As filed with the Securities and Exchange Commission on August 15, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------
TURBODYNE TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4699061
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
6155 Carpinteria Avenue 93013
Carpinteria, California (Zip code)
(Address of principal executive offices)
--------
2000 STOCK INCENTIVE PLAN
(Full title of the plan)
----------
Joseph D. Castano
Chief Financial Officer
Turbodyne Technologies Inc.
6155 Carpinteria Avenue
Carpinteria, California 93013
(Name and address of agent for service)
(805) 684-4551
(Telephone number, including area code, of agent for service)
Copy to:
PETER M. MENARD, ESQ.
Sheppard, Mullin, Richter & Hampton LLP
333 South Hope Street, 48th Floor
Los Angeles, California 90071
(213) 617-5483
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Proposed
Amount maximum maximum Amount of
Title of securities to be offering price aggregate registration
to be registered registered (1) per share (2) offering price fee
--------------------------------------------------------------------------------
Common Stock, $.001 4,800,000 $.75 $3,600,000 $1,062.00
par value
================================================================================
(1) This Registration Statement covers, in addition to the number of shares of
Common Stock stated above, such indeterminate number of shares of Common
Stock as may be issued upon exercise of options granted under the 2000
Stock Incentive Plan as a result of the adjustment provisions thereof.
(2) Estimated solely for purposes of calculating the amount of the
registration fee pursuant to Rule 457 based upon the last sale price of
the Common Stock as reported by CNBC on the pink sheets on August 8, 2000.
================================================================================
This Registration Statement Includes a Total of 35 Pages.
Exhibit Index Appears on Page 12
Page 1 of 35
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information specified in Part I of
Form of S-8 will be sent or given to participants in the 2000 Stock Incentive
Plan (the "Plan") of Turbodyne Technologies Inc., a Delaware corporation (the
"Registrant"), as specified in Rule 428(b)(1) promulgated by the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"). Such document(s) are not being filed with the
Commission either as part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Rule 424 in accordance with the Note to Part
I of Form S-8. These documents and the documents incorporated by reference into
this Registration Statement pursuant to Item 3 of Part II of Form S-8, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act.
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Page 2 of 35
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
The following documents previously filed by the Registrant with the
Commission are incorporated in this Registration Statement by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999;
(b) All other reports filed by the Registrant pursuant to Sections
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since the end of the fiscal year ended December 31, 1999; and
(c) The description of the Common Stock of the Registrant contained
in the Registrant's Registration Statement on Form S-1 (Commission File No.
333-65207), including any amendment or report filed for the purpose of updating
such description.
All documents filed by the Registrant pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents.
Any statement made in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which is also
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
Not applicable.
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
Section 145 of the Delaware General Corporation Law (the "Delaware
Law") grants corporations the power to indemnify directors, officers, employees
and agents in accordance with the provisions thereof.
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Page 3 of 35
<PAGE>
Section 102(b)(7) of the Delaware Law grants corporations the power
to eliminate a director's personal liability for monetary damages to the Company
or its stockholders for breach of fiduciary duty as a director, except in
circumstances involving a breach of a director's duty of loyalty to the Company
of its stockholders, acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of the law, self-dealing or the
unlawful payment of dividends or repurchase of stock.
Article X of the Registrant's Certificate of Incorporation provides:
The Corporation shall indemnify to the fullest extent authorized or
permitted by law (as now or hereafter in effect) any person made, or threatened
to be made, a defendant or witness to any action, suit or proceeding (whether
civil or criminal or otherwise) by reason of the fact that she or he, her or his
testator or intestate, is or was a director, officer, employee or agent of the
Corporation or by reason of the fact that any person is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or
enterprise. Nothing contained herein shall affect any rights to indemnification
to which employees other than directors and officers may be entitled by law. No
amendment or repeal of this paragraph of Article X shall apply to or have any
effect on any right to indemnification provided hereunder with respect to any
acts or omissions occurring prior to such amendment or repeal.
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such a director as a director. Notwithstanding the foregoing sentence, a
director shall be liable to the extent provided by applicable law (i) for any
breach of the director's 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) pursuant to Section 174 of the
Delaware Law, or (iv) for any transaction form which such director derived an
improper personal benefit. No amendment to or repeal of this paragraph of
Article X shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
In furtherance and not in limitation of the powers conferred by
statute:
(i) the Corporation may purchase and maintain insurance
on behalf of any person who is or was a director or officer, employee or agent
of the Corporation, or is serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of his or her status as such, whether or not the Corporation would
have the power to indemnify against such liability under the provisions of law;
and
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<PAGE>
(ii) the Corporation may create a trust fund, grant a
security interest and/or use other means (including, without limitation, letters
of credit, surety bonds and/or other similar arrangements), as well as enter
into contract providing indemnification to the full extent authorized or
permitted by law and including as part thereof provisions with respect to any or
all of the foregoing to ensure the payment of such amounts as may become
necessary to effect indemnification as provided therein, or elsewhere.
Article XI, Section 43 of the Registrant's Bylaws provides:
Section 43. INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER
OFFICERS, EMPLOYEES AND OTHER AGENTS.
(a) DIRECTORS OFFICERS. The corporation shall indemnify its
directors and officers to the fullest extent not prohibited by the Delaware
General Corporation Law; provided, however, that the corporation may modify the
extent of such indemnification by individual contracts with its directors and
officers; and, provided, further, that the corporation shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless (i) such indemnification is expressly
required to be made by law, (ii) the proceeding was authorized by the Board of
Directors of the corporation, (iii) such indemnification is provided by the
corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the Delaware General Corporation Law or (iv) such
indemnification is required to be made under subsection (d).
(b) EMPLOYEES AND OTHER AGENTS. The corporation shall have power
to indemnify its employees and other agents as set forth in the Delaware General
Corporation Law.
(c) EXPENSE. The corporation shall advance to any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer, of
the corporation, or is or was serving at the request of the corporation as a
director or executive officer of another corporation, partnership, joint
venture, trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
director or officer in connection with such proceeding upon receipt of an
undertaking by or on behalf of such person to repay said mounts if it should be
determined ultimately that such person is not entitled to be indemnified under
this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant
to paragraph (e) of this Bylaw, no advance shall be made by the corporation to
an officer of the corporation (except by reason of the fact that such officer is
or was a director of the corporation in which event this paragraph shall not
apply) in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, if a determination is reasonably and promptly
made (i) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to the proceeding, or (ii) if such quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, that the facts known
to the decision-making party at the time such determination is made demonstrate
II-3
Page 5 of 35
<PAGE>
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to the best interests of the
corporation.
(d) ENFORCEMENT. Without the necessity of entering into an express
contract, all rights to indemnification and advances to directors and officers
under this Bylaw shall be deemed to be contractual rights and be effective to
the same extent and as if provided for in a contract between the corporation and
the director or officer. Any right to indemnification or advances granted by
this Bylaw to a director or officer shall be enforceable by or on behalf of the
person holding such right in any court of competent jurisdiction if (i) the
claim for indemnification or advances is denied, in whole or in part, or (ii) no
disposition of such claim is made within ninety (90) days of request therefor.
The claimant in such enforcement action, if successful in whole or in part,
shall be entitled to be paid also the expense of prosecuting his claim. In
connection with any claim for indemnification, the corporation shall be entitled
to raise as a defense to any such action that the claimant has not met the
standard of conduct that make it permissible under the Delaware General
Corporation Law for the corporation to indemnify the claimant for the amount
claimed. In connection with any claim by an officer of the corporation (except
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such officer is or was a director of
the corporation) for advances, the corporation shall be entitled to raise a
defense as to any such action clear and convincing evidence that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed in the best interests of the corporation, or with respect to any
criminal action or proceeding that such person acted without reasonable cause to
believe that his conduct was lawful. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that claimant has not
met the applicable standard of conduct. In any suit brought by a director or
officer to enforce a right to indemnification or to an advancement of expenses
hereunder, the burden of proving that the director or officer is not entitled to
be indemnified, or to such advancement of expenses, under this Article XI or
otherwise shall be on the corporation.
(e) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person
by this Bylaw shall not be exclusive of any other right which such person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the Delaware General Corporation Law.
II-4
Page 6 of 35
<PAGE>
(f) SURVIVAL OF RIGHTS. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a director, officer,
employee or other agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
(g) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Bylaw.
(h) AMENDMENTS. Any repeal or modification of this Bylaw shall only
be prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
(i) SAVING CLAUSE. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and officer to the full
extent not prohibited by any applicable portion of this Bylaw that shall not
have been invalidated, or by any other applicable law.
(j) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:
(i) The term "proceeding" shall be broadly construed
and shall include, without limitation, the investigation, preparation,
prosecution, defense, settlement, arbitration and appeal of, and the giving of
testimony in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative.
(ii) The term "expenses" shall be broadly construed and
shall include, without limitation, court costs, attorneys' fees, witness fees,
fines, amounts paid in settlement or judgment and any other costs and expenses
of any nature or kind incurred in connection with any proceeding.
(iii) The term the "corporation" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent or another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Bylaw with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(iv) Reference to a "director," "executive officer,"
"officer," "employee," or "agent" of the corporation shall include, without
limitation, situations where such person is serving at the request of the
corporation as, respectively, a director, executive officer, officer, employee,
trustee or agent of another corporation, partnership, joint venture, trust or
other enterprise.
II-5
Page 7 of 35
<PAGE>
(v) References to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to an employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Bylaw.
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits.
--------
Exhibit
Number Description
------ -----------
3.1 Certificate of Incorporation of the Registrant(1)
3.2 Bylaws of the Registrant(1)
5.1 Opinion of Sheppard, Mullin, Richter & Hampton LLP
23.1 Consent of Sheppard, Mullin, Richter & Hampton LLP (see Exhibit 5.1)
23.2 Consent of Independent Auditors (McGowan Guntermann)
24.1 Power of Attorney (See page II-7)
99.1 2000 Stock Incentive Plan
99.2 Form of Incentive Stock Option Agreement
99.3 Form of Non-Qualified Stock Option Agreement
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 this 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 this Registration Statement (or the most
recent post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement; and
--------
(1) Filed as an exhibit to the Registrant's Form 10-Q for the quarter ended
June 30, 1998 filed with the Securities and Exchange Commission.
II-6
Page 8 of 35
<PAGE>
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this Registration Statement
or any material change to such information in this 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 with or furnished to
the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in 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 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 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 Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, 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 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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<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 Carpinteria, State of California, on this 31st day
of July, 2000.
TURBODYNE TECHNOLOGIES INC.
By /s/ Joseph D. Castano
_____________________________________
Joseph D. Castano,
Chief Financial Officer and Secretary
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Gerhard E. Delf and Joseph D.
Castano his true and lawful attorney-in-fact and agent, each with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent with full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gerhard E. Delf
_____________________________ President and Chief Executive Officer July 31, 2000
Gerhard E. Delf
/s/ Peter Hofbauer
_____________________________ Chairman of the Board July 31, 2000
Prof. Peter Hofbauer
/s/ Robert Taylor
_____________________________ Director July 31, 2000
Robert Taylor
/s/ Joseph D. Castano
_____________________________ Chief Financial Officer (Principal Financial July 31, 2000
Joseph D. Castano and Accounting Officer) and Secretary
/s/ Sadayappa Durairaj
_____________________________ Director July 31, 2000
Dr. Sadayappa Durairaj
/s/ Wendall R. Anderson
_____________________________ Director July 31, 2000
Wendall R. Anderson
/s/ Peter Kitzinski
_____________________________ Director July 31, 2000
Peter Kitzinski
/s/ Daniel Geronazzo
_____________________________ Director July 31, 2000
Daniel Geronazzo
/s/ Friedrich Goes
_____________________________ Director July 31, 2000
Dr. Friedrich Goes
</TABLE>
Page 10 of 35
<PAGE>
EXHIBITS
TO
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
TURBODYNE TECHNOLOGIES INC.
Page 11 of 35
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Description Page Number
------ ----------- -----------
3.1 Certificate of Incorporation of the Registrant(1)
3.2 Bylaws of the Registrant(1)
5.1 Opinion of Sheppard, Mullin, Richter & Hampton LLP 13
23.1 Consent of Sheppard, Mullin, Richter & Hampton LLP
(see Exhibit 5.1)
23.2 Consent of Independent Auditors (McGowan Guntermann) 16
24.1 Power of Attorney (See page II-7)
99.1 2000 Stock Incentive Plan 17
99.2 Form of Incentive Stock Option Agreement 24
99.3 Form of Non-Qualified Stock Option Agreement 30
--------
(1) Filed as an exhibit to the Registrant's Form 10-Q for the quarter ended
June 30, 1998 filed with the Securities and Exchange Commission.
Page 12 of 35
<PAGE>
EXHIBIT 5.1
-----------
August 14, 2000
Turbodyne Technologies Inc.
6155 Carpinteria Avenue
Carpinteria, California 93013
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen:
At your request, we have examined the Registration Statement on Form
S-8 (the "Registration Statement") to be filed by Turbodyne Technologies Inc., a
Delaware corporation (the "Company"), with the Securities and Exchange
Commission (the "SEC") in connection with the registration under the Securities
Act of 1933, as amended (the "Securities Act"), of 4,800,000 shares of the
Company's common stock (the "Common Stock"), that may be issued in the aggregate
pursuant to awards granted under the Company's 2000 Stock Incentive Plan (the
"Plan").
In rendering this opinion, we have examined only the following
documents:
1. The Certificate of Incorporation of the Company, as certified
by the Delaware Secretary of State;
2. The Bylaws of the Company;
3. The Plan;
4. The forms of Incentive Stock Option Agreement and Non-Qualified
Stock Option Agreement (collectively the "Agreements") to be
used in connection with the Plan;
Page 13 of 35
<PAGE>
Turbodyne Technologies Inc.
August 14, 2000
Page 2
5. Resolutions, adopted by the Company's Board of Directors as of
July 31, 2000, and by the stockholders of the Company as of May
12, 2000, pertaining to the adoption of the Plan, the
Agreements and the Registration Statement; and
6. The Registration Statement.
With respect to the foregoing documents, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to originals of all documents submitted to us as
certified or reproduced copies. We also have obtained from the officers of the
Company certificates as to all factual matters necessary for the purpose of this
opinion and, insofar as this opinion is based on such matters of fact, we have
relied on such certificates without independent investigation.
Based solely upon the foregoing and assuming, without further
inquiry, that (i) all awards granted under the Plan to date have been, and all
awards to be granted under the Plan will be, duly and validly granted in
accordance with the terms of the Plan, (ii) the consideration for the shares of
Common Stock to be issued pursuant to such awards will be received prior to the
issuance thereof, (iii) the shares of Common Stock to be issued pursuant to such
awards will be issued in accordance with the terms of the Plan and the
applicable Agreement, (iv) the Registration Statement will become effective
under the Securities Act prior to the issuance of any shares of Common Stock
under the Plan and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or be pending before the SEC, (v)
prospectuses will be updated and delivered to participants in the Plan as
required by the Securities Act and the rules and regulations promulgated by the
SEC thereunder, and (vi) the grant of awards under the Plan and the issuance of
shares of Common Stock pursuant to such awards will comply with the securities
laws of each state or jurisdiction applicable thereto (other than the Securities
Act), upon which assumptions the following opinion is expressly conditioned, it
is the opinion of the undersigned that the 4,800,000 shares of Common Stock
issuable by the Company pursuant to awards granted pursuant to the Plan will be,
when issued and delivered against payment therefor in accordance with the Plan,
the applicable Agreement and the Registration Statement, duly authorized,
validly issued, fully paid and non-assessable.
Page 14 of 35
<PAGE>
Turbodyne Technologies Inc.
August 14, 2000
Page 3
This opinion is limited to the General Corporation Law of the State
of Delaware and the Securities Act and the rules and regulations promulgated by
the SEC thereunder, to present judicial interpretations thereof and to facts as
they presently exist. In rendering this opinion, we have no obligation to revise
or supplement it should the current laws of the State of Delaware or the
Securities Act or such rules and regulations be changed by legislative action,
judicial decision or otherwise or if we become aware of any facts that change
the opinion expressed herein after the date hereof.
This opinion is issued to you solely for use in connection with the
Registration Statement and is not to be quoted or otherwise referred to in any
financial statements of the Company or related document, nor is it to be filed
with or furnished to any government agency or other person, without the prior
written consent of the undersigned in each instance.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Respectfully submitted,
/s/ Sheppard, Mullin, Richter & Hampton LLP
-------------------------------------------
SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
Page 15 of 35
<PAGE>
EXHIBIT 23.2
------------
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the incorporation by reference in the Registration
Statement (Form S-8 333-0000) pertaining to the 2000 Stock Incentive Plan of
Turbodyne Technologies Inc. of our report dated April 4, 2000 with respect to
the consolidated financial statements and schedules for Turbodyne Technologies
Inc. for the year ended December 31, 1999 included in the Annual Report on From
10-K of Turbodyne Technologies Inc. for the year ended December 31, 1999.
/s/ McGowan Guntermann
-----------------------
MCGOWAN GUNTERMANN
Santa Barbara, California
August 1, 2000
Page 16 of 35
<PAGE>
EXHIBIT 99.1
------------
TURBODYNE TECHNOLOGIES INC.
2000 STOCK INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of this 2000 Stock Incentive Plan (the "Plan") is to provide
incentives and rewards to selected eligible directors, officers, employees and
consultants of Turbodyne Technologies Inc. (the "Company") or its subsidiaries
in order to assist the Company and its subsidiaries in attracting, retaining and
motivating those persons by providing for or increasing the proprietary
interests of those persons in the Company, and by associating their interests in
the Company with those of the Company's stockholders.
2. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Board of Directors of the Company (the
"Board"), or a committee of the Board (the "Committee") whose members shall
serve at the pleasure of the Board. If administration is delegated to the
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board (and references in this
Plan to the Board shall thereafter be to the Committee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan as may be
adopted from time to time by the Board.
The Board shall have all the powers vested in it by the terms of the Plan,
including exclusive authority (i) to select from among eligible directors,
officers, employees and consultants, those persons to be granted "Awards" (as
defined below) under the Plan; (ii) to determine the type, size and terms of
individual Awards (which need not be identical) to be made to each person
selected; (iii) to determine the time when Awards will be granted and to
establish objectives and conditions (including, without limitation, vesting and
performance conditions), if any, for earning Awards; (iv) to amend the terms or
conditions of any outstanding Award, subject to applicable legal restrictions
and to the consent of the other party to such Award; (v) to determine the
duration and purpose of leaves of absences which may be granted to holders of
Awards without constituting termination of their employment for purposes of
their Awards; (vi) to authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of the Plan; and (vii) to make
any and all other determinations which it determines to be necessary or
advisable in the administration of the Plan. The Board shall have full power and
authority to administer and interpret the Plan and to adopt, amend and revoke
such rules, regulations, agreements, guidelines and instruments for the
administration of the Plan and for the conduct of its business as the Board
deems necessary or advisable. The Board's interpretation of the Plan, and all
actions taken and determinations made by the Board pursuant to the powers vested
in it hereunder, shall be conclusive and binding on all parties concerned,
including the Company, its stockholders, any participants in the Plan and any
other employee of the Company or any of its subsidiaries.
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3. PERSONS ELIGIBLE UNDER THE PLAN.
Any person who is a director, officer, employee or consultant of the Company, or
any of its subsidiaries (a "Participant"), shall be eligible to be considered
for the grant of Awards under the Plan.
4. AWARDS.
(a) COMMON STOCK AND DERIVATIVE SECURITY AWARDS. Awards authorized under
the Plan shall consist of any type of arrangement with a Participant
that is not inconsistent with the provisions of the Plan and that, by
its terms, involves or might involve or be made with reference to the
issuance of (i) shares of the Common Stock, $.001 par value per share,
of the Company (the "Common Stock") or (ii) a "derivative security" (as
that term is defined in Rule 16a-1(c) of the Rules and Regulations of
the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, as the same may be amended from time to time)
with an exercise or conversion price related to the Common Stock or
with a value derived from the value of the Common Stock.
(b) TYPES OF AWARDS. Awards are not restricted to any specified form or
structure and may include, but need not be limited to, sales, bonuses
and other transfers of stock, restricted stock, stock options, reload
stock options, stock purchase warrants, other rights to acquire stock
or securities convertible into or redeemable for stock, stock
appreciation rights, phantom stock, dividend equivalents, performance
units or performance shares, or any other type of Award which the Board
shall determine is consistent with the objectives and limitations of
the Plan. An Award may consist of one such security or benefit, or two
or more of them in tandem or in the alternative.
(c) CONSIDERATION. Common Stock may be issued pursuant to an Award for any
lawful consideration as determined by the Board, including, without
limitation, a cash payment, services rendered, or the cancellation of
indebtedness.
(d) GUIDELINES. The Board may adopt, amend or revoke from time to time
written policies implementing the Plan. Such policies may include, but
need not be limited to, the type, size and term of Awards to be made to
participants and the conditions for payment of such Awards.
(e) TERMS AND CONDITIONS. Subject to the provisions of the Plan, the Board,
in its sole and absolute discretion, shall determine all of the terms
and conditions of each Award granted pursuant to the Plan, which terms
and conditions may include, among other things:
(i) any provision necessary for such Award to qualify as an incentive
stock option under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") (an "Incentive Stock Option");
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(ii) a provision permitting the recipient of such Award to pay the
purchase price of the Common Stock or other property issuable
pursuant to such Award, or to pay such recipient's tax withholding
obligation with respect to such issuance, in whole or in part, by
delivering previously owned shares of capital stock of the Company
(including "pyramiding") or other property, or by reducing the
number of shares of Common Stock or the amount of other property
otherwise issuable pursuant to such Award; or
(iii) a provision conditioning or accelerating the receipt of benefits
pursuant to the Award, or terminating the Award, either
automatically or in the discretion of the Board, upon the
occurrence of specified events, including, without limitation, a
change of control of the Company, an acquisition of a specified
percentage of the voting power of the Company, the dissolution or
liquidation of the Company, a sale of substantially all of the
property and assets of the Company or an event of the type
described in Section 7 of the Plan.
(f) SUSPENSION OR TERMINATION OF AWARDS. If the Company believes that a
Participant has committed an act of misconduct as described below, the
Company may suspend the Participant's rights under any then outstanding
Award pending a determination by the Board. If the Board determines
that a Participant has committed an act of embezzlement, fraud,
nonpayment of any obligation owed to the Company or any subsidiary,
breach of fiduciary duty or deliberate disregard of the Company's rules
resulting in loss, damage or injury to the Company, or if a Participant
makes an unauthorized disclosure of trade secret or confidential
information of the Company, engages in any conduct constituting unfair
competition, or induces any customer of the Company to breach a
contract with the Company, neither the Participant nor his or her
estate shall be entitled to exercise any rights whatsoever with respect
to such Award. In making such determination, the Board shall act fairly
and shall give the Participant a reasonable opportunity to appear and
present evidence on his or her behalf to the Board.
(g) MAXIMUM GRANT OF AWARDS TO ANY PARTICIPANT. No Participant shall
receive Awards representing more than 500,000 shares of Common Stock
per annum, subject to adjustment as provided in Section 7 hereof.
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
The aggregate number of shares of Common Stock that may be issued or issuable
pursuant to all Awards under the Plan (including Awards in the form of Incentive
Stock Options and Non-Statutory Stock Options) shall not exceed an aggregate of
4,800,000 shares of Common Stock, subject to adjustment as provided in Section 7
of the Plan.
Shares of Common Stock subject to the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. Any shares of Common Stock
subject to an Award which for any reason expires or is terminated unexercised as
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to such shares shall again be available for issuance under the Plan. For
purposes of this Section 5, the aggregate number of shares of Common Stock that
may be issued at any time pursuant to Awards granted under the Plan shall be
reduced by: (i) the number of shares of Common Stock previously issued pursuant
to Awards granted under the Plan, other than shares of Common Stock subsequently
reacquired by the Company pursuant to the terms and conditions of such Awards
and with respect to which the holder thereof received no benefits of ownership,
such as dividends; and (ii) the number of shares of Common Stock which were
otherwise issuable pursuant to Awards granted under this Plan but which were
withheld by the Company as payment of the purchase price of the Common Stock
issued pursuant to such Awards or as payment of the recipient's tax withholding
obligation with respect to such issuance.
6. PAYMENT OF AWARDS.
The Board shall determine the extent to which Awards shall be payable in cash,
shares of Common Stock or any combination thereof. The Board may, upon request
of a Participant, determine that all or a portion of a payment to that
Participant under the Plan, whether it is to be made in cash, shares of Common
Stock or a combination thereof, shall be deferred. Deferrals shall be for such
periods and upon such terms as the Board may determine in its sole discretion.
7. DILUTION AND OTHER ADJUSTMENT.
In the event of any change in the outstanding shares of the Common Stock or
other securities then subject to the Plan by reason of any stock split, reverse
stock split, stock dividend, recapitalization, merger, consolidation,
combination or exchange of shares or other similar corporate change, or if the
outstanding securities of the class then subject to the Plan are exchanged for
or converted into cash, property or a different kind of securities, or if cash,
property or securities are distributed in respect of such outstanding securities
as a class (other than cash dividends), then the Board may, but it shall not be
required to, make such equitable adjustments to the Plan and the Awards
thereunder (including, without limitation, appropriate and proportionate
adjustments in (i) the number and type of shares or other securities or cash or
other property that may be acquired pursuant to Incentive Stock Options and
other Awards theretofore granted under the Plan, (ii) the maximum number and
type of shares or other securities that may be issued pursuant to Incentive
Stock Options and other Awards thereafter granted under the Plan; and (iii) the
maximum number of securities with respect to which Awards may thereafter be
granted to any Participant in any fiscal year) as the Board in its sole
discretion determines appropriate, including any adjustments in the maximum
number of shares referred to in Section 5 of the Plan. Such adjustments shall be
conclusive and binding for all purposes of the Plan.
8. MISCELLANEOUS PROVISIONS.
(a) DEFINITIONS. As used herein, "subsidiary" means any current or future
corporation which would be a "subsidiary corporation," as that term is
defined in Section 424(f) of the Code, of the Company; and the term
"or" means "and/or."
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(b) CONDITIONS ON ISSUANCE. Securities shall not be issued pursuant to
Awards unless the grant and issuance thereof shall comply with all
relevant provisions of law and the requirements of any securities
exchange or quotation system upon which any securities of the Company
are listed, and shall be further subject to approval of counsel for the
Company with respect to such compliance. Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which
authority is determined by Company counsel to be necessary to the
lawful issuance and sale of any security or Award, shall relieve the
Company of any liability in respect of the nonissuance or sale of such
securities as to which requisite authority shall not have been
obtained.
(c) RIGHTS AS STOCKHOLDER. A participant under the Plan shall have no
rights as a holder of Common Stock with respect to Awards hereunder,
unless and until certificates for shares of such stock are issued to
the participant.
(d) ASSIGNMENT OR TRANSFER. Subject to the discretion of the Board, and
except with respect to Incentive Stock Options which are not
transferable except by will or the laws of descent and distribution,
Awards under the Plan or any rights or interests therein shall be
assignable or transferable to the extent provided in the written grant
agreement.
(e) AGREEMENTS. All Awards granted under the Plan shall be evidenced by
written agreements in such form and containing such terms and
conditions (not inconsistent with the Plan) as the Board shall from
time to time adopt.
(f) WITHHOLDING TAXES. The Company shall have the right to deduct from all
Awards hereunder paid in cash any federal, state, local or foreign
taxes required by law to be withheld with respect to such awards and,
with respect to awards paid in stock, to require the payment (through
withholding from the participant's salary or otherwise) of any such
taxes. The obligation of the Company to make delivery of Awards in cash
or Common Stock shall be subject to the restrictions imposed by any and
all governmental authorities.
(g) NO RIGHTS TO AWARD. No Participant or other person shall have any right
to be granted an Award under the Plan. Neither the Plan nor any action
taken hereunder shall be construed as giving any Participant any right
to be retained in the employ of the Company or any of its subsidiaries
or shall interfere with or restrict in any way the rights of the
Company or any of its subsidiaries, which are hereby reserved, to
discharge a Participant at any time for any reason whatsoever, with or
without good cause.
(h) COSTS AND EXPENSES. The costs and expenses of administering the Plan
shall be borne by the Company and not charged to any Award nor to any
Participant receiving an Award.
(i) FUNDING OF PLAN. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Award under the
Plan.
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9. AMENDMENTS AND TERMINATION.
(a) AMENDMENTS. The Board may at any time terminate or from time to time
amend the Plan in whole or in part, but no such action shall adversely
affect any rights or obligations with respect to any Awards theretofore
made under the Plan. However, with the consent of the Participant
affected, the Board may amend outstanding agreements evidencing Awards
under the Plan in a manner not inconsistent with the terms of the Plan.
(b) STOCKHOLDER APPROVAL. To the extent that Section 422 of the Code, other
applicable law, or the rules, regulations, procedures or listing
agreement of any national securities exchange or quotation system,
requires that any amendment of the Plan be approved by the stockholders
of the Company, no such amendment shall be effective unless and until
it is approved by the stockholders in such a manner and to such a
degree as is required.
(c) TERMINATION. Unless the Plan shall theretofore have been terminated as
above provided, the Plan (but not the awards theretofore granted under
the Plan) shall terminate on and no awards shall be granted after
September 11, 2008.
10. EFFECTIVE DATE.
The Plan is effective on October 1, 1999, the date on which it was adopted by
the Executive Committee of the Board of Directors of the Company.
11. FORM S-8 REGISTRATION STATEMENT.
The Company intends to file a Registration Statement on Form S-8, or such other
form as counsel for the Company determines appropriate, to register the issuance
of shares by the Company upon the exercise of any options granted pursuant to
the Plan. Prior to the filing and effectiveness of the Registration Statement,
any shares issued upon the exercise of options granted pursuant to the Plan to
U.S. resident shareholders will be issued pursuant to Section 4(2) of the
Securities Act of 1933 and will be subject to appropriate restrictions on
transfer. Any shares issued upon the exercise of options granted pursuant to the
Plan to persons who are not U.S. Persons, as defined in Regulation S promulgated
pursuant to the Securities Act of 1933, shall be issued in reliance of
Regulation S and subject to the conditions of Regulation S including the
agreement of the Participants not to resell the shares to a U.S. Person or for
the account or benefit of a U.S. Person until expiry of the distribution
compliance period.
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12. GOVERNING LAW
The Plan and any agreements entered into thereunder shall be construed and
governed by the laws of the State of Delaware applicable to contracts made
within, and to be performed wholly within, such state, without regard to the
application of conflict of laws rules thereof.
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EXHIBIT 99.2
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INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of the Date of Grant set
forth below, between TURBODYNE TECHNOLOGIES, INC., a Delaware corporation (the
"Company"), and the employee of the Company whose name appears below (the
"Optionee"). All capitalized terms not specifically defined herein shall have
the meanings set forth in the Company's 2000 Stock Incentive Plan (the "Plan").
RECITALS
A. The Board of Directors and the shareholders of the Company both
approved and adopted the Plan. The Plan provides for the granting of awards to
directors, officers, employees and consultants of the Company or any of its
affiliates.
B. Pursuant to the Plan, the Plan is administered by the Committee
appointed by and comprised of members of the Company's Board of Directors.
C. Pursuant to the Plan, the Compensation Committee (the "Committee")
has determined that it is to the advantage and in the best interests of the
Company and its shareholders to grant an incentive stock option to the Optionee
covering shares of the Company's Common Stock (or any class of stock into which
such Common Stock is converted or reclassified as provided in the Plan) ("Common
Stock") as an inducement to remain in the service of the Company and as an
incentive for increased effort during such service, and has approved the
execution of this Incentive Stock Option Agreement between the Company and the
Optionee.
D. The option granted hereby is intended to qualify as an "incentive
stock option" under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Effective as of the date of grant set forth on
the signature page hereof (the "Date of Grant"), the Company grants to the
Optionee the right and option (the "Option") to purchase on the terms and
conditions hereinafter set forth, all or any part of such number of shares of
Common Stock at such purchase price per share as are set forth below, which
price is not less than the fair market value of such stock (as determined
pursuant to Section 4 hereof) on the Date of Grant; provided, however, that if
the Optionee possesses more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company (and its affiliates) (a "10%
Shareholder"), such price is not less than one hundred and ten percent (110%) of
the fair market value of such stock (as determined pursuant to Section 4) on the
Date of Grant. The Option shall be exercisable from time to time in accordance
with the provisions of this Agreement during a period expiring on the tenth
anniversary of the Date of Grant (the "Expiration Date") or earlier in
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accordance with Section 5; provided, however, that it the Option is granted to a
10% Shareholder, the Expiration Date shall be the fifth anniversary of the Date
of Grant.
2. Vesting. The Option shall become exercisable to purchase, and
shall vest with respect to, such percentage of the shares covered hereby
(rounded to the nearest whole share) as may be set forth on the signature page
hereof. In each case the number of shares which may be purchased shall be
calculated to the nearest full share.
3. Manner of Exercise. Each exercise of the Option shall be by means
of a written notice of exercise delivered to the Company, specifying the number
of shares to be purchased and accompanied by payment to the Company of the full
purchased price of the shares to be purchased solely (i) in cash or by check
payable to the order of the Company, (ii) by delivery of shares of Common Stock
of the Company already owned by, and in the possession of, the Optionee, valued
at their fair market value, as determined in accordance with Section 4, or (iii)
(x) by a promissory note made by Optionee in favor of the Company, upon the
terms and conditions determined by the Committee including, to the extent the
Committee determines appropriate, a security interest in the shares issuable
upon exercise or other property, or (y) through a "cashless exercise," in either
case complying with applicable law (including, without limitation, state and
federal margin requirements), or any combination thereof. Shares of Common Stock
used to satisfy the exercise price of this Option shall be valued at their fair
market value determined (in accordance with Section 4 hereof) on the date of
exercise (or if such date is not a business day, as of the close of the business
day immediately preceding date). This Option may not be exercised for a fraction
of a share and no partial exercise of this Option may be for less than (a) one
hundred (100) shares or (b) the total number of shares then eligible for
exercise, if less than one hundred (100) shares.
The Option may be exercised (i) during the lifetime of the Optionee
only by the Optionee; (ii) to the extent permitted by the Committee or by the
terms of this Agreement, Optionee's spouse if such spouse obtained the Option
pursuant to a qualified domestic relations ordered as defined by the Code of
Title I of ERISA, or the rules thereunder ("Qualified Domestic Relations
Order"); and (iii) after the Optionee's death by his or her transferees by will
or the laws of descent or distribution.
4. Fair Market Value of Common Stock. The fair market value of a
share of Common Stock shall be determined for purposes of this Agreement by
reference to the closing price on the principal stock exchange on which such
shares are then listed or, if such shares are not then listed on a stock
exchange, by reference to the closing price (if approved for quotation on the
NASDAQ National Market System) or the mean between the bid and asked price (if
other over-the-counter issue) of a share as supplied by the National
Association of Securities Dealers, Inc. through NASDAQ (or its successor in
function), in each case as reported by The Wall Street Journal, for the business
day immediately preceding the date on which the option is granted (which, for
all purposes, shall be the Date of Grant) or exercised (or, if for any reason no
such price is available, in such other manner as the Committee may deem
appropriate to reflect the then fair market value thereof).
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5. Termination of Employment; Death or Permanent Disability. If the
Optionee ceases to be employed by the Company or one of its affiliates for any
reason other than the Optionee's death or "permanent disability" (within the
meaning of Section 22(e)(3) of the Code), the Option shall be exercisable until
the earlier of (i) the Expiration Date or (ii) a date three (3) months after the
date the Optionee ceases to be an employee of the Company or such affiliate, to
the extent exercisable on the date of such cessation of employment, and shall
thereafter expire and be void and of no further force or effect. A leave of
absence approved in writing by the Committee shall not be deemed a termination
of employment for the purposes of this Section 5, but the Option may not be
exercised during any such leave of absence, except during the first three (3)
months thereof. If the Optionee dies or becomes "permanently disabled" while the
Optionee is employed by the Company or one of its affiliates, the Option shall
expire on the earlier of (i) the Expiration Date or (ii) a date one (1) year
after the date of such death or "permanent disability," to the extent
exercisable on the date of death or permanent disability, and shall thereafter
expire and be void and of no further force or effect. During such period after
death, the Option may, to the extent that it remained unexercised (but
exercisable by the Optionee according to the Option's terms) on the date of such
death, be exercised by the person or persons to whom the Optionee's rights under
the Option shall pass by the Optionee's will or by the laws of descent and
distribution.
6. Shares to be Issued in Compliance with Federal Securities Laws
and Exchange Rules. By accepting the Option, the Optionee represents and agrees,
for the Optionee and his or her legal successors (by will or the laws of descent
and distribution or through a Qualified Domestic Relations Order), that none of
the shares purchased upon exercise of the Option will be acquired with a view to
any sale, transfer or distribution of said shares in violation of the Securities
Act of 1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder, or any applicable state "blue sky" laws. If required by
the Committee at the time the Option is exercised, the Optionee or any other
person entitled to exercise the Option shall furnish evidence satisfactory to
the Company (including a written and signed representation) to such effect in
form and substance satisfactory to the Company, including an indemnification of
the Company in the event of any violation of the Securities Act or state blue
sky laws by such person. The Company shall use reasonable efforts to take all
necessary and appropriate action to assure that the shares issuable upon the
exercise of this Option shall be issued in full compliance with the Securities
Act, state blue sky laws and all applicable listing requirements of any
principal securities exchange on which shares of the same class are listed.
7. Withholding of Taxes. Upon any disposition by the Optionee or the
Optionee's legal successor of shares of Common Stock acquired pursuant to the
exercise of this Option within two (2) years of the Date of Grant or one (1)
year of the exercise of this Option (an "Early Disposition"), the Company shall
have the right to require the Optionee or the Optionee's legal successor to pay
the Company the amount of any taxes which the Company may be required to
withhold with respect to such shares.
8. No Assignment. The Option and all other rights and privileges
granted hereby are not transferable except by will or the laws of descent and
distribution or by Optionee's spouse if such spouse obtained the Option pursuant
to a qualified domestic relations.
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9. Adjustment for Reorganizations, Stock Splits, etc. If the
outstanding shares of Common Stock of the Company (or any other class of shares
or securities which shall have become issuable upon the exercise of this Option
pursuant to this sentence) are increased, decreased, changed into or exchanged
for a different number or kind of shares or securities of the Company through
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, an appropriate and
proportionate adjustment shall be made in the maximum number and kind of shares
receivable upon the exercise of this Option, without change in the total price
applicable to the unexercised portion of this Option, but with a corresponding
adjustment in the price for each share or other unit of any security covered by
this Option.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all the property or more than eighty percent
(80%) of the then outstanding stock of the Company to another corporation, this
Option shall terminate.
Adjustments under this Section 9 shall be made by the Committee,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive. No fractional shares of stock
shall be issued under this Option on any such adjustment.
10. Participation by the Optionee in Other Company Plans. Nothing
herein contained shall affect the right of the Optionee to participate in and
receive benefits under and in accordance with the then current provisions of any
pension, insurance, profit sharing or other employee welfare plan or program of
the Company or of any subsidiary of the Company.
11. No Rights as a Shareholder Until Issuance of Stock Certificate.
Neither the Optionee nor any other person legally entitled to exercise this
Option shall be entitled to any of the rights or privileges of a shareholder of
the Company in respect of any shares issuable upon any exercise of the Option
unless and until a certificate or certificates representing such shares shall
have been actually issued and delivered to the Optionee. No shares shall be
issued and delivered upon the exercise of this Option unless and until there
shall have been full compliance with all applicable requirements of the
Securities Act (whether by registration or satisfaction of an exemption
therefrom), all applicable listing requirements of a national securities
exchange on which shares of the same class are listed and any other requirements
of law or of any regulatory bodies having jurisdiction over such issuance and
delivery.
12. Not an Employment or Service Contract. Nothing herein contained
shall be construed as an agreement by the Company or any of its affiliates,
express or implied, to employ the Optionee or contract for the Optionee's
services, to restrict the Company's or such affiliate's right to discharge the
Optionee or cease contracting for the Optionee's services or to modify, extend
or otherwise affect in any manner whatsoever, the terms of any employment
agreement or contract for services which may exist between the Optionee and the
Company or any of its affiliates.
13. Agreement Subject to the Plan. The Option hereby granted is
subject to, and the Company and the Optionee agree to be bound by, all of the
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terms and conditions of the Plan, as the same shall be amended from time to time
in accordance with the terms thereof, but no such amendment shall adversely
affect the Optionee's rights under this Option without the prior written consent
of the Optionee.
14. Execution. The interpretation, performance and enforcement of
this Agreement shall be governed by the internal substantive laws of the State
of California.
COMPANY: TURBODYNE TECHNOLOGIES INC.
By_______________________________
Its_______________________________
OPTIONEE:
---------------------------------
Name
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By his or her signature below, the spouse of the Optionee agrees to be
bound by all of the terms and conditions of the foregoing Agreement.
OPTIONEE'S SPOUSE:
---------------------------------
Name
The following terms and conditions are an integral part of the foregoing
Incentive Stock Option Agreement.
Optionee: _________________________________
Address: _________________________________
_________________________________
Social Security Number: _________________________________
Date of Grant: _________________________________
Number of shares purchasable: _________________________________
Exercise Price per share: _________________________________
Expiration Date: _________________________________
Anniversary Date Percentage Initially Cumulative Percentage
of the Date of Grant Exercisable Exercisable
--------------------------------------------------------------------------------
First
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Second
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Third
--------------------------------------------------------------------------------
Fourth
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EXHIBIT 99.3
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NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT is made as of the Date of Grant
set forth below, between TURBODYNE TECHNOLOGIES INC., a Delaware corporation
(the "Company"), and the employee of the Company whose name appears below (the
"Optionee"). All capitalized terms not specifically defined herein shall have
the meanings set forth in the Company's 2000 Stock Incentive Plan (the "Plan").
RECITALS
A. The Board of Directors and the shareholders of the Company both
approved and adopted the Plan. The Plan provides for the granting of awards to
directors, officers, employees and consultants of the Company or any of its
affiliates.
B. Pursuant to the Plan, the Plan is administered by the Committee
appointed by and comprised of members of the Company's Board of Directors.
C. Pursuant to the Plan, the Compensation Committee (the "Committee")
has determined that it is to the advantage and in the best interests of the
Company and its shareholders to grant an non-qualified stock option to the
Optionee covering shares of the Company's Common Stock (or any class of stock
into which such Common Stock is converted or reclassified as provided in the
Plan) ("Common Stock") as an inducement to remain in the service of the Company
and as an incentive for increased effort during such service, and has approved
the execution of this Non-Qualified Stock Option Agreement between the Company
and the Optionee.
D. The option granted hereby is not intended to qualify as an
"incentive stock option" under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. The Company grants to the Optionee the right and
option (the "Option") to purchase on the terms and conditions hereinafter set
forth, all or any part of such number of shares of Common Stock at such purchase
price per share as are set forth below, which price is not less than the fair
market value of such stock (as determined pursuant to Section 4 hereof) on the
Date of Grant. The Option shall be exercisable from time to time in accordance
with the provisions of this Agreement during a period expiring on the tenth
anniversary of the Date of Grant (the "Expiration Date") or earlier in
accordance with Section 5.
2. Vesting. The Option shall become exercisable to purchase, and
shall vest with respect to, such percentage of the shares covered hereby
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(rounded to the nearest whole share) as may be set forth on the signature page
hereof. In each case the number of shares which may be purchased shall be
calculated to the nearest full share.
3. Manner of Exercise. Each exercise of the Option shall be by means
of a written notice of exercise delivered to the Company, specifying the number
of shares to be purchased and accompanied by payment to the Company of the full
purchased price of the shares to be purchased solely (i) in cash or by check
payable to the order of the Company, (ii) by delivery of shares of Common Stock
of the Company already owned by, and in the possession of, the Optionee, valued
at their fair market value, as determined in accordance with Section 4, or (iii)
(x) by a promissory note made by Optionee in favor of the Company, upon the
terms and conditions determined by the Committee including, to the extent the
Committee determines appropriate, a security interest in the shares issuable
upon exercise or other property, or (y) through a "cashless exercise," in either
case complying with applicable law (including, without limitation, state and
federal margin requirements), or any combination thereof. Shares of Common Stock
used to satisfy the exercise price of this Option shall be valued at their fair
market value determined (in accordance with Section 4 hereof) on the date of
exercise (or if such date is not a business day, as of the close of the business
day immediately preceding date). This Option may not be exercised for a fraction
of a share and no partial exercise of this Option may be for less than (a) one
hundred (100) shares or (b) the total number of shares then eligible for
exercise, if less than one hundred (100) shares.
The Option may be exercised (i) during the lifetime of the Optionee
only by the Optionee; (ii) to the extent permitted by the Committee or by the
terms of this Agreement, Optionee's spouse if such spouse obtained the Option
pursuant to a qualified domestic relations ordered as defined by the Code of
Title I of ERISA, or the rules thereunder ("Qualified Domestic Relations
Order"); and (iii) after the Optionee's death by his or her transferees by will
or the laws of descent or distribution.
4. Fair Market Value of Common Stock. The fair market value of a
share of Common Stock shall be determined for purposes of this Agreement by
reference to the closing price on the principal stock exchange on which such
shares are then listed or, if such shares are not then listed on a stock
exchange, by reference to the closing price (if approved for quotation on the
NASDAQ National Market System) or the mean between the bid and asked price (if
other over-the-counter issue) of a share as supplied by the National
Association of Securities Dealers, Inc. through NASDAQ (or its successor in
function), in each case as reported by The Wall Street Journal, for the business
day immediately preceding the date on which the option is granted (which, for
all purposes, shall be the Date of Grant) or exercised (or, if for any reason no
such price is available, in such other manner as the Committee may deem
appropriate to reflect the then fair market value thereof).
5. Termination of Employment; Death or Permanent Disability. If the
Optionee ceases to be employed by the Company or one of its affiliates for any
reason other than the Optionee's death or "permanent disability" (within the
meaning of Section 22(e)(3) of the Code), the Option shall be exercisable until
the earlier of (i) the Expiration Date or (ii) a date three (3) months after the
date the Optionee ceases to be an employee of the Company or such affiliate, to
the extent exercisable on the date of such cessation of employment, and shall
thereafter expire and be void and of no further force or effect. A leave of
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absence approved in writing by the Committee shall not be deemed a termination
of employment for the purposes of this Section 5, but the Option may not be
exercised during any such leave of absence, except during the first three (3)
months thereof. If the Optionee dies or becomes "permanently disabled" while the
Optionee is employed by the Company or one of its affiliates, the Option shall
expire on the earlier of (i) the Expiration Date or (ii) a date one (1) year
after the date of such death or "permanent disability," to the extent
exercisable on the date of death or permanent disability, and shall thereafter
expire and be void and of no further force or effect. During such period after
death, the Option may, to the extent that it remained unexercised (but
exercisable by the Optionee according to the Option's terms) on the date of such
death, be exercised by the person or persons to whom the Optionee's rights under
the Option shall pass by the Optionee's will or by the laws of descent and
distribution.
6. Shares to be Issued in Compliance with Federal Securities Laws
and Exchange Rules. By accepting the Option, the Optionee represents and agrees,
for the Optionee and his or her legal successors (by will or the laws of descent
and distribution or through a Qualified Domestic Relations Order), that none of
the shares purchased upon exercise of the Option will be acquired with a view to
any sale, transfer or distribution of said shares in violation of the Securities
Act of 1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder, or any applicable state "blue sky" laws. If required by
the Committee at the time the Option is exercised, the Optionee or any other
person entitled to exercise the Option shall furnish evidence satisfactory to
the Company (including a written and signed representation) to such effect in
form and substance satisfactory to the Company, including an indemnification of
the Company in the event of any violation of the Securities Act or state blue
sky laws by such person. The Company shall use reasonable efforts to take all
necessary and appropriate action to assure that the shares issuable upon the
exercise of this Option shall be issued in full compliance with the Securities
Act, state blue sky laws and all applicable listing requirements of any
principal securities exchange on which shares of the same class are listed.
7. Withholding of Taxes. Upon any disposition by the Optionee or the
Optionee's legal successor of shares of Common Stock acquired pursuant to the
exercise of this Option within two (2) years of the Date of Grant or one (1)
year of the exercise of this Option (an "Early Disposition"), the Company shall
have the right to require the Optionee or the Optionee's legal successor to pay
the Company the amount of any taxes which the Company may be required to
withhold with respect to such shares.
8. No Assignment. Subject to the discretion of the Board of
Directors, awards granted hereby or any rights or interests therein shall be
assignable or transferable to the extent provided herein.
9. Adjustment for Reorganizations, Stock Splits, etc. If the
outstanding shares of Common Stock of the Company (or any other class of shares
or securities which shall have become issuable upon the exercise of this Option
pursuant to this sentence) are increased, decreased, changed into or exchanged
for a different number or kind of shares or securities of the Company through
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, an appropriate and
proportionate adjustment shall be made in the maximum number and kind of shares
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<PAGE>
receivable upon the exercise of this Option, without change in the total price
applicable to the unexercised portion of this Option, but with a corresponding
adjustment in the price for each share or other unit of any security covered by
this Option.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all the property or more than eighty percent
(80%) of the then outstanding stock of the Company to another corporation, this
Option shall terminate.
Adjustments under this Section 9 shall be made by the Committee,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive. No fractional shares of stock
shall be issued under this Option on any such adjustment.
10. Participation by the Optionee in Other Company Plans. Nothing
herein contained shall affect the right of the Optionee to participate in and
receive benefits under and in accordance with the then current provisions of any
pension, insurance, profit sharing or other employee welfare plan or program of
the Company or of any subsidiary of the Company.
11. No Rights as a Shareholder Until Issuance of Stock Certificate.
Neither the Optionee nor any other person legally entitled to exercise this
Option shall be entitled to any of the rights or privileges of a shareholder of
the Company in respect of any shares issuable upon any exercise of the Option
unless and until a certificate or certificates representing such shares shall
have been actually issued and delivered to the Optionee. No shares shall be
issued and delivered upon the exercise of this Option unless and until there
shall have been full compliance with all applicable requirements of the
Securities Act (whether by registration or satisfaction of an exemption
therefrom), all applicable listing requirements of a national securities
exchange on which shares of the same class are listed and any other requirements
of law or of any regulatory bodies having jurisdiction over such issuance and
delivery.
12. Not an Employment or Service Contract. Nothing herein contained
shall be construed as an agreement by the Company or any of its affiliates,
express or implied, to employ the Optionee or contract for the Optionee's
services, to restrict the Company's or such affiliate's right to discharge the
Optionee or cease contracting for the Optionee's services or to modify, extend
or otherwise affect in any manner whatsoever, the terms of any employment
agreement or contract for services which may exist between the Optionee and the
Company or any of its affiliates.
13. Agreement Subject to the Plan. The Option hereby granted is
subject to, and the Company and the Optionee agree to be bound by, all of the
terms and conditions of the Plan, as the same shall be amended from time to time
in accordance with the terms thereof, but no such amendment shall adversely
affect the Optionee's rights under this Option without the prior written consent
of the Optionee.
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14. Execution. The interpretation, performance and enforcement of
this Agreement shall be governed by the internal substantive laws of the State
of California.
COMPANY: TURBODYNE TECHNOLOGIES INC.
By_______________________________
Its_______________________________
OPTIONEE:
---------------------------------
Name
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By his or her signature below, the spouse of the Optionee agrees to be
bound by all of the terms and conditions of the foregoing Agreement.
OPTIONEE'S SPOUSE:
---------------------------------
Name
The following terms and conditions are an integral part of the foregoing
Incentive Stock Option Agreement.
Optionee: _________________________________
Address: _________________________________
_________________________________
Social Security Number: _________________________________
Date of Grant: _________________________________
Number of shares purchasable: _________________________________
Exercise Price per share: _________________________________
Expiration Date: _________________________________
Anniversary Date Percentage Initially Cumulative Percentage
of the Date of Grant Exercisable Exercisable
--------------------------------------------------------------------------------
First
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Second
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Third
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Fourth
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