body corporate, if:
(1) he acted honestly and in good faith with a view to the best
interest of the corporation; and
(2) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable
grounds for believing that his conduct was lawful.
(c) A person referred to above is entitled to indemnity from the
corporation in respect of all costs, charges and expenses reasonably
incurred by him in connection with the defense of any civil, criminal
or administrative action or proceeding to which he is made a party by
reason of being or having been a director or officer of the
corporation or body corporate, if the person seeking indemnity:
(1) was substantially successful on the merits in his defense of the
action or proceeding, and
(2) fulfills the conditions set out in paragraphs (1) and (2) above.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 Turbodyne Technologies Inc. 1997 Stock Option Plan.
4.2 Form of Registrant's Stock Option Agreement
pursuant to Registrant's 1997 Stock Option Plan.
4.3 Form of Registrant's Stock Option Agreement not pursuant to Registrant's
1997 Stock Option Plan.
5.1 Opinion of O'Neill & Company.
23.1 Consent of Morgan and Company, Chartered Accountants.
23.2 Consent of O'Neill & Company (included in its opinion as Exhibit 5.1).
24.1 Power of Attorney (included on signature page).
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes as follows:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material
change to such information in this Registration Statement;
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(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial BONA FIDE 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 this offering.
(4) To file a post-effective amendment to the registration statement to
include any financial statements required by Rule 3-19 of Regulation
S-X at the start of any delayed offering or throughout a continuous
offering. Financial statements and information otherwise required by
Section 10(a)(3) of the Act need not be furnished, PROVIDED, that the
registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph
and other information necessary to ensure that all other information
in the prospectus is at least as current as the date of those
financial statements.
(5) 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
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or controlling persons of
the Registrant pursuant to the foregoing provisions, 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
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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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 Woodland Hills, State of California, on this ninth
day of February 1998.
TURBODYNE TECHNOLOGIES, INC.
(Registrant)
By: /S/ LEON NOWEK
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Leon Nowek
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Leon
Nowek as his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and his name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
- ----------------------------------------------------------- -----------------
/s/ EDWARD HALIMI President, Chief Executive -------- --, 1998
- ----------------------- Officer and Director
Edward Halimi
/s/ LEON NOWEK Chief Financial Officer and -------- --, 1998
- ----------------------- Director
Leon Nowek
/s/ ANDREW LEE Chief Accounting Officer December 29, 1997
- -----------------------
Andrew Lee
/s/ DANIEL GERONAZZO Director December 31, 1997
- -----------------------
Daniel Geronazzo
/s/ WENDELL R. ANDERSON Director December 31, 1997
- -----------------------
Wendell R. Anderson
/s/ EUGENE A. HODGSON Director December 30, 1997
- -----------------------
Eugene A. Hodgson
/s/ ROBERT TAYLOR Director December 31, 1997
- -----------------------
Robert Taylor
/s/ SADAYAPPA DURAIRAJ Director -------- --, 1998
- -----------------------
Sadayappa Durairaj
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EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NO. EXHIBIT DESCRIPTION NUMBERED PAGE
- ----------- ------------------- -------------
4.1 Turbodyne Technologies Inc. 1997 Stock Option Plan.
4.2 Form of Registrant's Stock Option Agreement
pursuant to Registrant's 1997 Stock
Option Plan.
4.3 Form of Registrant's Stock Option Agreement not pursuant to
Registrant's 1997 Stock Option Plan.
5.1 Opinion of O'Neill & Company.
23.1 Consent of Morgan and Company, Chartered Accountants.
23.2 Consent of O'Neill & Company (included in its opinion as
Exhibit 5.1).
24.1 Power of Attorney (included on signature page).
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EXHIBIT 4.1
TURBODYNE TECHNOLOGIES INC.
1997 STOCK OPTION PLAN
----------------------
PURPOSE: The purpose of this 1997 Stock Option Plan (hereinafter called the
"Plan") is to further the success of Turbodyne Technologies Inc., a Canadian
corporation (hereinafter called the "Company"), and certain of its affiliates
by making available Common Stock of the Company for purchase by certain
directors, officers and employees of the Company and its affiliates, and thus
to provide an additional incentive to such individuals to continue in the
service of the Company or its affiliates and to give them a greater interest as
shareholders in the success of the Company. Subject to compliance with the
provisions of the Plan and the Internal Revenue Code of 1986, as amended,
Incentive Stock Options are authorized by Section 422 of the Code and stock
options which do not qualify under Section 422 of the Code are authorized and
may be granted under the Plan,
DEFINITIONS: As used in this Plan the following terms shall have the meanings
indicated as follows:
"Board" means the Board of Directors of the Company.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Committee" means the Committee administering the Plan described in
Paragraph 3 hereof.
"Common Stock" means the company's common shares without par value.
"Date of Grant" means the date on which an option is granted under a
written option agreement executed by the Company and a participant
pursuant to the Plan.
"Designated Participants" shall mean the President, the Chief
Executive Officer, the Chief Financial Officer, the Chief Operating
Officer, the Secretary, and any Directors of the Company or its
affiliates.
"Effective Date" means the effective date of this Plan specified in
Paragraph 13 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as it may
be amended from time to time.
"Incentive Stock Option" means an option qualifying under Section 422
of the Code.
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"Parent" means a parent corporation of the Company as defined in
Section 424(e) of the Code.
"Participants" means the directors, employees, consultants,
affiliates and officers of the Company, its Subsidiaries and its
Parents and those directors of the Company or its subsidiaries.
"Securities Act" shall mean the SECURITIES ACT (British Columbia).
"Subsidiary" means a subsidiary corporation of the Company as defined
in Section 424(f) of the Code.
ADMINISTRATION OF THE PLAN: The Board of Directors of the Company shall appoint
a committee (the "Committee") comprised of at least two directors to administer
the Plan. The Committee shall report all action taken by it to the Board, which
shall review and ratify or approve those actions that are by law required to be
so reviewed and ratified or approved by the Board. The Committee shall have
full and final authority in its discretion, subject to the provisions of the
Plan, to determine the Participants to whom, and the time or times at which,
options shall be granted and the number of shares and purchase price of Common
Stock covered by each option; to construe and interpret the Plan and any
agreements made pursuant to the Plan; to determine the terms and provisions
(which need not be identical or consistent with respect to each participant) of
the respective option agreements and any agreement ancillary thereto including,
but without limitation, terms covering the payment of the option price; and to
make all other determinations and to take all other actions deemed necessary or
advisable for the proper administration of the Plan. All such actions and
determinations shall be conclusively binding for all purposes and upon all
persons.
OPTIONS AUTHORIZED: The options granted under this Plan may be Incentive Stock
Options or stock options that do not qualify as Incentive Stock Options
(sometimes referred to herein as "nonqualified options" or "nonqualified stock
options"). The Committee shall have the full power and authority to determine
which options shall be nonqualified stock options and which shall be Incentive
Stock Options; to grant only Incentive Stock Options or, alternatively, only
nonqualified stock options; and to, in its sole discretion, grant to the holder
of an outstanding option, in exchange for the surrender and cancellation of
such option, a new option having a purchase price lower than that provided in
the option so surrendered and canceled and containing such other terms and
conditions as the Committee may prescribe in accordance with provisions of the
Plan. Under no circumstances may nonqualified stock options be granted where
the exercise of such nonqualified stock options may affect the exercise of
Incentive Stock Options granted pursuant to the Plan. No options may be granted
under the Plan prior to the Effective Date. In addition to any other
limitations set forth herein, the aggregate fair market value (determined in
accordance with Paragraph 7(a) of the Plan as of the time the option is
granted) of the
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stock with respect to which Incentive Stock Options are exercisable for the
first time by a participant in any calendar year (under all plans of the
Company and of any Parent or Subsidiary) shall not exceed $100,000,
COMMON STOCK SUBJECT TO OPTIONS: The aggregate number of shares of the
Company's Common Stock which may be issued upon the exercise of options shall
not exceed two million, eight hundred and forty thousand (2,840,000), subject
to adjustment under the provisions of Paragraph 8. The shares of Common Stock
to be issued upon the exercise of options may be authorized but unissued
shares, or shares issued and reacquired by the Company. In the event any option
shall, for any reason, terminate or expire or be surrendered without having
been exercised in full, the shares subject to such option shall again be
available for options to be granted under the Plan, except that shares for
which relinquished options (or portions thereof) are exercisable shall not
again be available for options under the Plan. In no circumstances shall the
number of options granted under this plan when aggregated with the number of
options granted by the Company under any other plan or otherwise, exceed 20% of
the number of common shares of the Company then outstanding.
PARTICIPANTS: Except as hereinafter provided, options may be granted under the
Plan to any Participant. In determining the Participants to whom options shall
be granted and the number of shares to be covered by such option, the Committee
may take into account the nature of the services rendered by the respective
Participants, their present and potential contributions to the Company's
success and such other factors as the Committee in its discretion shall deem
relevant. A participant who has been granted an option under the Plan may be
granted an additional option or options under the Plan or otherwise, in the
Committee's discretion.
TERMS AND CONDITIONS OF OPTIONS: The grant of an option under the Plan shall
be evidenced by a written agreement executed by the Company and the applicable
Participant and shall contain such terms and be in such form as the Committee
may from time to time approve subject to the following limitations and
conditions:
OPTION PRICE: The option price per share with respect to each option
shall be determined by the Committee, but shall in no instance be
less than the par value of the shares subject to the option. In
addition, the option price per share with respect to Incentive Stock
Options granted hereunder shall in no instance be less than the fair
market value of the shares subject to the option as determined by the
Committee. For the purposes of this Paragraph 7(a), fair market value
shall be, where applicable, the average closing price of the Common
Stock for the ten (10) trading days preceding the Date of the Grant
as reported on the Vancouver Stock Exchange or on NASDAQ or any other
national securities exchange on which the Common Stock may be traded.
If the stock is not listed on a national securities exchange but is
publicly traded on any securities exchange or in the over the counter
market, the Committee
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shall determine the fair market value based on the closing prices or the
bid and ask prices on any such exchange or market. If the Common Stock was
not traded on the Date of Grant, the nearest preceding date on which there
was a trade shall be substituted. Notwithstanding the foregoing, however,
fair market value shall be determined consistent with Code Section 422
(b)(4) or any successor provisions. The Committee may permit the option
purchase price to be payable by transfer to the Company of Common Stock
owned by the option holder with a fair market value at the time of
exercise equal to the option purchase price.
PERIOD OF OPTION: The expiration date of each option shall be fixed
by the Committee but, notwithstanding any provision of the Plan to
the contrary, such expiration date shall not be more than ten (10)
years from the Date of Grant.
VESTING OF SHAREHOLDER RIGHTS: Neither the optionee nor his
successor in interest shall have any of the rights of shareholder of
the Company until the shares relating to the option hereunder are
issued by the Company and are properly delivered to such optionee, or
successor.
EXERCISE OF OPTION: Subject to vesting in accordance with paragraph
7(i), and approval of this Option by the members of the Company and
the Vancouver Stock Exchange, each option shall be exercisable from
time to time over such period and upon such terms and conditions as
the Committee shall determine, but not at any time as to less than
twenty-five (25) shares unless the remaining shares which have become
so purchasable are less than twenty-five (25) shares. After the death
of the optionee, an option may be exercised as provided in Paragraph
15 hereof.
NONTRANSFERABILITY OF OPTION: No option shall be transferable or
assignable by an optionee, other than by till or the laws of descent
and distribution or pursuant to a qualified domestic relations order
and each options shall be exercisable, during the optionee's
lifetime, only by him or her or, during periods of legal disability,
by his or her legal representative. No option shall be subject to
execution, attachment, or similar process.
DISQUALIFYING DISPOSITION: The option agreement evidencing any
Incentive Stock Options granted under this Plan shall provide that if
the optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any
share or shares of Common Stock issued to him or her pursuant to
exercise of the option within the two-year period commencing on the
day after the Date of Grant of such option or within the one-year
period commencing on the day after the date of issuance of the share
or shares to him or her pursuant to the exercise of such options, he
or she shall, within ten (10) days of such disposition date, notify
the Company of the sales price or other value ascribed to or used to
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measure the disposition of the share or shares thereof and immediately
deliver to the Company any amount of federal income tax withholding
required by law.
LIMITATION ON GRANTS TO CERTAIN SHAREHOLDERS: An Incentive Stock
Option may be granted to a participant only if such Participant, at
the time the option is granted, does not own, after application of
the attribution rules of code Section 424, stock possessing more than
10% of the total combined voting power of all classes of Common Stock
of the Company or of its Parent of Subsidiary. The preceding
restrictions shall not apply if at the time the option price is at
least 110% of the fair market value (as defined in Paragraph 7(a)
above) of the Common Stock subject to the option and such option by
its terms is not exercisable after the expiration of five (5) years
from the Date of Grant.
CONSISTENCY WITH CODE: Notwithstanding any other provision in this
Plan to the contrary, the provisions of all agreements granting
incentive stock options pursuant to the Plan shall not violate the
requirements of the Code applicable to the Incentive Stock Options
authorized hereunder.
VESTING OF OPTIONS: Any options granted under this Plan to Non-
Designated Participants shall be subject to a vesting formula and
shall vest equally over the three year period commencing on the date
of the grant to that the options can only be exercised as to an
aggregate of 33.3% in the first year, 66.6% in the second year and
100% in the third year and each year thereafter. No option granted to
an employee of the Company or an affiliate of the Company under this
agreement shall be exercisable until the optionee has been employed
by the Company or affiliate for a period of six months.
Notwithstanding any other provision of this Agreement, the Committee
may waive these Vesting Provisions for any reason including the
contributions of the optionee, his length of service to the Company
or his abandonment of options held to purchase shares under his prior
employment to enter into employment with the Company.
ADJUSTMENTS: The Committee, in its discretion, may make such adjustments in
the option price and the number of shares covered by outstanding options that
are required to prevent any dilution or enlargement of the rights of the
holders of such options that would otherwise result from any reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, issuance of rights or any other change in the capital structure
of the Company. The Committee, in its discretion, may also make such
adjustments in the aggregate number of shares that may be the subject of
options which are appropriate to reflect any transaction or event described in
the preceding sentence.
RESTRICTION OF ISSUING SHARES: The exercise of each option shall be subject to
the condition that if at any time the Company shall determine in its discretion
that the
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satisfaction of withholding tax or other withholding liabilities, or that the
listing, registration, or qualification of any shares otherwise deliverable
upon such exercise upon any securities exchange or under any state or federal
law, or that the consent or approval of any regulatory body, is necessary or
desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in any such event, such
exercise shall not be effective unless such withholding, listing, registration,
qualification, consent, or approval shall have been effected or obtained free
of any conditions not acceptable to the Company.
USE OF PROCEEDS: The Proceeds received by the Company from the sale of Common
Stock pursuant to the exercise of options granted under the Plan shall be added
to the Company's general funds and used for general corporate purposes.
AMENDMENT, SUSPENSION AND TERMINATION OF PLAN: The Board may at any time
suspend or terminate the Plan or may amend it from time to time in such
respects as the Board may deem advisable in order that the options granted
thereunder may conform to any changes in the law or in any other respect that
the Board may deem to be in the best interests of the Company; provided,
however that without approval by the shareholders of the Company voting the
proper percentage of its voting power, no such amendment shall make any change
in the Plan for which shareholder approval is required of the Company in order
to comply with (1) Rule 16b-3, as amended, promulgated under the Exchange Act,
(ii) the Code or regulatory provisions dealing with incentive Stock Options,
(iii) any rules for listed companies promulgated by any national stock exchange
on which the Company's stock is traded or (iv) any other applicable rule or
law. Unless sooner terminated hereunder, the Plan shall terminate ten (10)
years after Effective Date, provided, however, that no Incentive Stock Options
may be granted after 10 years after the date the Plan receives shareholder
approval in accordance with paragraph 13 below. No option may be granted during
any suspension or after the termination of the Plan. Except as provided in
Paragraph 12, no amendment, suspension, or termination of the Plan shall,
without an optionee's consent, impair or negate any of the rights or
obligations under any option theretofore granted to such optionee under the
Plan.
TAX WITHHOLDING: The Committee may, in its sole discretion, (a) require an
optionee to remit to the Company a cash amount sufficient to satisfy, in whole
or in part, any federal, state or local withholding tax requirements prior to
the delivery of any certificate for shares pursuant to the exercise of an
option hereunder; or (b) satisfy such withholding requirements through another
lawful method.
EFFECTIVE DATE OF PLAN: This Plan shall become effective on the date (the
"Effective Date") of the adoption of the Plan by the Board. Although options
may be granted under the Plan on the Effective Date, such options shall not be
exercisable until this plan is approved by the members of the Company and by
the Vancouver Stock Exchange.
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TERMINATION OF EMPLOYMENT: In the event of the retirement (with the written
consent of the Company) or other termination of the employment of an employee
to whom an option has been granted under the Plan, other than (a) a termination
that is either (i) for cause or (ii) voluntary on the part of the employee and
without the written consent of the Company, or (b) a termination by reason of
death, the employee may (unless otherwise provided in his option agreement)
exercise his option at any time within thirty (30) days after such retirement
or other termination of employment (or within one (1) year after termination of
employment due to disability within the meaning of Code Section 422(c)(6), or
within such other time as the Committee shall authorize, but in no event after
ten (10) years from the date of granting thereof (or such lesser period as may
be specified in the stock option agreement), but only to the extent of the
number of shares for which his options were exercisable by him at the date of
the termination of his employment. In the event of the termination of the
employment of an employee to whom an option has been granted under the Plan
that is either (i) for cause or (ii) voluntary on the part of the employee and
without the written consent of the Company, any option held by him under the
Plan, to the extent not previously exercised, shall forthwith terminate on the
date of such termination of employment. Options granted under the Plan shall
not be affected by any change of employment so long as the holder continues to
be an employee of the Company, a Subsidiary or a Parent. The option agreement
may contain such provisions as the Committee shall approve with respect to the
effect of approved leaves of absence. Nothing in the Plan or in any option
granted pursuant to the Plan shall confer on any individual any right to
continue in the employ of the Company or any of its Subsidiaries or Parents or
interfere in any way with the right of the Company or any of its Subsidiaries
or parents to terminate his employment at any time.
DEATH OF HOLDER OF OPTION: In the event an employee to whom an option has been
granted under the Plan dies during, or within thirty days after termination of,
his employment by the Company or a Subsidiary or Parent, such option (unless it
shall have been previously terminated pursuant to the provisions of the Plan or
unless otherwise provided in his option agreement) may be exercised (to the
extent of the entire number at the date of his death) by the executor or
administrator of the optionee's estate or by the laws of descent and
distribution, at any time within a period of one (1) year after his death, but
not after the exercise termination date set forth in the relevant stock option
agreement.
LOANS TO ASSIST IN EXERCISE OF OPTIONS: If approved by the Board and permitted
by applicable law, the Company or any Parent or Subsidiary may lend money or
guarantee loans by third parties to an individual to finance the exercise of
any option granted under the Plan to carry Common Stock thereby acquired. No
such loans to finance the exercise of an Incentive Stock Option shall have any
interest rate or other terms that would cause any part of the principal amount
to be characterized as interest for purposes of the Code.
RULE 16B-3 PLAN: This Plan is intended and has been drafted to comply in all
respects with Rule 16b-3, as amended, under the Exchange Act. If any provision
of this plan does
Page 13
<PAGE>
not comply with Rule 16b-3, as amended, this Plan shall be automatically
amended to comply with Rule 16b-3, as amended.
COMPLIANCE WITH APPLICABLE LAWS UNDER THIS AGREEMENT: Any shares issued on
exercise of options granted under this Agreement shall be issued subject to
compliance with any applicable securities laws and shall bear a legend if
required under such laws. Any shares issued to persons other than described in
s.55(2)(9) of the Securities Act shall not be issued prior to the issuance of
an appropriate exemption order under the Securities Act.
Page 14
EXHIBIT 4.2
STOCK OPTION AGREEMENT
----------------------
THIS AGREEMENT is made as of the [DAY] of [MONTH], YEAR].
BETWEEN:
TURBODYNE TECHNOLOGIES INC., of 510 - 1090 West Pender Street,
Vancouver, British Columbia V6E 2N7
(the "Company")
OF THE FIRST PART
AND:
[NAME OF OPTIONEE], of [ADDRESS];
-------------------
(the "Optionee")
OF THE SECOND PART
WHEREAS:
A. The Company has adopted a plan entitled the 1997 Stock Option Plan (the
"Plan") attached hereto as Schedule "A"; and
B. The Company wishes to grant the Optionee an option pursuant to the Plan to
purchase common shares in the capital of the Company; and
C. The Company's shares are listed and posted for trading on NASDAQ and
EASDAQ;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the sum of
$1.00 given by the Optionee to the Company (the receipt of which is hereby
acknowledged by the Company) the parties hereto agree as follows:
Page 15
<PAGE>
1. The Company hereby grants the Optionee an option to purchase a total of
[NUMBER OF OPTIONS] common shares in its capital (the "Option") at a price
of $[EXERCISE PRICE] per share exercisable on or before [EXPIRY DATE] (the
"Expiry Date").
2. Unless the Optionee is a Designated Participant as defined in the Plan,
the Optionee acknowledges that the Option is subject to the Vesting
provisions contained paragraph 7(i) of the Plan subject to any exemption
granted by the Committee pursuant to the Plan and communicated in writing
to the Optionee.
3. In order to exercise the Option, the Optionee shall, before 5:00 p.m. on
the Expiry Date, give notice to the Company of the Optionee's intention to
exercise the Option in whole or in part, such notice to be accompanied by
cash, bank draft, money order or certified cheque, payable to the Company,
in the appropriate amount.
4. The Option granted is personal to the Optionee and may not be assigned or
transferred in whole or in part.
5. Except as otherwise provided for herein, the Optionee's rights with
respect to Option shall be as set forth and as limited by the Plan.
6. Nothing in this Agreement shall be construed as conferring on the Optionee
any right to continue in the employment of the Company or any subsidiary
of the Company, nor interfere in any way with the right of the Company or
any subsidiary to terminate the Optionee's employment at any time with
or without cause (without prejudice to any rights the Optionee may have
under any written employment agreement with the Company).
7. Subject to any existing option agreements between the Company and the
Optionee, which have been approved by the Vancouver Stock Exchange, this
Agreement constitutes and expresses the whole agreement of the parties
with reference to the granting of options to the Optionee and with
reference to any of the matters or things herein discussed or mentioned
with reference to such granting of options, all promises, representations
and understandings relative thereto being merged herein (without prejudice
to any rights the Optionee may have under any written employment agreement
with the Company). The Optionee acknowledges and agrees that the Options
granted under this Agreement are the only options granted by the Company
to the Optionee under the Company's 1997 Stock Option Plan and that this
Agreement supersedes and replaces all other negotiations, discussions and
agreements between the Company and the Optionee in connection with the
granting of options under the Company's 1997 Stock Option Plan (without
prejudice to any rights the Optionee may have under any written employment
agreement with the Company).
Page 16
<PAGE>
8. If the Option is granted prior to the approval of the Plan by the
Shareholders of the Company and the Vancouver Stock Exchange, the Optionee
shall not exercise the Option until such approval has been obtained.
9. This Agreement shall be construed and enforced in accordance with the laws
of British Columbia.
Page 17
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
day and year first above written.
THE COMMON SEAL OF )
TURBODYNE TECHNOLOGIES INC. )
Was hereunto affixed in the )
presence of: )
)
- ------------------------------ )
Authorized Signatory )
)
)
- ------------------------------ )
Authorized Signatory
SIGNED, SEALED AND DELIVERED )
BY )
in the presence of: )
- ------------------------------ )
Signature )
) ----------------------------
- ------------------------------ ) Signature
Name )
)
- ------------------------------ )
Address )
)
- ------------------------------ )
Page 18
EXHIBIT 4.3
FORM OF REGISTRANT'S STOCK OPTION AGREEMENT
NOT PURSUANT TO REGISTRANT'S
1997 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
----------------------
THIS AGREEMENT is made as of the [DAY] day of [MONTH], [YEAR].
BETWEEN:
TURBODYNE TECHNOLOGIES INC., of Suite 510, 1090 West Pender Street,
Vancouver, British Columbia
(the "Company")
OF THE FIRST PART
AND:
[NAME OF OPTIONEE], of [ADDRESS];
------------------
(the "Optionee")
OF THE SECOND PART
WHEREAS:
A. The Company wishes to grant the Optionee an option to purchase common
shares in the capital of the Company;
B. The Company's shares are listed and posted for trading on the
Vancouver Stock Exchange;
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the sum of
$1.00 given by the Optionee to the Company (the receipt of which is hereby
acknowledged by the Company) the parties hereto agree as follows:
<PAGE>
1. The Company hereby grants the Optionee an option to purchase a total
of [NUMBER OF OPTIONS] common shares in the capital of the Company (the
"Option") at a price of $[EXERCISE PRICE] per share exercisable on or before
[EXPIRY DATE] (the "Expiry Date").
2. In order to exercise the Option, the Optionee shall, before 5:00 p.m.
on the Expiry Date, give notice to the Company of the Optionee's intention to
exercise the Option in whole or in part, such notice to be accompanied by cash,
bank draft, money order or certified cheque, payable to the Company, in the
appropriate amount. After receipt of such notice, the Company shall, if
requested, assist the Optionee in qualifying any portion of the shares
acquired upon the exercise of the Option for sale to the public through the
facilities of the Vancouver Stock Exchange.
3. If the Optionee:
(a) dies prior to the expiration of the Option, the Optionee's legal
representatives may, within one year from the Optionee's death and
prior to the expiry of the Option, exercise that portion of the
Option which remains outstanding after which time the Option shall
terminate; or
(b) ceases to act as a director or employee of the Company or its wholly-
owned subsidiary or as an employee of a company providing management
services to the Company for any reason other than the Optionee's
death, the Option shall terminate 30 days after the date of such
cessation.
4. If the issued and outstanding common shares in the capital of the
Company are at any time changed by subdivision, consolidation, re-division,
reduction in capital, reclassification or recapitalization (such changes are
herein called collectively "Capital Alterations"), not including any issuance
of additional shares for consideration, the Option shall be adjusted as
follows:
(a) the number and class of shares in respect of which the Option is
granted shall be adjusted in such a manner as to parallel the change
created by the Capital Alterations in the class and total number of
the issued and outstanding common shares; and
(b) the exercise price of each share in respect of which the Option shall
operate shall be increased or decreased proportionately, as the case
may require, so that upon exercising the Option the same
proportionate shareholdings at the same aggregate purchase price
shall be acquired after such Capital Alterations as would have been
acquired before the Capital Alterations.
Page 20
<PAGE>
5. The Company and the Optionee represent to each other that the
Optionee is an employee, senior officer or director or an employee, senior
officer or director of an affiliate of the Company within the meaning of
Section 74(2)(9) of the SECURITIES ACT (British Columbia).
6. The Option granted is personal to the Optionee and may not be
assigned or transferred in whole or in part.
7. This Agreement constitutes and expresses the whole agreement of the
parties with reference to the appointment of the Optionee and with reference to
any of the matters or things herein discussed or mentioned with reference to
such appointment, all promises, representations and understandings relative
thereto being merged herein.
8. Any amendment to this Agreement shall be subject to the approval of
the shareholders of the Company if the Optionee was an insider of the Company,
as that term is used in the SECURITIES ACT (British Columbia), at the time of
granting the Option or is an insider of the Company at the time of the
amendment.
9. This Agreement shall be construed and enforced in accordance with the
laws of British Columbia.
10. This Agreement shall be subject to the approval of all securities
regulatory authorities having jurisdiction and the approval of the Vancouver
Stock Exchange.
11. If the Optionee is an insider of the Company, as that term is defined
in the SECURITIES ACT (British Columbia), the Optionee shall not exercise the
Option prior to the approval of the Option by the shareholders of the Company.
If the shareholders do not approve the Option and this Agreement, then the
Option and this Agreement shall be void ab initio.
Page 21
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
day and year first above written.
THE COMMON SEAL OF )
TURBODYNE TECHNOLOGIES INC. )
was hereunto affixed in the )
presence of: )
)
)
- ------------------------ )
Authorized Signatory )
)
)
- ------------------------ )
Authorized Signatory )
SIGNED, SEALED AND DELIVERED )
BY [NAME OF OPTIONEE] )
in the presence of: )
)
)
)
- ------------------------ )
Signature )
) ------------------------
- ------------------------ ) [NAME OF OPTIONEE]
Name )
)
- ------------------------ )
Address )
)
- ------------------------ )
Page 22
EXHIBIT 5.1
[LETTERHEAD OF O'NEILL & COMPANY]
February 4, 1998 3046
TURBODYNE TECHNOLOGIES INC.
21700 Oxnard Street
Suite 1550, Warner Center
Woodland Hills, California
91367
Ladies and Gentlemen:
RE: TURBODYNE TECHNOLOGIES INC. (THE "COMPANY")
- FORM S-8 REGISTRATION STATEMENT
- -------------------------------------------------------------------------------
At your request, we have examined the Registration Statement on Form S-8 (the
"Registration Statement") to which this letter is attached as Exhibit 5.1 filed
by Turbodyne Technologies Inc., a Canadian federal corporation (the "Company"),
in order to register under the Securities Act of 1933, as amended (the "Act"),
the following common shares of Common Stock, no par value of the Company (the
"Shares"):
(a) 2,840,000 shares of Common Stock, no par value (the "Option Plan Shares")
of the Company issuable pursuant to options granted pursuant to the
Company's 1997 Stock Option Plan (collectively the "Plan").
(b) 231,000 shares of Common Stock, no par value of the Company issuable at an
exercise price of $7.13 Cdn ($4.93 US, at a conversion ratio of $0.6908
Canadian dollars per US dollar) pursuant to option agreements between the
Company and certain optionees dated February 27, 1996.
(c) 475,000 shares of Common Stock, no par value of the Company issuable at an
exercise price of $9.00 Cdn ($6.22 US per share, at a conversion ratio of
$0.6908 Canadian dollars per US dollar) pursuant to option agreements
between the Company and certain optionees dated September 3, 1996.
Page 23
<PAGE>
(d) 305,000 shares of Common Stock, no par value of the Company issuable at an
exercise price of $9.00 Cdn ($6.22 US per share, at a conversion ratio of
$0.6908 Canadian dollars per US dollar) pursuant to option agreements
between the Company and certain optionees dated September 12, 1996.
(e) 480,000 shares of Common Stock, no par value of the Company issuable at an
exercise price of $4.50 US pursuant to option agreements between the
Company and certain optionees dated January 6, 1997.
(f) 230,000 shares of Common Stock, no par value of the Company issuable at an
exercise price of $4.75 Cdn ($3.29 US per share, at a conversion ratio of
$0.6908 Canadian dollars per US dollar) pursuant to option agreements
between the Company and certain optionees dated August 17, 1995.
We are of the opinion that the Option Plan Shares to be issued pursuant to
options granted by the Company under the Plan have been duly authorized and
upon issuance and sale in conformity with options granted under the Plan, the
Option Plan Shares will be validly issued, fully paid and non-assessable. We
are of the opinion that the Shares to be issued pursuant to exercise of options
not granted pursuant to the Plan have been duly authorized and upon exercise of
such options and payment in full of the exercise price in accordance with the
terms of such options, such Shares will be validly issued, fully paid and non-
assessable.
We consent to the use of this opinion as an Exhibit to the Registration
Statement and to the use of our name in the Prospectus constituting a part
thereof.
Yours truly,
/S/ MICHAEL H. TAYLOR
MICHAEL H. TAYLOR
/dml
Page 24
EXHIBIT 23.1
[LETTERHEAD OF MORGAN & COMPANY]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion of our audit report dated February 14, 1997,
except for the last paragraph of Note 5(A) which is as of March 12, 1997, Note
2, Note 13 and Note 14(a) which are as of May 14, 1997 and Notes 14(b), 14(c),
14(d), and 14(e), which are as of June 17, 1997 on the revised consolidated
financial statements of Turbodyne Technologies Inc. for the year ended
December 31, 1996 and 1995 in Form S-8, when such financial information is read
in conjunction with the financial statements referred to in our report.
Vancouver, Canada /S/ MORGAN & COMPANY
February 3, 1998 Chartered Accountants
Page 25
