<PAGE> 1
As filed with the Securities and Exchange Commission on October 6, 1999.
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INAMED CORPORATION
(Exact name of issuer as specified in its charter)
Delaware 59-0920629
(State of Incorporation) (I.R.S. Employer
Identification No.)
5540 Ekwill Street, Suite D
Santa Barbara, California 93111
(805) 692-5400
(Address and telephone number of principal executive offices)
INAMED CORPORATION
1998 STOCK OPTION PLAN
(Full Title of the Plan)
David E. Bamberger, Esq.
Senior Vice President, General Counsel and Secretary
Inamed Corporation
11 Penn Plaza, Suite 946
New York, NY 10001
(212) 273-3430
(Name, address and telephone number of agent for service)
Copies to:
Milbank, Tweed, Hadley & McCloy LLP
One Chase Manhattan Plaza
New York, New York 10005
(212) 530-5000
Attention: Robert S. Reder, Esq.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered Share Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (par $ 6.50
value $0.01 per share) 450,000 shares $28.688 $3,146,880 $874.84
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* The proposed maximum aggregate offering price listed above has been determined
pursuant to Rule 457(h) under the Securities Act of 1933, as amended, and
represents (i) the exercise price of all options to acquire any of the
above-registered shares granted under the Plan as of the Effective Date of this
registration, plus (ii) the product of the remaining shares registered hereunder
available for future grant under the Plan multiplied by a per share price of
$28.688, the average price of Inamed Corporation Common Stock on the Nasdaq
National Market on October 4, 1999.
<PAGE> 2
PART I
ITEM 1. PLAN INFORMATION
This Registration Statement relates to the registration of
450,000 shares of Common Stock, $0.01 par value per share, of INAMED CORPORATION
(the "Registrant") awarded under the Inamed Corporation 1998 Stock Option Plan
(the "Plan"). Documents containing the information required by Part I of the
Registration Statement will be sent or given to participants in the Plan as
specified by Rule 428(b). Such documents are not filed with the Securities and
Exchange Commission (the "Commission" or the "SEC") either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424 in reliance on Rule 428.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
The Registrant will, upon written or oral request, provide
without charge to any person to whom the Prospectus relating to this
Registration Statement is delivered, a copy of any and all of the information
which has been incorporated by reference in such Prospectus and this
Registration Statement (pursuant to Item 3 of Part II below). Such requests
should be directed to the Assistant Secretary, Inamed Corporation, 5540 Ekwill
Street, Suite D, Santa Barbara, California 93111 (telephone: (805) 692-5400).
PART II
INFORMATION REQUIRED IN THE REGISTRATION
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents which have been filed by the
Registrant with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Securities Act") and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as applicable, are
incorporated by reference herein and shall be deemed to be a part hereof:
1. The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998.
2. The description of the Registrant's Capital Stock contained in
the registration statement filed pursuant to Section 12 of the
Exchange Act, including any amendment or report filed for the
purpose of updating such description.
3. All other reports filed by the Registrant pursuant to Section
13(a) or 15(d) of the Exchange Act.
All documents, filed by the Registrant with the Commission pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment to this registration statement 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 made a part hereof from their respective dates of
filing (such documents, and the documents enumerated above, being hereinafter
referred to as "Incorporated Documents"); provided, however, that the documents
enumerated above or subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act in each year during which the
offering made by this registration statement is in effect prior to the filing
with the Commission of the Registrant's Annual Report on Form 10-K covering such
year
2
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shall not be Incorporated Documents or be incorporated by reference in this
registration statement or be a part hereof from and after the filing of such
Annual Report on Form 10-K.
Any statement contained in an Incorporated Document 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 Incorporated Document 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
The Common Stock being registered hereunder has been
registered pursuant to Section 12 of the Exchange Act and a description of the
Common Stock is contained in the Exchange Act registration statement which has
been filed with the Commission.
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, inter
alia, generally empowers a Delaware corporation to indemnify 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 by reason of the fact that such person is
or was a director, officer, employee or agent of another corporation or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Similar indemnity is
authorized for such person against expense (including attorneys' fees) actually
and reasonably incurred in connection with the defense or settlement of any such
threatened, pending or completed action or suit if such person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and provided further that (unless a court of
competent jurisdiction otherwise provides) such person shall not have been
adjudged liable to the corporation. Any such indemnification may be made only as
authorized in each specific case upon a determination by the shareholders or
disinterested directors or by independent legal counsel in a written opinion
that indemnification is proper because the indemnitee has met the applicable
standard of conduct.
Section 145 further authorizes a corporation to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise, against any liability asserted against him, and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 145.
The Registrant's bylaws provide a right to indemnification to
the full extent permitted by law for expenses, attorney's fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by any director
of officer whether or not the indemnified liability arises or arose from any
threatened, pending or completed proceeding by or in the Registrant's right by
reason of the fact that the director or officer is or was serving as the
Registrant's director or officer at the Registrant's request, as a director,
officer, partner, fiduciary or trustee of another corporation, partnership,
joint venture, trust,
3
<PAGE> 4
employee benefit plan or other enterprise, unless a court finally determines
that the director or officer did not act in good faith in a manner reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal action, that the director or officer has no
reasonable cause to believe that his conduct was unlawful. The Registrant's
bylaws provide for the advancement of expenses to an indemnified party upon
receipt of an undertaking by the party to repay those amounts if it is finally
determined that the indemnified party is not entitled to indemnification. The
Registrant's bylaws authorize the Registrant to take steps to ensure that all
persons entitled to indemnification are properly indemnified, including, if the
board of directors so determines, purchasing and maintaining insurance.
The Registrant's Restated Certificate of Incorporation
provides that director of the Registrant will be personally liable to the
Registrant or its stockholders for monetary damages for a breach of fiduciary
duty as a director, except for liability for (i) any breach of that person's
duty of loyalty; (ii) acts or omissions not in good faith or involving
intentional misconduct or a knowing violation of law; (iii) the payment of
unlawful dividends and certain other actions prohibited by Delaware corporation
law; and (iv) any transaction resulting in receipt by that person of an improper
personal benefit.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Exhibit Index on page 8.
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;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and
price represent no more than a 20%
"Calculation of Registration Fee" table in
the effective registration statement; and
4
<PAGE> 5
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13(a) or Section 15(d) of the 1934 Act that are incorporated by
reference in the 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 Registrant hereby undertakes that, for the purpose of determining any
liability under the Securities Act, each filing of the issuer's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act of (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial bona fide offering hereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the above-mentioned provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
5
<PAGE> 6
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 New York and the State of New York, on October
5, 1999.
INAMED CORPORATION
By: /s/ DAVID E. BAMBERGER
-----------------------------
David E. Bamberger
Senior Vice President,
General Counsel and
Secretary
6
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POWER OF ATTORNEY
Each person whose signature appears below hereby severally
constitutes and appoints Ilan K. Reich and David E. Bamberger and each of them
acting singly, as his or her true and lawful attorney-in-fact and agent, with
full and several power of substitution and resubstitution, to sign for him or
her and in his or her name, place and stead in any and all capacities indicated
below, the registration statement on Form S-8 filed herewith and any and all
pre-effective and post-effective amendments and supplements to the said
registration statement, and to file the same, with 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 fully to all
intents and purposes as he or she might or could do in person hereby ratifying
and confirming all that said attorney-in-fact and agent, or his or her
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement or amendment thereto has been signed below by the
following persons in the capacities and on the date indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ RICHARD G. BABBITT
- --------------------------- Chairman of the Board of October 5, 1999
Richard G. Babbitt Directors and Chief
Executive Officer
/s/ ILAN K. REICH
- --------------------------- Director and President October 5, 1999
Ilan K. Reich
/s/ JAMES E. BOLIN
- --------------------------- Director October 5, 1999
James E. Bolin
- --------------------------- Director October , 1999
Malcolm R. Currie, Ph.D.
- --------------------------- Director October , 1999
John F. Doyle
/s/ MITCHELL S. ROSENTHAL, M.D.
- --------------------------- Director October 5, 1999
Mitchell S. Rosenthal, M.D.
/s/ DAVID A. TEPPER
- --------------------------- Director October 5, 1999
David A. Tepper
- --------------------------- Director October , 1999
John E. Williams, M.D.
</TABLE>
7
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<TABLE>
<S> <C> <C>
- --------------------------- Senior Vice President October __, 1999
Michael J. Doty Chief Financial Officer
</TABLE>
8
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
5 Opinion of Milbank, Tweed, Hadley & McCloy LLP as to the legality of
the Company's Common Stock.
23(a) Consent of Milbank, Tweed, Hadley & McCloy LLP (included in the
Opinion filed as Exhibit 5 hereto).
23(b) Consent of BDO Seidman, LLP, independent auditors.
24 Power of Attorney (set forth on the signature page hereof).
99(a) Inamed Corporation 1998 Stock Option Plan.
</TABLE>
9
<PAGE> 1
Exhibits 5 and 23(a)
LETTERHEAD
October 5, 1999
Inamed Corporation
11 Penn Plaza, Suite 946
New York, NY 10001
Re: Registration Statement on Form S-8 of Inamed Corporation
Relating to the Issuance Shares of Common Stock Pursuant to
the Inamed Corporation 1998 Stock Option Plan.
Ladies and Gentlemen:
We have acted as counsel to Inamed Corporation, a Delaware corporation
(the "Company"), in connection with the preparation of a registration statement
on Form S-8 (the "Registration Statement") to be filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, (the "Act") relating to the offering of up to 450,000 shares of the
Company's Common Stock, par value $0.01 per share (the "Shares"), to be issued
pursuant to the provisions of the Inamed Corporation 1998 Stock Option Plan (the
"Plan"). We have examined such records, documents, statutes and decisions as we
have deemed relevant in rendering this opinion.
We are of the opinion that when:
(a) the applicable provisions of the Act and of State securities
or blue sky laws shall have been complied with; and
(b) the Shares shall have been duly authorized and issued and paid
for in an amount not less than par value of $0.01 per share,
the Shares will be legally issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement. In giving such opinion, we do not thereby admit that we
are acting within the category of persons whose consent is required under
Section 7 of the Act or the rules or regulations of the Commission thereunder.
Very truly yours,
1
MILBANK, TWEED, HADLEY & McCLOY
<PAGE> 1
Exhibit 23(b)
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Inamed Corporation and subsidiaries
New York, New York
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated February
12, 1999 except for note 14, which is as of March 3, 1999, relating to the
consolidated financial statements and schedule of Inamed Corporation and
subsidiaries appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
New York, New York
October 5, 1999
<PAGE> 1
INAMED CORPORATION
1998 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
This 1998 Stock Option Plan (the "Plan") is intended as an incentive,
to retain in the employ of INAMED CORPORATION (the "Company") and any Subsidiary
of the Company, within the meaning of Section 424(f) of the United States
Internal Revenue Code of 1986, as amended (the "Code"), persons of training,
experience and ability, to attract new employees, consultants, officers and
directors, whose services are considered valuable, to encourage the sense of
proprietorship and to stimulate the active interest of such persons in the
development and financial success of the Company and its Subsidiaries.
It is further intended that options (the "Options") granted pursuant to
the Plan shall be Options not intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code.
The Company intends that the Plan meet the requirements of Rule 16b-3
("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan will be exempt from the operation of Section
16(b) of the Exchange Act. In all cases, the terms, provisions, conditions and
limitations of the Plan shall be construed and interpreted consistent with the
Company's intent as stated in this Section 1.
2. ADMINISTRATION OF THE PLAN.
The Board of Directors of the Company (the "Board") shall administer
the Plan unless and until the Board delegates administration to a Committee. The
Board may delegate administration of the Plan to a Committee or Committees of
one or more members of the Board. In the discretion of the Board, a Committee
may consist solely of two or more Outside Directors (as such term is defined in
Section 162(m) of the Code), or solely of two or more Non-Employee Directors (as
such term is defined in Rule 16b-3). If administration is delegated to a
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 may abolish the Committee at
any time and revest in the Board the administration of the Plan.
Subject to the provisions of the Plan, the Board shall have the
authority, in its discretion: (1) to grant Options; (2) to determine, upon
review of relevant information and in accordance with Section 5 of the Plan,
the Fair Market Value of the Common
<PAGE> 2
Stock of the Company, $.01 par value per share ("Common Stock"); (3) to
determine the exercise price per share of Options to be granted, which exercise
price shall be determined in accordance with Section 5 of the Plan; (4) to
determine the recipients to whom, and the time or times at which, Options shall
be granted and the number of shares to be represented by each Option; (5) to
interpret the provisions and supervise the administration of the Plan; (6) to
prescribe, amend and rescind rules and regulations relating to the Plan; (7) to
determine the terms and provisions of each Option granted (which need not be
identical) and, with the consent of the holder therefore, modify or amend each
Option; (8) to accelerate or defer (with the consent of the recipient of the
Option (the "Optionee")) the exercise date of any Option, consistent with the
provisions of Section 5 of the Plan; (9) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
Option previously granted by the Board; and (10) to make all other
determinations deemed necessary or advisable for the administration of the Plan.
All decisions, determinations and interpretations of the Board shall be
final and binding on all Optionees and any other holders of any Options granted
under the Plan.
In the event that for any reason the Board is unable to act or if the
Board at the time of any grant, award or other acquisition under the Plan of
Options or Common Stock does not consist of two or more Non-Employee Directors,
then any such grant, award or other acquisition may be approved or ratified in
any other manner contemplated by subparagraph (d) of Rule 16b-3.
3. DESIGNATION OF OPTIONEES.
The persons eligible for participation in the Plan as recipients of
Options (the "Optionees") shall include employees, consultants and directors of
the Company or any Subsidiary. In selecting Optionees, and in determining the
number of shares to be covered by each Option granted to Optionees, the Board
may consider the office or position held by the Optionee or the Optionee's
relationship to the Company, the Optionee's degree of responsibility for and
contribution to the growth and success of the Company or any Subsidiary, the
Optionee's length of service, age, promotions, potential and any other factors
that the Board may consider relevant. An Optionee who has been granted an Option
hereunder may be granted an additional Option or Options, if the Board shall so
determine.
4. COMMON STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in Section 7 hereof, a total of
450,000 shares of the Common Stock shall be subject to the Plan. The shares of
Common Stock subject to the Plan shall consist of unissued shares or previously
issued shares held by any Subsidiary of the Company, and such amount of shares
of Common Stock shall be and is hereby reserved for such propose. Any of such
shares of Common Stock that may remain unsold and that are not subject to
outstanding Options at the termination of the
<PAGE> 3
Plan shall cease to be reserved for the purposes of the Plan, but until
termination of the Plan the Company shall at all times reserve a sufficient
number of shares of Common Stock to meet the requirements of the Plan. Should
any Option expire or be cancelled prior to its exercise in full or should the
number of shares of Common Stock to be delivered upon the exercise in full of an
Option be reduced for any reason, the shares of Common Stock theretofore subject
to such Option may be subject to future Options under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS.
Options granted under the Plan shall be subject to the following
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Board shall deem desirable:
(a) Option Price. The purchase price of each share of Common
Stock purchasable under an Option shall be determined by the Board at the time
of grant, but shall not be less than 85% of the Fair Market Value (as defined
below) of such share of Common Stock on the date the Option is granted;
provided, however, that if an option granted to the Company's Chief Executive
Officer or to any of the Company's other four most highly compensated officers
is intended to qualify as performance-based compensation under Section 162(m) of
the Code, the exercise price of such Option shall not be less than 100% of the
Fair Market Value of such share of Common Stock on the date the Option is
granted. The exercise price for each Option shall be subject to adjustment as
provided in Section 7 below. Fair Market Value means the closing price of
publicly traded shares of Common Stock on a national securities exchange or the
over-the-counter Bulletin Board market ("OTC Bulletin Board"), or, if not so
listed or regularly quoted, the mean between the closing bid and asked prices of
publicly traded shares of Common Stock in the over-the-counter market, or, if
such bid and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company, or as determined by the
Board in a manner consistent with the provisions of the Code. Anything in this
Section 5(a) to the contrary notwithstanding, in no event shall the purchase
price of a share of Common Stock be less than the minimum price permitted
under the rules and policies of any national securities exchange or the OTC
Bulletin Board if and so long as the Common Stock is listed on any such
exchange or the OTC Bulletin Board.
(b) Option Term. The term of each Option shall be fixed by
the Board, but not Option shall be exercisable more than 10 years after the date
such Option is granted.
(c) Exercisability. Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by the
Board at the time of grant. Unless the Board shall decide otherwise, Options
shall vest ratably over three (3) years.
<PAGE> 4
(d) Method of Exercise. Options to the extent then
exercisable may be exercised in whole or in part at any time during the option
period, by giving written notice to the Company specifying the number of shares
of Comm Stock to be purchased accompanied, by payment in full of the purchase
price, in cash, by check or such other instrument as may be acceptable to the
Board. Payment in full or in part may also be made by (i) exchanging Common
Stock owned by the Optionee which is not the subject of any pledge or security
interest, (ii) the Optionee's written selection to have shares of Common Stock
withheld by the Company from the shares of Common Stock otherwise to be received
with such withheld shares of Common Stock having a Fair Market Value on the date
of exercise equal to the exercise price of the Option, or (iii) by a combination
of the foregoing, provided that the combined value of all cash and cash
equivalents and the Fair Market Value of any shares surrendered to the Company
is at least equal to such exercise price. An Optionee shall have the right to
dividends and other rights of a stockholder with respect to shares of Common
Stock purchased upon exercise of an Option after (i) the Optionee has given
written notice of exercise and has paid in full for such shares and (ii) becomes
a stockholder of record with respect thereto. The provisions of this subsection
5(d) are subject to any Option provisions governing the minimum number of shares
as to which an Option may be exercised.
Neither the recipient of an Option nor any person to whom an Option is
transferred in accordance with the Plan shall be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any share subject to such
Option unless and until such person has satisfied all requirements for exercise
of the Option pursuant to its terms.
(e) Non-transferability of Options. Options may be
transferred to the extent provided in the Option Agreement; provided that if the
Option Agreement does not expressly permit the transfer of an Option, the Option
shall not be transferable except by will, by the laws of descent and
distribution or pursuant to a domestic relations order satisfying the
requirements of Rule 16 of the Exchange Act and shall be exercisable during the
lifetime of the person to whom the Option is granted only by such person or any
transferee pursuant to a domestic relations order. Notwithstanding the
foregoing, the person to whom the Option is granted, may by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionee, shall thereafter be
entitled to exercise the Option. Any attempt to transfer, assign, pledge or
otherwise dispose of, or to subject to execution, attachment or similar process,
any Option contrary to the provisions hereof shall be void and ineffective and
shall give no right to the purported transferee.
(f) Termination by Death. Unless otherwise determined by the
Board at grant, if any Optionee's employment with or service to the Company or
any Subsidiary terminates by reason of death, the Option may thereafter be
exercised, to the extent then exercisable (or on such accelerated basis as the
Board shall determine at or after grant), by the legal representative of the
estate or by the legatee of the Optionee under the will of the Optionee, for a
period of one year after the date of such death or
<PAGE> 5
until the expiration of the stated term of such Option as provided under the
Plan, whichever period is shorter.
(g) Termination by Reason of Disability. Unless otherwise
determined by the Board at grant, if any Optionee's employment with or service
to the Company or any Subsidiary terminates by reason of total and permanent
disability (as defined in Section 22(e)(3) of the Code, "Disability"), any
Option held by such Optionee may thereafter be exercised, to the extent it was
exercisable at the time of termination due to Disability (or on such accelerated
basis as the Board shall determine at or after grant), but may not be exercised
after 30 days after the date of such termination of employment or service or the
expiration of the stated term of such Option, whichever period is shorter;
provided, however, that, if the Optionee dies within such 30 day period, any
unexercised Option held by such Optionee shall thereafter be exercisable to the
extent to which it was exercisable at the time of death for a period of one year
after the date of such death or for the stated term of such Option, whichever
period is shorter.
(h) Other Termination. Unless otherwise determined by the
Board at grant, if any Optionee's employment with or service to the Company or
any Subsidiary terminates for any reason other than death or Disability, the
Option shall thereupon terminate, except that the portion of any Option that was
exercisable on the date of such termination of employment may be exercised for
the lesser of 30 days after the date of termination or the balance of such
Option's term if the Optionee's employment or service with the Company or any
Subsidiary is terminated by the Company or such Subsidiary without cause (the
determination as to whether termination was for cause to be made by the Board).
The transfer of an Optionee from the employ of the Company to a Subsidiary, or
vice versa, or from one Subsidiary to another, shall not be deemed to constitute
a termination of employment for purposes of the Plan.
6. EFFECTIVE DATE OF PLAN AND TERM OF PLAN.
The Plan is subject to approval, at a duly held shareholders' meeting,
within twelve (12) months after the date the Board approves the Plan, by the
affirmative vote of the holders of a majority of the voting shares of the
Company represented in person or by proxy and entitled to vote at the meeting.
Options may be granted, but not exercised, before such shareholder approval. If
the shareholders fail to approve the Plan within the required time period, any
Options granted under the Plan shall be void, and no additional Options may
thereafter be granted. The Plan shall continue until such time as it may be
terminated by action of the Board; provided, however, that no Options may be
granted under this Plan on or after the tenth anniversary of approval of the
Plan by the Board, but Options theretofore granted may extend beyond that date.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) Subject to any required action by the stockholders of the
Company, the number of shares of Common Stock covered by each outstanding
Option, and the
<PAGE> 6
number of shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock of the
Company or the payment of a stock dividend with respect to the Common Stock or
any other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive, Except as expressly provided herein, no issuance by the
Company of shares of Common Stock of any class, or securities convertible into
shares of Common Stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to an Option.
(b) Unless otherwise provided by the Board at the time of grant, in
the event of: (i) a dissolution, liquidation or sale of substantially all of the
assets of the Company; (ii) a merger or consolidation in which the Company is
not the surviving corporation; (iii) a reverse merger in which the Company is
the surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (iv) the acquisition by
any person, entity or group within the meaning of Section 13(d) or 14(d) of the
Exchange Act, or any comparable successor provisions (excluding any employee
benefit plan or related trust sponsored or maintained by the Company or any
affiliate of the Company), of the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of directors, then, with
respect to Options held by Optionees, the vesting of such Options (and, if
applicable, the time during which such Options may be exercised) shall be
accelerated immediately prior to such event and the Options shall terminate if
not exercised (if applicable) twenty days following such acceleration.
8. PURCHASE FOR INVESTMENT.
Unless the Options and shares covered by the Plan have been registered
under the United States Securities Act of 1933, as amended (the "Securities
Act"), or the Company has determined that such registration is unnecessary, each
person exercising an Option under the Plan may be required by the Company to
give a representation in writing that he is acquiring the shares for his own
account for investment and not with a view to, or for sale in connection with,
the distribution of any part thereof.
<PAGE> 7
9. TAXES.
The Company may make such provisions as it may deem appropriate,
consistent with applicable law, in connection with any Options granted under the
Plan with respect to the withholding of taxes or any other tax matters.
10. AMENDMENT AND TERMINATION.
The Board may amend, suspend, or terminate the Plan, except that no
amendment shall be made that would impair the rights of any Optionee under any
Option theretofore granted without his consent, and except that no amendment
shall be made which, without the approval of the stockholders of the Company
would:
(a) materially increase the number of shares that may be
issued under the Plan, except as provided in Section 7;
(b) materially increase the benefits accruing to the
Optionees under the Plan;
(c) materially modify the requirements as to eligibility
for participation in the Plan; or
(d) extend the term of any Option beyond that provided for
in Section 5(b).
The Board may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Optionee without his consent. The Board may also substitute new Options for
previously granted Options, including options granted under other plans
applicable to the participant and previously granted Options having higher
option prices, upon such terms as the Board may deem appropriate.
11. GOVERNMENT REGULATIONS.
The Plan, and the grant and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies, or by national securities exchanges or the OTC
Bulletin Board if and so long as the Common Stock is listed on any such exchange
or the OTC Bulletin Board, as may be required.
12. GENERAL PROVISIONS.
(a) Certificates. All certificates for shares of Common Stock
delivered under the Plan shall be subject to such stop transfer orders and
other restrictions as the Board may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, or other
securities commission having jurisdiction, any applicable Federal, provincial or
state securities law, any stock
<PAGE> 8
exchange upon which the Common Stock is then listed and the Board may cause a
legend or legends to be placed on any such certificates to make appropriate
references to such restrictions.
(b) Employment Matters. The adoption of the Plan shall not
confer upon any Optionee of the Company or any Subsidiary any right to continued
employment or, in the case of an Optionee who is a director, continued service
as a director, with the Company or a Subsidiary, as the case may be, nor shall
it interfere in any way with the right of the Company or any Subsidiary to
terminate the employment of any of its employees, the service of any of its
directors or the retention of any of its consultants or advisors at any time.
(c) Limitation of Liability. No member of the Board or the
Committee, or any officer or employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Board or the Committee and each and any officer or
employee of the Company acting on their behalf shall, to the extent permitted by
law, be fully indemnified and protected by the Company in respect of any such
action, determination or interpretation.
(d) Registration of Common Stock. Notwithstanding any other
provision in the Plan, no Option may be exercised unless and until the Common
Stock to be issued upon the exercise thereof has been registered under the
Securities Act and applicable state securities laws, or is, in the opinion of
counsel to the Company, exempt from such registration in the United States or
exempt from the prospectus and registration requirements under applicable
provincial legislation. The Company shall not be under any obligation to
register under applicable federal or state securities laws any Common Stock to
be issued upon the exercise of an Option granted hereunder, or to comply with an
appropriate exemption from registration under such laws or the laws of any
province in order to permit the exercise of an Option and the issuance and sale
of the Common Stock subject to such Option. However, the Company may in its sole
discretion register such Common Stock at such time as the Company shall
determine. If the Company chooses to comply with such an exemption from
registration, the Company Stock issued under the Plan may, at the direction of
the Board, bear an appropriate restrictive legend restricting the transfer or
pledge of the Common Stock represented thereby, and the Committee may also give
appropriate stop transfer instructions to the Company's transfer agents.
