<PAGE>
As filed with the Securities and Exchange Commission on September 28, 1998
Registration No. 33-
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NORD PACIFIC LIMITED
(Exact name of registrant as specified in its charter)
Bermuda N/A
- ------------------------------------- --------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
NORD PACIFIC LIMITED
22 CHURCH STREET
HAMILTON HMII BERMUDA
(809) 292-2363
(Name, address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
CERTAIN NORD PACIFIC LIMITED NON-PLAN STOCK OPTIONS
(Full Title of Plan)
RAY JENNER
NORD PACIFIC LIMITED
201 THIRD STREET NW, SUITE 1750
ALBUQUERQUE, NEW MEXICO 87102
(505) 241-5820
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price per offering registration
registered registered share price fee
- ---------- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Common Stock, 328,000 $2.75(l) $902,000(l) $266.00
$.05 par value
- -------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(h), based upon the exercise price of the
Non-Plan Stock Options (the "Option") described in the accompanying
prospectus.
<PAGE>
NORD PACIFIC LIMITED
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. Plan Information*
ITEM 2. Registration Information and Employee Plan Annual Information*
- ----------------
*Portions of the information required by Part I to be contained in the Section
10(a) prospectus, as such information is contained in the Registrant's Annual
Report for Form 10-K for its fiscal year ended December 31, 1997, is omitted
from the registration statement in accordance with Rule 428 under the Securities
Act of 1933 and the Note to Part I of Form S-8. The remainder of such
information is contained in the prospectuses filed herewith, pursuant to Rule
424(b).
- ----------------
PART II.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, filed with the Securities and Exchange Commission,
are incorporated herein by reference as of their respective dates of filing:
(a) The Annual Report of Nord Pacific Limited (the "Company") on Form
10-K for the year ended December 31, 1997, filed pursuant to Section 13(a) of
the Securities Exchange Act of 1934 ("Exchange Act");
(b) The Quarterly Reports of the Company on Form 10-Q for the quarters
ended March 31, 1998 and June 30, 1998, filed pursuant to Section 13(a) of
the Exchange Act;
(c) All other reports filed by the Company pursuant to Section 13(a) or
1-3(d) of the Exchange Act since December 31, 1997; and
(d) The description of the Registrant's Common Stock contained in the
Registration Statement on Form S-4, filed on January 24, 1990 (Registration
No. 33-25683), including any
2
<PAGE>
amendment or report filed for the purpose of updating such description.
In addition, all documents filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the
filing of this Registration Statement and prior to the filing of a
post-effective amendment that indicates that all securities offered have been
sold or which de-registers 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 contained in a document incorporated or deemed to be
incorporated by reference shall be deemed to be modified or superseded to the
extent that a statement contained in any other subsequently filed document
that also is or is deemed to be incorporated by reference herein modifies or
supersedes such prior statement. The documents required to be so modified or
superseded shall not be deemed to constitute a part of this Registration
Statement, except as so modified or superseded.
ITEM 4. DESCRIPTION OF SECURITIES.
A description of the Registrant's Common Stock has been incorporated by
reference into this Registration Statement. See Item 3, above.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Bermuda law authorizes a corporation, in its bylaws, to provide
that directors of the corporation will not be liable to the corporation or
its shareholders for any act or failure to act, except in respect of any
fraud or dishonesty on such director's part. Bermuda law also authorizes a
corporation, in its bylaws, to provide that each shareholder waives any claim
or right of action such shareholder may have, whether individually or by in
the right of the corporation, against any director on account of any action
or failure to act; provided, however, that no shareholder may waive such
shareholder's rights in respect of any fraud or dishonesty on such director's
part. Bermuda law also authorizes a corporation, in its bylaws, to provide
that the corporation will indemnify and hold harmless its officers and
directors from any act or failure to act, except in respect of any fraud or
dishonesty which may attach to any officer or director.
The Company's bylaws provide, in substance, for the exculpation
from liability of directors and for the indemnification of directors and
officers of the Company to the maximum extent permitted by Bermuda law.
3
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Index to Exhibits, below.
ITEM 9. UNDERTAKINGS.
A. RULE 415 OFFERING. 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 the
Registration Statement (or the most recent
post-effective amendment thereof); that,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed
in the Registration Statement or any material
change to such information in the Registration
Statement. Provided, however, that paragraphs
(1)(i) and (1)(ii) do not apply if the information
required to be included in a post-effective
amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Act 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
4
<PAGE>
of the securities being registered that remain
unsold at the termination of the offering.
B. FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY
REFERENCE.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Act
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
C. SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the 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.
5
<PAGE>
SIGNATURE
THE REGISTRANT. 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 Albuquerque, State of New Mexico,
on this 28th day of September 1998.
NORD PACIFIC LIMITED
By: /s/ W. Pierce Carson
--------------------------------
Name: W. Pierce Carson
--------------------------------
Title: President and CEO
--------------------------------
POWER OF ATTORNEY
We, the undersigned officers and directors of NORD PACIFIC LIMITED,
hereby severally constitute and Appoint W. PIERCE CARSON and RAY W. JENNER
and each of them (with full power to each of them to act alone), our true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for us and in our stead, to sign any and all amendments
(including any post-effective amendments) to this Registration Statement and
all documents in connection therewith, with the Securities and Exchange
Commission, granting unto such attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
necessary or advisable to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agents, or any of them, or
their substitutes, may lawfully do or cause to be done by virtue hereof.
Witness our hands on the dates set forth below.
6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Signature Title Date
- --------------------------------------------------------------------------------
<C> <C> <C>
/s/ Edgar F. Cruft Chairman of the Board September 28, 1998
- -------------------------
EDGAR F. CRUFT
/s/ W. Pierce Carson Chief Executive Officer September 28, 1998
- -------------------------
W. PIERCE CARSON
/s/ Ray W. Jenner Chief Financial Officer September 28, 1998
- -------------------------
RAY W. JENNER
/s/ Michel J. Drew Director September 28, 1998
- -------------------------
MICHEL J. DREW
/s/ Lucile Lansing Director September 28, 1998
- -------------------------
LUCILE LANSING
/s/ Leonard Lichter Director September 28, 1998
- -------------------------
LEONARD LICHTER
/s/ John B. Roberts Director September 28, 1998
- -------------------------
JOHN B. ROBERTS
</TABLE>
7
<PAGE>
*The undersigned, by signing his name hereto, executes this Registration
Statement pursuant to a power of attorney executed by each of the above-named
persons and filed with the Securities and Exchange Commission as an exhibit
to this Registration Statement.
/s/ Edgar F. Cruft
--------------------------
EDGAR F. CRUFT
8
<PAGE>
INDEX TO EXHIBITS
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES:
4.1 Form of Nord Pacific Limited Non-Plan Option for options being
registered hereunder
(5) OPINION REGARDING LEGALITY:
5.1 Opinion of Messrs. Conyers, Dill & Pearman, Bermuda, regarding
legality of the issuance of the Shares
(23) CONSENTS OF COUNSEL AND EXPERTS:
23.1 Consent of Deloitte & Touche
23.2 Consent of Messrs. Conyers, Dill & Pearman (contained in their
opinion filed as Exhibit 5.1)
9
<PAGE>
Exhibit 4.1
NORD PACIFIC LIMITED
STOCK OPTION
NORD PACIFIC LIMITED, a Bermuda corporation (the "Company"), hereby
grants to ____________ ("Optionee"), effective March 5, 1998 ("Date of
Grant"), as a separate inducement and agreement in connection with Optionee's
services to the Company and not in lieu of any other compensation or fees
paid to the Optionee for services, the right and option to purchase
____________shares of Common Stock of the Company ("Shares") at the purchase
price of U.S$____ per Share (the "Option").
The Option is granted upon the following terms:
1. Subject to subparagraph 4 below, the Option shall expire at the close
of business on the earlier of: (i) ________, or (ii) ninety (90) days
after the date that the Optionee no longer has a contract and/or an
employment relationship with the Company, unless exercised prior
thereto.
2. The Option is exercisable at any time, in whole or in part, subject
to the provisions of subparagraphs 3 and 4 below.
3. The Optionee shall vest __% on _______, 199_ and the remaining __%
on ___________.
4. In the event Optionee dies or becomes permanently disabled, the
Option may be exercised within one (1) year after the date of death
or permanent disability by the person or persons (including the
Optionee's estate) to whom the Optionee's rights under the Option
10
<PAGE>
shall have passed by will or by the laws of descent and distribution
or by the Optionee or his or personal representatives, as the case
may be. Under no circumstances, however, may the Option be exercised
after the expiration date of the Option specified in subparagraph 1
above.
5. The Option may not be assigned, transferred, pledged or otherwise
encumbered by Optionee other than by will or the laws of descent and
distribution; the Option may not be subject to execution,
attachment, or similar process; and the Option may be exercised
during the lifetime of Optionee only by Optionee.
6. Payment for all Shares purchased to exercise the Option shall be
made in cash or by certified check, money order or by personal check
(if approved by the Board of Directors). In lieu of a check, the
Optionee may, with the approval of the Compensation Committee of the
Board of Directors in its sole discretion, submit certificates for
stock of the Company tendered as full or partial payment of the
option exercise price. Certificates for stock tendered must be
endorsed or accompanied by signed stock powers with the signature
guaranteed by the commercial bank or trust company or by a brokerage
firm acceptable to the Company. Stock tendered in payment will be
valued at its fair market value on the date of exercise of the
Option. Any deficiency in the option exercise price shall be paid
by certified check. Such payment shall be made at the time that the
Option or any part thereof is exercised and no Shares shall be
issued or delivered until full payment therefor has been made.
7. If and to the extent that the number of issued shares of common
stock of the Company shall be increased or reduced by change in par
value, split up, reclassification, distribution of a dividend
payable in stock or the like, the number of shares subject to the
Option and the option
11
<PAGE>
price per share shall be proportionately adjusted. If the Company
shall be the surviving corporation in any merger or consolidation,
recapitalization, reclassification of shares or similar
reorganization, the holder of this Option shall be entitled to
purchase, at the same times and upon the same terms and conditions
as are then provided in this Option, the number and class of shares
of stock or other securities to which a holder of the number of
shares of stock subject to this Option at the time of such
transaction would have been entitled to receive as a result of such
transaction. In the event of a dissolution or liquidation of the
Company or a merger or consolidation in which the Company is not the
surviving corporation, this Option shall terminate upon the
effective date thereof, except to the extent that another
corporation assumes this Option or substitutes another option
therefor. Except as expressly provided in this Section 7, the
holder of this Option shall have no rights by reason of any
subdivision or combination of shares of stock of any class or the
payment of any stock dividend or any other increase or decrease in
the number of shares of stock or any class or by reason of any
dissolution, liquidation, merger or consolidation or distribution to
the Company's shareholders of assets or stock of another
corporation. Except as expressly provided herein, any issue by the
Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
number or price of Shares of stock subject to this Option.
8. Optionee shall have no rights as a stockholder with respect to the
Option until payment of the option price and delivery to him of the
Shares as herein provided.
9. This Option Agreement shall be governed by and construed in
accordance with the laws of
12
<PAGE>
Bermuda, without giving effect to principals of conflict of laws.
10. Neither this Option Agreement nor the Shares are registered under
the Securities Act of 1933, as amended. This Option is subject to
the condition that if at any time the listing, registration or
qualification of the Shares covered by this Option upon any
securities exchange or under any state or federal law is necessary
or desirable as a condition of or in connection with the purchase or
delivery of Shares hereunder, the delivery of any or all Shares
pursuant to this Option may be withheld unless and until such
listing, registration or qualification shall have been effected. If
a registration statement is not in effect under the Securities Act
of 1933 or any applicable state securities laws with respect to the
Shares purchasable or otherwise deliverable under this Option, the
Company may require, as a condition of exercise of this Option, that
the Optionee represent, in writing, that the Shares received
pursuant to this Option are being acquired for investment and not
with a view to distribution and agree that the Shares will not be
disposed of except pursuant to an effective registration statement,
unless the Company shall have received an opinion of counsel that
such disposition is exempt from such requirement under the
Securities Act of 1933 and any applicable state securities laws.
The Company may endorse on certificates representing Shares
delivered pursuant to this Option such legends referring to the
foregoing representations or restrictions or any other applicable
restrictions on resale as the Company, in its discretion, shall deem
appropriate.
11. This Option Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
13
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Option as of the ____
day of ____, 199_.
NORD PACIFIC LIMITED
By: ______________________________
W. P. Carson
Chief Executive Officer
ATTEST:
__________________________________
James E. Taets
Assistant Secretary
14
<PAGE>
Exhibit 5.1
22 September, 1998
The Board of Directors
Nord Pacific Limited
22 Church Street
Hamilton
Dear Sirs,
RE: REGISTRATION STATEMENT ON FORM S-8
We have acted as special counsel in Bermuda to Nord Pacific Limited, (the
"Company") in connection with the preparation for filing with the Securities
and Exchange Commission of a Registration Statement on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, of
the United States of America. The Registration Statement relates to the
issue of 328,000 shares (the "Shares") of the Company of par value $0.05
which are issuable pursuant to certain stock options granted on March 5, 1998
to certain officers, directors and employees of the Company (the "Options").
For the purposes of giving this opinion, we have examined draft facsimile
copies of the form of Options and the Registration Statement (collectively,
the "Documents"). We have also reviewed the Memorandum of Association and
the Bye-laws of the Company, minutes of the meetings of the Directors and
Shareholders of the Company held on June 25, 1998 and a letter from American
Stock Transfer & Trust Company as branch transfer agent and registrar for the
Company dated 3 September, 1998 (the "Registrar's Letter") and such other
documents and made such inquiries as to questions of law as we have deemed
necessary in order to render the opinions set forth below.
We have assumed:
(a) the genuineness and authenticity of all signatures, stamps and seals and
the conformity to the originals of all copies (whether or not certified)
reviewed by us and the authenticity and completeness of the original
documents from which such copies were taken;
(b) the capacity, power and authority of each of the parties to the
Documents, other
15
<PAGE>
than the Company;
(c) the due execution and delivery of the Documents by each of the parties
thereto;
(d) that there is no improper purpose for the grant of the Options or for the
issue of the Shares;
(e) the accuracy and completeness of all factual statements, representations
and warranties made in the Documents;
(f) that there is no provision of the law of any jurisdiction, other than
Bermuda, which would have any implication in relation to the opinions
expressed herein;
(g) the validity and binding effect of the Documents under the laws of
Bermuda and the United States of America;
(h) that the Registration Statement has been or will be duly filed with the
Securities and Exchange Commission;
(i) that the Shares are listed or traded on NASDAQ and the Toronto Stock
Exchange;
(j) that the Shares will be issued to persons who are regarded as
non-resident in Bermuda for exchange control purposes;
(k) that due payment has been or will be made for the Shares; and
(l) that the Options and the Shares will be or have been granted or issued to
persons who qualify under the Options.
We have made no investigation of and express no opinion in relation to the
laws of any country other than Bermuda. This opinion is to be governed by
and construed in accordance with the laws of Bermuda and is limited to and is
given on the basis of the current law and practice in Bermuda. This opinion
is issued solely for your benefit in connection with the filing of the
Registration Statement with the Securities and Exchange Commission and is not
to be relied upon by any other person, firm or entity or in respect of any
other matter nor is it to be quoted or referred to in any other document
registered or filed with any governmental authority or public body without
our prior express consent in writing.
On the basis of and subject to the foregoing, we are of the opinion that:
(1) based solely on our examination of the Registrar's Letter dated 3
September, 1998, the authorized capital of the Company is adequate to
enable the Shares to be issued; and
(2) the Shares will, if as and when the Options are properly exercised and
upon issue and
16
<PAGE>
delivery of the Shares against due payment therefor in the manner
contemplated by the Options and the Registration Statement, be legally
issued and credited as fully paid and non-assessable (meaning that no
further sums will be payable to the Company in respect of the Shares).
This firm consents to the filing of this opinion as an exhibit to the
Registration Statement.
Yours faithfully
/s/ CONYERS, DILL & PEARMAN
CONYERS, DILL & PEARMAN
17
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Nord Pacific Limited on Form S-8 of our report, dated March 20, 1998,
appearing in the Annual Report on Form 10-K of Nord Pacific Limited for the
year ended December 31, 1997.
/s/ Deloitte & Touche
Hamilton, Bermuda
September 25, 1998
18
<PAGE>
NORD PACIFIC LIMITED
PROSPECTUS
Number of Shares: 328,000
Nord Pacific Limited
Common Stock
(par value $.05 per share)
Nord Pacific Limited
Non-Plan Options
September 25, 1998
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED.
INFORMATION CONCERNING NORD PACIFIC LIMITED
AVAILABILITY OF PUBLIC INFORMATION
Nord Pacific Limited (the "Company") (which includes all subsidiaries of
the Company unless the context dictates otherwise) is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance with the Exchange Act, files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information filed by the Company with the Commission can be inspected
and copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549
and at its regional offices at 1801 California Street, Denver, Colorado
80202. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission, Room 1024, 455 Street, N.W.,
Washington, D.C. 20549. In addition, certain of such materials are also
available through the Commission's Electronic Data Gathering and Retrieval
System ("EDGAR").
INCORPORATION OF DOCUMENTS BY REFERENCE
Upon written or oral request of the secretary of the Company, the
following documents, which constitute the remainder of the prospectus of
which this document forms a part, will be made available, without charge, to
any individual granted an option to purchase common stock of the Company, par
value $.05 per share (the "Common Stock"), pursuant to a Company Non-Plan
Option
<PAGE>
(the "Option"):
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and Quarterly Reports for the fiscal periods ended March 31
and June 30, 1998.
(2) All other reports filed by the Company pursuant to Section 13 or
15(d) of the Exchange Act since August 1, 1998.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment that indicates that all securities offered have been
sold or that de-registers all securities then remaining unsold, shall be
deemed to be incorporated in this prospectus by reference and to be a part of
this prospectus from the date of filing of such documents.
UPDATING OF PROSPECTUS AND QUALIFICATION OF PROSPECTUS
Employees who have Options may obtain additional information about the
Options and copies of documents incorporated by reference in this Prospectus
by contacting Ray W. Jenner, Chief Financial Officer at the Company's
executive offices, 201 Third Street NW, Suite 1750, Albuquerque, New Mexico
87102, or by telephone at (505) 241-5820.
The descriptive information contained in this Prospectus with respect to
the Options summarizes certain features of such Options, but rights of an
option holder under the Options are in all cases determined by the actual
text of the option agreement ("Option Agreement"), which have previously been
forwarded to option holders, and additional copies of which can be obtained
from the Company. The summary given below is, therefore, qualified in its
entirety by reference to the text of the Option Agreements.
The Company does not intend to update the Prospectus unless and until
there is a material change in any of the information contained herein. The
Company intends to reflect any material change in the information contained
herein in a supplement to this Prospectus and to distribute a copy of any
such supplement to every person to whom a copy of this Prospectus has
previously been given and who has any Options outstanding. This Prospectus
should be read only in conjunction with any current supplement so issued by
the Company.
2
<PAGE>
THE NON-PLAN OPTIONS AND UNDERLYING SHARES
At the Company's Annual and Special Meeting, held on June 25, 1998, the
Company's Stockholders approved the issuance of Options to purchase an
aggregate of 328,000 shares (the "Shares") of Common Stock to certain
officers, directors and employees of the Company (the "Option holders"). The
grant of the Options represents additional compensation for services rendered
to the Company.
Proceeds from the sale of shares of Common Stock pursuant to the
exercise of the Options will be used by the Company for working capital and
general corporate purposes.
The following is a summary of the principal features and tax aspects of
the Options and the Shares.
PURPOSE OF THE OPTIONS
The Options are intended to enhance the Company's ability to attract,
retain and reward directors, officers, employees, consultants and advisors
and to encourage those individuals to make significant contributions to the
long-term performance and growth of the Company and its subsidiaries.
ADMINISTRATION
Granting of Non-Plan Options is administered by the Compensation
Committee of the Board of Directors ("Committee"). The members of the
Committee are selected by and serve at the discretion of the Company's Board
of Directors. The persons presently serving on the Committee are Edgar F.
Cruft and Michel Drew, each of who is a director of the Company. Dr. Cruft
is also the Chairman of the Company and the Chairman of Nord Resources
Corporation, an affiliate of the Company.
The Committee has full authority to designate the persons who will
receive Options, determine the number of Options which are granted, and
decide the exercise period and the terms thereof. The Committee has further
authority, consistent with the provisions of the Options, to interpret the
Options, to prescribe, amend and rescind rules relating to the Options, and
to make all other determinations in connection with the administration of the
Options. The Committee may grant other Options pursuant to Option
Agreements, exercise terms and prices and other terms which need not be
identical. The exercise price need not be at fair market value.
ELIGIBILITY
The Committee selects recipients of stock options from directors,
officers, employees, advisors and consultants of the Company and of its
subsidiaries. Advisors and consultants cannot receive options in connection
with the offer or sale of securities of the Company or its subsidiaries
3
<PAGE>
in a capital-raising transaction.
EXERCISE OF OPTIONS
The exercise price per share of Common Stock purchasable under the
Options is US$2.75 per share (the "Option Exercise Price"), the average of
the bid and ask price on the date of grant for the Company's Common Stock,
which are traded on the New York Stock Exchange, on the date of grant. Each
Option expires on March 5, 2008 and is exercisable pursuant to each Option
Agreement.
Payments for shares of Common Stock purchased pursuant to the Option
shall be by cash, certified check, personal check (if approved by the
Committee) or by money order. In lieu of a check, the Option holder may,
with the approval of the Committee in its sole discretion, submit
certificates for Common Stock of the Company tendered as full or partial
payment of the option exercise price.
For example, if the option exercise price of $2.75 per share, and at
that time or subsequently, the fair market value of the Common Stock is $10
per share, the option holder can purchase all or a portion of the number of
shares of Common Stock subject to his or her stock option for $10 per share,
even though the fair market value of the shares purchased will be $7.25 per
share higher than the purchase price.
Options are not transferable or assignable except by will or laws of
descent and during an Option holder's lifetime may only be exercised by such
Option holder. Upon termination of employment for any reason other than
disability or death of an Option holder, Options, to the extent then
exercisable, may be exercised during the ninety (90) day period after the
date of termination. Upon the disability or death of an Option holder, any
Option held on the date of such occurrence may, to the extent then
exercisable, be exercised by the Option holder or the Option holder's legatee
or personal representative, as the case may be, for up to one (1) year
following such date.
GOVERNMENT REGULATIONS
The grant and exercise of Options are subject to applicable government
rules and regulations, and, notwithstanding any contrary provision of any
Option Agreement, or this prospectus, the Company's Board of Directors may
make such changes in any Option Agreement that may be required, in the
Board's discretion, to conform the Option Agreement to those rules and
regulations.
ADJUSTMENTS
Unless otherwise provided in an Option Agreement, in the event that the
outstanding shares of Common Stock of the Company are hereafter changed
and/or exchanged for a different number or kind of shares or securities of
the Company or of another corporation by reason of merger, consolidation,
reorganization, reclassification, recapitalization, combination of shares,
stock split or stock dividend, the number of shares of Common Stock as to
which Options may be granted, the number of shares covered by each
outstanding Option and the exercise price per share of each
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outstanding Option shall be proportionately adjusted as the Committee, in its
sole discretion, shall deem equitable or appropriate, subject to the terms of
the Option, to prevent dilution or enlargement of rights. In making any such
adjustment, the Committee may provide for the elimination of fractional share
interests.
SPECIAL RULES APPLICABLE TO SECTION 16 INSIDERS
In addition to the restrictions on exercise of options contained in the
Plan and in any Option Agreement, the exercise of options owned by officers,
directors and other insiders (owners of more than 10% of the Common Stock)
are affected by the provisions of Section 16 of the Exchange Act. Section 16
requires such shareholders to pay to the Company profits received from the
purchase and sale of any Common Stock within a six-month period, and may
prohibit stock sales or exercises of options by such persons within six
months of the purchase and sale by them of Common Stock outside of the Plan.
Section 16(b) of the Exchange Act also generally provides that, in the case
of an officer, director or insider who elects to pay the Option Exercise
Price under an option by delivery of previously acquired Common Stock, the
election to deliver such Common Stock may only be made (1) during a ten-day
"window" period specified in Rule 16b-3 or (2) at least six months prior to
the date on which the option is exercised.
RESTRICTIONS ON ISSUANCE OF COMMON STOCK
The exercise of each option will be conditioned on the Option holder's
completion, to the satisfaction of the Company, of any withholding tax
requirements (see "Withholding Tax Requirements"); compliance with state or
federal law or rules of any securities exchange; and the consent or approval
of any regulatory body. The Company will try to promptly notify each Option
holder of all such requirements when the Option holder informs the Company
that he or she wishes to exercise an Option.
The Company may require an exercising Option holder to make certain
representations concerning ownership and intended disposition of the Common
Stock to be purchased upon exercise of the option. Option holders may be
required to represent to the Company, among other things, that they are
acquiring the Common Stock in good faith for investment and not for resale or
distribution.
WITHHOLDING TAX REQUIREMENTS
If the exercise of an Option gives rise to any withholding tax
requirements, as a condition of exercising the Option, an Option holder must
satisfy those requirements, and provide information and make representations
as required by the Company to determine if withholding is required. If the
Company determines that withholding tax is required on exercise of an Option,
the Company will notify the Option holder of the withholding amount, and the
Option holder must make payment by check or other means acceptable to the
Company. The Company may allow the Option holder to pay the withholding
amount by directing the Company to withhold a number of shares of Common
Stock otherwise issuable upon exercise of the Option in an aggregate value
equal to the appropriate
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withholding amount. However, any employee who is an officer, director or
otherwise subject to Section 16(b) of the Exchange Act may be restricted from
using shares of Common Stock to pay withholding. (See "Special Rules
Applicable to Section 16 Insiders")
Any fractional share interest resulting from the delivery or withholding
of shares of Common Stock to meet withholding tax requirements will be
settled in cash. If the Company determines that no withholding tax is
required upon the exercise of any Option, but subsequently determined that
the exercise resulted in taxable income requiring withholding, the employee
shall promptly, upon being notified of the withholding requirement, pay to
the Company the amount required to be withheld; and at its election, the
Company may condition any transfer of any Common Stock issued pursuant to the
exercise of an Option upon receipt of such payment.
NO RIGHTS AS STOCKHOLDER
No Option holder has any right as a stockholder of the Company with
respect to Common Stock covered by an Option until the date of exercise. No
adjustment for any dividend or otherwise will be made if the record date
thereof is prior to the exercise date of the Option.
TAX AND ERISA STATUS
GENERAL
The following summary of United States Federal income tax consequences
does not purport to be a complete statement of the law in this area.
Furthermore, the discussion below does not cover the tax consequences of the
Option (or the grant or exercise of Options thereunder) under foreign, state
or local tax law, and such tax laws may not correspond to the Federal tax
treatment described herein. Accordingly, Option holders should consult their
personal tax advisors prior to engaging in any action involving the Options.
NON-QUALIFIED OPTIONS
The Option does not meet the requirements under Section 421-424 of the
Internal Revenue Code of 1986 (the "Code") and is therefore a "Non-Qualified
Option."
GENERAL TAX TREATMENT
Pursuant to Section 83 of the Code, the granting of an option will
require taxes to be paid if the option has a "readily ascertainable fair
market value" at the time of its grant. In that case, the fair market value
will be treated as taxable compensation income.
For purposes of determining whether an option has "readily ascertainable
fair market value," regulations adopted under the Code divide non-statutory
stock options into two categories: those actively traded on an established
market and those not so traded. If an option granted to an employee
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is actively traded on an established market, the option's value is deemed to
be "readily ascertainable." Options that are not actively traded on an
established market do not have a readily ascertainable fair market value
unless that value can otherwise be measured with reasonable accuracy. The
regulations create an irrebuttable presumption that an untraded option does
not have a readily ascertainable fair market value unless four conditions are
met:
(1) the option is transferable by the optionee;
(2) the option is exercisable immediately in full by the optionee;
(3) neither the option nor the stock which can be purchased on
exercise of the option is subject to any restrictions that have a
significant effect on the option's value; and
(4) the fair market value of the "option privilege" (the difference
between the exercise price and the value of the stock which may be
purchased) is readily ascertainable.
The Options are not actively traded on any exchange and may be
transferred only under limited circumstances. As such, the Options probably
will not have a readily ascertainable fair market value.
If the Option does not have a readily ascertainable fair market value at
the date of grant, there is no tax due as a result of the grant of the
option, and taxes will not be due until the Option is exercised. In such a
case, at the time of exercise, the option holder will have income in an
amount equal to the difference between the exercise price and the fair market
value of the stock at the date of exercise, and the Company will be entitled
to a deduction from its income in the same amount.
For example, an employee is granted an option to purchase 500 shares of
Common Stock at $2.75 share. At that time, the option does not have a
readily ascertainable fair market value. No taxes are due as a result of the
grant of the option. On February 1, 1999, the employee exercises the option
and purchases 500 shares of Common Stock at $2.75 share. The Common Stock is
then worth $10.00 per share. Upon exercise, the employee has $3,625 in
income ($10.00-$2.75 = $7.25 x 500 shares).
However, taxation upon exercise of the Option may be delayed if the
Common Stock received by the option holder is, at that time, subject to both
a substantial risk of forfeiture and transferability restrictions. A
substantial risk of forfeiture is a circumstance in which the option holder's
ability to retain the Common Stock may be terminated by such events as his
termination of employment. The Common Stock may be nontransferable because
of provisions of an agreement between the option holder and the Company or
because of Section 16(b) of the Exchange Act. There currently are no
agreements restricting the sale of the Common Stock.
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Under Section 83(b) of the Code, if an employee is not subject to tax
upon receipt of an option or Common Stock because of a risk of forfeiture and
transferability restrictions, he or she may elect to be taxed on the receipt
of the option or Common Stock, notwithstanding any risk of forfeiture or
transferability restriction. If such an election is made, taxation upon the
receipt of option will be treated as ordinary income equal to the fair market
value of the option or Common Stock upon issue. By making such an election,
the employee will be taxed at ordinary income rates at receipt of the option
or stock and taxed at capital gains rates on any subsequent appreciation. By
not making the election, the employee will be taxed for the tax year in which
the Common Stock was sold on the fair market value of the option or the
Common Stock in the year the restrictions on transferability and risk of
forfeiture lapse.
An Option holder's tax basis in his or her shares of Common Stock
acquired on exercise of an Option will be equal to the exercise price paid by
the option holder plus the amount of income recognized by the option holder
by reason of his or her exercise of an Option. Upon a subsequent disposition
of the shares of Common Stock received on exercise of an Option, the
difference between the amount realized on such disposition and the option
holder's tax basis for such shares generally will be treated as a capital
gain or loss, which will be short-term or long-term depending upon whether
the shares are held for the applicable long-term holding period following
exercise of the Option (currently more than one year).
All of the provisions concerning the timing of taxation of Options and
exercise of those Options are subject to numerous, complex rules, regulations
and interpretations. Recipients of Options should consult their personal tax
advisors concerning the tax impact of any transaction in options or
underlying Common Stock.
STOCK FOR STOCK EXERCISES
The exercise of an Option by the exchange of Common Stock already owned
by the option holder will not result in any taxable gain or loss on the
unrealized appreciation or depreciation of the Common Stock exchanged.
When an Option is exercised with previously acquired Common Stock of the
Company, the option holder's basis in the Common Stock purchased upon
exercise of the Option is the same as his basis in the stock used to purchase
the Common Stock under the Plan, increased by any amount included in his
growth income as compensation.
ERISA STATUS OF THE PLAN
The Options are not subject to the provisions of the United States
Employee Retirement Income Security Act of 1974, as amended.
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RESALE RESTRICTIONS
Any option holder who received Options and is an Affiliate (as defined
in Rule 405 under the 1933 Act) of the Company, is subject to certain
restrictions on resale of the Common Stock underlying the Options as set
forth in Rule 144 under the 1933 Act unless, at the time of sale, the Company
is eligible to file a registration statement Form S-1 and has filed a
re-offer prospectus containing information required to be contained in Part I
of Form S-1. The Company is under no obligation to file such a re-offer
prospectus.
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DESCRIPTION OF THE COMPANY'S COMMON STOCK
The Company is authorized to issue 20,000,000 shares of Common Stock,
par value $.05 per share. At June 25, 1998, 12,925,203 shares were issued
and outstanding. The Company also has outstanding options to purchase
2,484,600 shares of common stock issued to directors, officers, employees and
consultants under certain option plans and by way of non-plan options with
various exercise prices and expiration dates.
Holders of Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders and are not entitled to accumulate
their votes in the election of directors, which means that the holders of a
majority of the shares voting for the election of directors can elect all of
the directors then standing for election, if they choose to do so. Holders
of Common Stock are entitled to receive such dividends, if any, as may be
declared from time to time by the Board of Directors in its discretion from
funds legally available therefor. The payment of dividends, if any, will
depend upon the Company's financial condition, results of operations, and
other factors determined relevant by the Company's Board of Directors.
Holders of Common Stock are entitled to share pro rata in any distribution to
stockholders upon liquidation of the Company. The holders of Common Stock
have no preemptive or other subscription or conversion rights and there are
no redemption provisions with respect to such shares. All of the shares of
Common Stock presently outstanding are validly issued, fully paid and
non-assessable.
CONFLICTING PROVISIONS
The foregoing is only a summary of some of the material provisions and
operational features of the Options. To the extent that this summary
Prospectus conflicts with any provision in any Option Agreement, the
conflicting provisions of the Option Agreement shall control.
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