As filed with the Securities and Exchange Commission on January 21, 2000
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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LIFE MEDICAL SCIENCES INC.
(Exact name of registrant as specified in its charter)
Delaware 14-1745197
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
379 Thornall Street
Edison, New Jersey 08837
(Address of principal executive offices) (Zip code)
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LIFE MEDICAL SCIENCES, INC. 2000 NON-QUALIFIED
STOCK OPTION PLAN;
NON-PLAN STOCK OPTION AGREEMENTS
(full title of the plan)
Mr. Robert P. Hickey, CEO
Life Medical Sciences, Inc.
379 Thornall Street
Edison, New Jersey 08837
(Name and address of agent for service)
(732) 494-0444
(Telephone number, including area code, of agent for service)
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Copy to:
Irwin M. Rosenthal, Esq.
Graham & James LLP
885 Third Avenue, 21st Floor
New York, New York 10022
(212) 848-1000
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<PAGE>
Calculation of Registration Fee
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Title of securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered(1) offering price per unit aggregate offering price registration fee
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($.001 par 1,000,000(2) $ 0.3438(4) $ 343,800 $ 90.76
value per share)
- ------------------------------------------------------------------------------------------------------------------
Common Stock 201,562(3) $ 0.0500 $ 10,078 $ 2.66
- ------------------------------------------------------------------------------------------------------------------
Common Stock 590,898(3) $ 0.0700 $ 41,363 $ 10.92
- ------------------------------------------------------------------------------------------------------------------
Common Stock 40,000(3) $ 0.0900 $ 3,600 $ 0.95
- ------------------------------------------------------------------------------------------------------------------
Common Stock 8,471(3) $ 0.1300 $ 1,101 $ 0.29
- ------------------------------------------------------------------------------------------------------------------
Common Stock 78,707(3) $ 0.1400 $ 11,019 $ 2.91
- ------------------------------------------------------------------------------------------------------------------
Common Stock 252,322(3) $ 0.1480 $ 37,344 $ 9.86
- ------------------------------------------------------------------------------------------------------------------
Common Stock 35,238(3) $ 0.1500 $ 5,286 $ 1.40
- ------------------------------------------------------------------------------------------------------------------
Common Stock 33,911(3) $ 0.1800 $ 6,104 $ 1.61
- ------------------------------------------------------------------------------------------------------------------
Common Stock 18,000(3) $ 0.1875 $ 3,375 $ 0.89
- ------------------------------------------------------------------------------------------------------------------
Common Stock 26,500(3) $ 0.1900 $ 5,035 $ 1.33
- ------------------------------------------------------------------------------------------------------------------
Common Stock 3,846(3) $ 0.1950 $ 750 $ 0.20
- ------------------------------------------------------------------------------------------------------------------
Common Stock 12,352(3) $ 0.2000 $ 2,470 $ 0.65
- ------------------------------------------------------------------------------------------------------------------
Common Stock 1,531(3) $ 0.2025 $ 310 $ 0.08
- ------------------------------------------------------------------------------------------------------------------
Common Stock 20,790(3) $ 0.2500 $ 5,198 $ 1.37
- ------------------------------------------------------------------------------------------------------------------
Common Stock 50,000(3) $ 0.5620 $ 28,100 $ 7.42
- ------------------------------------------------------------------------------------------------------------------
Common Stock 15,000(3) $ 0.6300 $ 9,450 $ 2.49
- ------------------------------------------------------------------------------------------------------------------
Common Stock 12,500(3) $ 0.9062 $ 11,328 $ 2.99
- ------------------------------------------------------------------------------------------------------------------
Common Stock 12,500(3) $ 0.9100 $ 11,375 $ 3.00
- ------------------------------------------------------------------------------------------------------------------
Common Stock 441,160(3) $ 1.0000 $ 441,160 $ 116.47
- ------------------------------------------------------------------------------------------------------------------
Common Stock 180,000(3) $ 1.3100 $ 235,800 $ 62.25
- ------------------------------------------------------------------------------------------------------------------
Common Stock 1,362,832(3) $ 2.0000 $2,725,664 $ 719.58
- ------------------------------------------------------------------------------------------------------------------
Common Stock 184,687(3) $ 4.0000 $ 738,748 $ 195.03
- ------------------------------------------------------------------------------------------------------------------
Common Stock 4,636(3) $ 4.7500 $ 22,021 $ 5.81
- ------------------------------------------------------------------------------------------------------------------
Common Stock 10,053(3) $ 6.0000 $ 60,318 $ 15.92
- ------------------------------------------------------------------------------------------------------------------
Common Stock 3,875(3) $ 7.0000 $ 27,125 $ 7.16
- ------------------------------------------------------------------------------------------------------------------
Common Stock 10,778(3) $ 7.8800 $ 84,931 $ 22.42
- ------------------------------------------------------------------------------------------------------------------
Common Stock 50,000(3) $ 9.1200 $ 456,000 $ 120.38
- ------------------------------------------------------------------------------------------------------------------
TOTAL 4,662,149 $5,328,853 $1,406.80
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 416, this Registration Statement also covers such
indeterminable number of additional shares as may become issuable pursuant
to terms designed to prevent dilution resulting from stock splits, stock
dividends or similar events.
(2) Represents shares of common stock reserved for issuance pursuant to
options available for grant under the registrant's 2000 Non-Qualified
Stock Option Plan (the "Option Plan").
(3) Represents shares of common stock issuable upon exercise of a
non-qualified stock option granted not under the Option Plan.
(4) Calculated on the basis of the average of the closing bid and ask prices
as of January 13, 2000 in accordance with Rule 457(h).
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EXPLANATORY NOTE
Pursuant to Rule 428(b) (1) under the Securities Act of 1933, as amended
(the "Securities Act"), an information statement will be distributed to holders
of options granted under the Life Medical Sciences, Inc. Non-Qualified 2000
Stock Option Plan and to holders of options granted outside of the Option Plan.
The information statement and the documents incorporated by reference in this
Registration Statement pursuant to Item 3 of Part II of this Form S-8, taken
together, constitute a prospectus that meets the requirements of the Securities
Act.
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<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
Item 2. Registrant Information and Employee Plan Annual Information.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents By Reference.
The following documents or portions thereof, as filed with the Securities
and Exchange Commission by Life Medical Sciences, Inc., a Delaware corporation
(the "Registrant"), are incorporated by reference herein:
(1) the Registrant's annual report on Form 10-K for the year ended
December 31, 1998.
(2) the Registrant's quarterly reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999, respectively.
(3) the description of the Common Stock, par value $.001 per share, of the
Registrant contained in the section entitled "Description of Securities" of the
Registrant's Registration Statement on Form S-1 (File No. 33-49008) (which is
incorporated by reference in Item 1 of the Registrant's Registration Statement
on Form 8-A filed pursuant to Section 12 of the Securities Exchange Act of 1934
(the "Exchange Act")).
All documents filed by the Registrant pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the effective date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference in the Registration Statement and to be a part thereof from the date
of filing such documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Certain legal matters in connection with the issuance of the shares of
Common Stock, par value $.001 per share, of the Registrant being registered
hereby are being passed upon by Graham & James LLP, 885 Third Avenue, New York,
New York 10022, counsel to the Registrant. Irwin M. Rosenthal, a member of such
firm, serves as an officer and a director of the registrant. Mr. Rosenthal
directly owns 2,704 shares of Common Stock of the registrant and may be deemed
to beneficially own, directly or indirectly, 682,940 shares of Common Stock of
the registrant, including 255,940 shares of Common Stock issuable upon exercise
of options which are currently exercisable. In addition, other members of Graham
& James LLP may be deemed to beneficially own additional shares of Common Stock
of the registrant.
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<PAGE>
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law generally provides
that a corporation is empowered to indemnify any person who is made a party to
any threatened, pending or completed action, suit or proceeding by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving, at the request of the corporation, in any of such
capacities of another corporation or other enterprise, if such director,
officer, employee or agent 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,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. This statute describes in detail the right of
the registrant to indemnify any such person.
Article TENTH of the Restated Certificate of Incorporation of the
Registrant provides generally for mandatory indemnification of the directors and
officers of the Corporation to the fullest extent permitted under the Delaware
General Corporation Law and permits indemnification for all other persons whom
the Registrant is empowered to indemnify.
Pursuant to Article VIII of the Registrant's By-Laws, the Registrant may
indemnify, to the fullest extent permitted by the Delaware General Corporation
Law, any person, including officers and directors, with regard to any action or
proceeding.
The Registrant has entered into an Indemnification Agreement (the
"Indemnification Agreement") with each of its directors and officers. The
Indemnification Agreement provides that the Registrant will indemnify the
indemnitee to the fullest extent permitted by applicable law against expenses,
including reasonable attorneys' fees, judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
any civil or criminal action or administrative proceeding arising out of his
performance of his duties as a director or officer of the Registrant other than
an action initiated by a director of officer. Such indemnification is available
if the indemnitee acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Registrant, and, with
respect to any criminal action, had no reasonable cause to believe his conduct
was unlawful.
Under the Indemnification Agreement, the entitlement of a director or
officer to indemnification shall be determined by a majority vote of a quorum of
disinterested directors, or if such quorum either is not obtainable or so
directs, by independent counsel or by the stockholders of the Registrant, as
determined by such quorum of disinterested directors. Under certain
circumstances, a party to the Indemnification Agreement will be conclusively
presumed to have met the applicable statutory standard of conduct unless the
Registrant's Board of Directors, stockholders or independent legal counsel
determine that the relevant standard has not been met. If a change of control of
the Registrant has occurred, the entitlement of such director or officer to
indemnification shall be determined by independent counsel selected by such
director or officer, unless such director or officer requests that either the
Board of Directors or the stockholders make such determination.
The Registrant's Certificate of Incorporation eliminates in certain
circumstances the liability of directors of the Registrant for monetary damages
for breach of their fiduciary duty as directors. This provision does not
eliminate the liability of a director (i) for breach of the director's duty of
loyalty to the Registrant or its stockholders, (ii) for acts or omissions by the
director not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for willful or negligent declaration of an unlawful
dividend, stock purchase or redemption or (iv) for transactions from which the
director derived an improper personal benefit.
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<PAGE>
The Registrant currently maintains an officers' and directors' liability
insurance policy which covers, subject to the exclusions and limitations of the
policy, losses relating to actual or alleged breaches of duty, errors,
misstatements, misleading statements or omissions by officers and directors of
the Registrant solely in their capacity as such. The policy currently has a
limit of $1,000,000 with respect to each individual claim and with respect to
all claims made during the policy period.
Item 7. Exemption From Registration Claimed.
Not Applicable.
Item 8. Exhibits.
The following is a complete list of exhibits filed as a part of this
registration statement:
Exhibit No. Document
----------- --------
4.1 2000 Non-Qualified Stock Option Plan of the
Registrant ("Option Plan").
4.2 Specimen Common Stock Certificate. (Incorporated by
reference to Exhibit 4.2 contained in the
Registrant's registration statement on S-1,
Registration No. 33-49008).
4.3 Form of Non-Qualified Stock Option Agreement under
the Option Plan.
4.4 Form of Non-Qualified Stock Option Agreement not
under the Option Plan.
5.1 Opinion of Graham & James LLP.
23.1 Consent of Graham & James LLP. (Included in
Exhibit 5.1).
23.2 Consent of Richard A. Eisner & Company, LLP.
24.1 Powers of Attorney. (Included on the signature page
of this Registration Statement).
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;
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(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;
(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 with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 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; and
(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. Incorporation of 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 Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
C. Indemnification of Officers and Directors
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 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 Act and will be governed by the final adjudication of
such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all 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, State of New York, on January 13, 2000.
LIFE MEDICAL SCIENCES, INC.
By: /S/ Robert P. Hickey
------------------------
Robert P. Hickey
CEO, President and Chairman of the Board of Directors
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Robert P. Hickey and Irwin M. Rosenthal
his true and lawful attorney-in-fact and agent, each acting alone, with full
powers of substitution and resubstitution, for him and his name, place and
stead, in any and all capacities, to sign any and all amendments to this
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, and to make any and all state securities law or blue sky filings,
granting unto said attorney-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully for all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/S/ Robert P. Hickey CEO, President, and Chairman of January 13, 2000
- ----------------------- the Board of Directors (principal
Robert P. Hickey executive officer and acting
principal financial and accounting
officer)
/S/ Irwin M. Rosenthal Secretary and Director January 14, 2000
- -----------------------
Irwin M. Rosenthal
/S/ Coy Eklund Director January 13, 2000
- -----------------------
Coy Eklund
Director January __, 2000
- -----------------------
Joel L. Gold
/S/ Walter R. Maupay Director January 12, 2000
- -----------------------
Walter R. Maupay
/S/ Edward A. Celano Director January 11, 2000
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Edward A. Celano
8
2000 NON-QUALIFIED STOCK OPTION PLAN
LIFE MEDICAL SCIENCES, INC.
1. Purpose of Plan.
The purpose of the Life Medical Sciences, Inc. 2000 Non-Qualified Stock
Option Plan (the "2000 Plan") is to promote the interests of Life Medical
Sciences, Inc., a Delaware corporation (the "Company") and its stockholders by
strengthening the Company's ability to attract and retain competent employees,
to make service on the Board of Directors of the Company more attractive to
present and prospective non-employee directors of the Company, to provide a
means to encourage stock ownership and proprietary interest in the Company by
officers, nonemployee directors and valued employees and other individuals upon
whose judgment, initiative, and efforts the financial success and growth of the
Company largely depend, and to compensate consultants and advisors for services
rendered. This 2000 Plan and the grant of any option hereunder shall be
effective upon approval by the Board of Directors of the Company.
2. Stock Subject to the 2000 Plan.
a. The total number of shares of the authorized but unissued or
treasury shares of the Common Stock, $.001 par value per share, of the Company
("Common Stock") for which non-qualified options may be granted under the 2000
Plan shall be 1,000,000, subject to adjustment as provided in Section 12 hereof.
b. If an option granted or assumed hereunder shall expire or
terminate any reason without having been exercised in full, the unpurchased
shares subject thereto shall again be available for subsequent option grants
under the 2000 Plan.
c. Stock issuable upon exercise of an option granted under the 2000
Plan may be subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors.
3. Administration of the 2000 Plan.
a. The 2000 Plan shall be administered by the Board of Directors of
the Company (the "Board"). No member of the Board shall act upon any matter
exclusively affecting any option granted or to be granted to himself or herself
under the 2000 Plan. The decision of the Board as to all questions of
interpretation and application of the 2000 Plan shall be final, binding and
conclusive on all persons. The Board may, in its sole discretion, grant options
to purchase shares of the Company's Common Stock and issue shares upon exercise
of such options, as provided in the 2000 Plan. The Board shall have authority,
subject to the express provisions of the 2000 Plan, to construe the respective
option agreements and the 2000 Plan, to prescribe, amend and rescind rules and
regulations relating to the 2000 Plan, to
1
<PAGE>
determine the terms and provisions of the respective option agreements, which
may but need not be identical, and to make all other determinations in the
judgment of the Board necessary or desirable for the administration of the 2000
Plan. The Board may correct any defect or supply any omission or reconcile any
inconsistency in the 2000 Plan or in any option agreement in the manner and to
the extent it shall deem expedient to carry the 2000 Plan into effect and shall
be the sole and final judge of such expediency. No director shall be liable for
any action or determination made in good faith. The Board may, in its
discretion, delegate its power, duties and responsibilities to a committee,
consisting of two or more members of the Board, all of whom are "non-employee
directors" (as hereinafter defined). If a committee is so appointed, all
references to the Board herein shall mean and relate to such committee, unless
the context otherwise requires. For the purposes of the 2000 Plan, a director or
member of such committee shall be deemed to be a "non-employee director" only if
such person qualified as a "non-employee director" within the meaning of
paragraph (c)(2) of Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended ("Exchange Act"), as such term is interpreted from time to
time.
4. Type of Options.
Options granted pursuant to the 2000 Plan shall be authorized by action of
the Board (or a committee designated by the Board) and may only be designated as
non-qualified options which are not intended to meet the requirements of such
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
5. Eligibility.
Options designated as non-qualified options may be granted to (i) officers
and key employees of the Company or of any of its subsidiaries, or (ii) agents,
medical and scientific advisors and directors of and consultants to the Company,
whether or not otherwise employees of the Company.
In determining the eligibility of an individual to be granted an option,
as well as in determining the number of shares to be optioned to any individual,
the Board shall take into account the position and responsibilities of the
individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Board may deem relevant.
6. Option Agreement.
Each option shall be evidenced by an agreement (the "Agreement") duly
executed on behalf of the Company and by the optionee to whom such option is
granted, which Agreement shall comply with and be subject to the terms and
conditions of the 2000 Plan. The Agreement may contain such other terms,
provisions and conditions which are not inconsistent with the 2000 Plan as may
be determined by the Board. No option shall be granted within the meaning of the
2000 Plan and no purported grant of any option shall be effective until the
Agreement
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<PAGE>
shall have been duly executed on behalf of the Company and the optionee. More
than one option may be granted to an individual.
7. Option Price.
The option price or prices of shares of the Company's Common Stock for
options designated as non-qualified stock options shall be a lawful
consideration as determined by the Board.
8. Manner of Payment: Manner of Exercise.
a. Options granted under the 2000 Plan may provide for the payment
of the exercise price by delivery of (i) cash or a check payable to the order of
the Company in an amount equal to the exercise price of such options, (ii)
shares of any class of common stock of the Company owned by the optionee having
a fair market value equal in amount to the exercise price of the options being
exercised, or (iii) any combination of (i) and (ii), provided, however, that
payment of the exercise price by delivery of shares of common stock of the
Company owned by such optionee may be made only upon the condition that such
payment does not result in a charge to earnings for financial accounting
purposes as determined by the Board, unless such condition is waived by the
Board.
b. To the extent that the right to purchase shares under an option
has accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the option
at such time, during ordinary business hours, after thirty (30) days but not
more than ninety (90) days from the date of receipt of the notice by the
Company, as shall be designated in such notice, or at such time, place and
manner as may be agreed upon by the Company and the person or persons exercising
the option.
9. Exercise of Options.
Each option granted under the 2000 Plan shall, subject to Section 10 (b)
hereof, be exercisable at such time or times and during such period as shall be
set forth in the Agreement; provided, however, that no option granted under the
2000 Plan shall have a term in excess of ten (10) years from the date of grant.
To the extent that an option is not exercised when it becomes initially
exercisable, it shall not expire but shall be carried forward and shall be
exercisable, on a cumulative basis, until the expiration of the exercise period.
No partial exercise may be made for less than one hundred (100) full shares of
Common Stock.
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10. Term of Options; Exercisability
a. Term.
i. Each option shall expire not more than ten (10) years
from the date of the granting thereof, except in the
event of earlier termination as herein provided.
ii. Except as otherwise provided in this Section 10 or at
the discretion of the Board, an option granted to any
optionee who ceases to perform services for the Company
or one of its subsidiaries shall terminate on the
earlier of the last day of the third month or ninety
days after the date such optionee ceases to perform
services for the Company or one of its subsidiaries, or
on the date on which the option expires by its terms,
whichever occurs first.
iii. If such termination of employment is because of
dismissal for cause or because the optionee is in breach
of any employment or consulting agreement, such option
will terminate on the date the optionee ceases to
perform services for the Company or one of its
subsidiaries.
iv. If the optionee ceases to perform services for the
Company because the optionee has become permanently
disabled (within the meaning of Section 22(e)(3) of the
Code), such option shall terminate on the last day of
the twelfth month from the date such optionee ceases to
perform services for the Company, or on the date on
which the option expires by its terms, whichever occurs
first.
v. In the event of the death of any optionee, any option
granted to such optionee shall terminate on the last day
of the twelfth month from the date of death, or on the
date on which the option expires by its terms, whichever
occurs first.
b. Exercisability.
i. Except as provided below, an option granted to a
optionee who ceases to perform services for the Company
or one of its subsidiaries shall be exercisable only to
the extent that such option has accrued and is in effect
on the date such optionee
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ceases to perform services for the Company or one of its
subsidiaries.
ii. An option granted to a optionee who ceases to perform
services for the Company or one of its subsidiaries
because he or she has become permanently disabled, as
defined above, shall be exercisable with respect to the
full number of shares covered by such option.
iii. In the event of the death of any optionee, the option
granted to such optionee may be exercised with respect
to the full number of shares covered thereby, whether or
not under the provisions of Section 9 hereof the
optionee was entitled to do so at the date of his or her
death, by the estate of such optionee, or by any person
or persons who acquired the right to exercise such
option by bequest or inheritance or by reason of the
death of such optionee.
11. Options Not Transferable.
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee other than by will or
the laws of descent and distribution or pursuant to a domestic relations order
as defined in the Code or Title 1 of the Employee Retirement Income Security
Act, or the rules thereunder, and any such option shall be exercisable during
the lifetime of such optionee only by him. Any option granted under the 2000
Plan shall be null and void and without effect upon the bankruptcy of the
optionee to whom the option is granted, or upon any attempted assignment or
transfer, except as herein provided, including without limitation, any purported
assignment, whether voluntary or by operation of law, pledge, hypothecation or
other disposition, attachment, trustee process or similar process, whether legal
or equitable, upon such option.
12. Recapitalization, Reorganizations and the Like.
In the event that the outstanding shares of the Common Stock of the
Company are changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation by reason of any
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, combination of shares, or dividends payable in capital stock,
appropriate adjustment shall be made in the number and kind of shares as to
which options may be granted under the 2000 Plan and as to which outstanding
options or portions thereof then unexercised shall be exercisable, to the end
that the proportionate interest of the optionee shall be maintained as before
the occurrence of such event; such adjustment in outstanding options shall be
made without change in the total price applicable to the unexercised portion of
such options and with a corresponding adjustment in the exercise price per
share.
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In addition, unless otherwise determined by the Board in its sole
discretion, in the case of any (i) sale or conveyance to another entity of all
or substantially all of the property and assets of the Company or (ii) Change in
Control (as hereinafter defined) of the Company, the purchaser(s) of the
Company's assets or stock may, in his, her or its discretion, deliver to the
optionee the same kind of consideration that is delivered to the shareholders of
the Company as a result of such sale, conveyance or Change in Control, or the
Board may cancel all outstanding options in exchange for consideration in cash
or in kind which consideration in both cases shall be equal in value to the
value of those shares of stock or other securities the optionee would have
received had the option been exercised (to the extent then exercisable) and no
disposition of the shares acquired upon such exercise been made prior to such
sale, conveyance or Change in Control, less the exercise price therefor. Upon
receipt of such consideration, the options shall immediately terminate and be of
no further force and effect. The value of the stock or other securities the
optionee would have received if the option had been exercised shall be
determined in good faith by the Board of the Company, and in the case of shares
of the Common Stock of the Company, in accordance with the provisions of Section
7 hereof.
The Board shall also have the power and right to accelerate the
exercisability of any options, notwithstanding any limitations in this 2000 Plan
or in the Agreement upon such a sale, conveyance or Change in Control.
A "Change in Control" shall be deemed to have occurred if any person, or
any two or more persons acting as a group, and all affiliates of such person or
persons, who prior to such time owned less than fifty percent (50%) of the then
outstanding Common Stock of the Company, shall acquire such additional shares of
the Company's Common Stock in one or more transactions, or series of
transactions, such that following such transaction or transactions, such person
or group and affiliates beneficially own fifty percent (50%) or more of the
Company's Common Stock outstanding.
Upon dissolution or liquidation of the Company, all options granted under
this 2000 Plan shall terminate, but each optionee (if at such time in the employ
of or otherwise associated with the Company or any of its subsidiaries) shall
have the right, immediately prior to such dissolution or liquidation, to
exercise his or her option to the extent then exercisable.
If by reason of a corporate merger, consolidation, acquisition of property
or stock, separation, reorganization, or liquidation, the Board shall authorize
the issuance or assumption of a stock option or stock options in a transaction
to which Section 424(a) of the Code applies, then, notwithstanding any other
provision of the 2000 Plan, the Board may grant an option or options upon such
terms and conditions as it may deem appropriate for the purpose of assumption of
the old option, or substitution of a new option for the old option, in
conformity with the provisions of such Section 424(a) of the Code and the
Regulations thereunder, and any such option shall not reduce the number of
shares otherwise available for issuance under the 2000 Plan.
No fraction of a share shall be purchasable or deliverable upon the
exercise of any option, but in the event of any adjustment hereunder in the
number of shares covered by the
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<PAGE>
option shall cause such number to include a fraction of a share, such fraction
shall be adjusted to the nearest smaller whole number of shares.
13. No Special Employment Rights.
Nothing contained in the 2000 Plan or in any option granted under the 2000
Plan shall confer upon any optionee any right with respect to the continuation
of his or her employment by the Company (or any subsidiary) or interfere in any
way with the right of the Company (or any subsidiary), subject to the terms of
any separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the optionee from the
rate in existence at the time of the grant of an option. Whether an authorized
leave of absence, or absence in military or government service, shall constitute
termination of employment shall be determined by the Board at the time.
14. Withholding.
The Company's obligation to deliver shares upon the exercise of any
non-qualified option granted under the 2000 Plan shall be subject to the option
holder's satisfaction of all applicable Federal, state and local income and
employment tax withholding requirements. The Company and optionee may agree to
withhold shares of Common Stock purchased upon exercise of an option to satisfy
the above-mentioned withholding requirements; provided, however, no such
agreement may be made by a optionee who is an "officer" or "director" within the
meaning of Section 16 of the Exchange Act, except pursuant to a standing
election to so withhold shares of Common Stock purchased upon exercise of an
option, such election to be made not less than six months prior to such exercise
and which election may be revoked only upon six months prior written notice.
17. Restrictions on Issuance of Shares.
a. Notwithstanding the provisions of Section 8, the Company may
delay the issuance of shares covered by the exercise of an option and the
delivery of a certificate for such shares until one of the following conditions
shall be satisfied:
i. The shares with respect to which such option has been
exercised are at the time of the issue of such shares effectively
registered or qualified under applicable Federal and state
securities acts now in force or as hereafter amended; or
ii. Counsel for the Company shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such
shares are exempt from registration and qualification under
applicable Federal and state securities acts now in force or as
hereafter amended.
b. It is intended that all exercises of options shall be effective,
and the Company shall use its best efforts to bring about compliance with the
above conditions within a
7
<PAGE>
reasonable time, except that the Company shall be under no obligation to qualify
shares or to cause a registration statement or a post-effective amendment to any
registration statement to be prepared for the purpose of covering the issue of
shares in respect of which any option may be exercised, except as otherwise
agreed to by the Company in writing.
16. Purchase for Investment, Rights of Holder on Subsequent
Registration.
Unless the shares to be issued upon exercise of an option granted
under the 2000 Plan have been effectively registered under the 1933 Act, as now
in force or hereafter amended, the Company shall be under no obligation to issue
any shares covered by any option unless the person who exercises such option, in
whole or in part, shall give a written representation and undertaking to the
Company which is satisfactory in form and scope to counsel for the Company and
upon which, in the opinion of such counsel, the Company may reasonably rely,
that he or she is acquiring the shares issued pursuant to such exercise of the
option for his or her own account as an investment and not with a view to, or
for sale in connection with, the distribution of any such shares, and that he or
she will make no transfer of the same except in compliance with any rules and
regulations in force at the time of such transfer under the 1933 Act, or any
other applicable law, and that if shares are issued without such registration, a
legend to this effect may be endorsed upon the securities so issued.
In the event that the Company shall, nevertheless, deem it necessary or
desirable to register under the 1933 Act or other applicable statutes any shares
with respect to which an option shall have been exercised, or to qualify any
such shares for exemption from the 1933 Act or other applicable statutes, then
the Company may take such action and may require from each optionee such
information in writing for use in any registration statement, supplementary
registration statement, prospectus, preliminary prospectus or offering circular
as is reasonably necessary for such purpose and may require reasonable indemnity
to the Company and its officers and directors from such holder against all
losses, claims, damages and liabilities arising from such use of the information
so furnished and caused by any untrue statement of any material fact therein or
caused by the omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
17. Loans.
At the discretion of the Board, the Company may loan to the optionee some
or all of the purchase price of the shares acquired upon exercise of an option
granted under the 2000 Plan.
18. Modification of Outstanding Options.
Subject to limitations contained herein, the Board may authorize the
amendment of any outstanding option with the consent of the optionee when and
subject to such conditions as are
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<PAGE>
deemed to be in the best interests of the Company and in accordance with the
purposes of the 2000 Plan.
19. Termination and Amendment of 2000 Plan.
Unless sooner terminated as herein provided, the 2000 Plan shall terminate
ten (10) years from the effective date of the 2000 Plan, which shall be the date
the 2000 Plan is duly adopted by the Board of the Company. The Board may at any
time terminate the 2000 Plan or make such modification or amendment thereof as
it deems advisable. Termination or any modification or amendment of the 2000
Plan shall not, without the consent of an optionee, affect his or her rights
under an option theretofore granted to him or her.
20. Limitation of Rights in the Underlying Shares.
A holder of an option shall not be deemed for any purpose to be a
stockholder of the Company with respect to such option except to the extent that
such option shall have been exercised with respect thereto and, in addition, a
stock certificate shall have been issued theretofore and delivered to the
holder.
21. Notices.
Any communication or notice required or permitted to be given under the
2000 Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
Attention: President, and, if to the holder of an option, to the address as
appearing on the records of the Company.
9
LIFE MEDICAL SCIENCES, INC.
STOCK OPTION AGREEMENT
UNDER THE 2000 NON-QUALIFIED STOCK OPTION PLAN
AGREEMENT entered into as of the date set forth on the signature page
hereto by and between Life Medical Sciences, Inc, a Delaware corporation, with a
principal place of business at 379 Thornall Street in Edison, New Jersey
(together with its subsidiaries, if any, the "Company"), and the undersigned
(the "Optionee").
WHEREAS, the Company desires to grant to the Optionee a non-qualified
stock option under the Company's 2000 Non-Qualified Stock Option Plan (the
"Plan") to acquire shares of the Company's Common Stock, $.001 par value (the
"Shares"), and
WHEREAS, the Plan provides that each option is to be evidenced by an
option agreement, setting forth the terms and conditions of the option.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Optionee hereby
agree as follows.
1. Grant of Option
The Company hereby grants to the Optionee a non-qualified stock option
under the Plan (the "Option") to purchase all or any part of an aggregate of the
number of Shares set forth on the signature page to this Agreement on the terms
and conditions hereinafter set forth. The Option shall NOT be treated as an
incentive stock option under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
2. The Purchase Price
The purchase price ("Purchase Price") for the Shares covered by the Option
shall be the dollar amount per share set forth on the signature page to this
Agreement.
3. Time of Vesting and Exercise of Option
Subject to Section 4 hereof, the Option shall vest and become exercisable
on the dates and as to the installment amounts set forth on the signature page
to this Agreement. To the extent the Option (or any portion thereof) is not
exercised by the Optionee when it becomes exercisable, it shall not expire, but
shall be carried forward and shall be exercisable, on a cumulative basis, until
the Expiration Date (as hereinafter defined) or until earlier termination as
hereinafter provided.
<PAGE>
4. Term; Extent of Exercisability
(a) Term
(i) The Option shall expire as to each installment amount on the
date set forth next to each such amount on the signature page to this Agreement
(the "Expiration Date"), subject to earlier termination as herein provided.
(ii) Except as otherwise provided in this Section 4, if the Optionee
ceases to perform services for the Company, the Option shall terminate on the
earlier of the last day of the third month or ninety days after the date such
Optionee ceases to perform services for the Company, or on the date on which the
Option expires by its terms, whichever occurs first.
(iii) If such termination to perform services is because of
dismissal for cause or because the Optionee is in breach of any employment
agreement, such Option will terminate on the date the Optionee ceases to perform
services for the Company.
(iv) If such termination to perform services is because the Optionee
has become permanently disabled (within the meaning of Section 22(e)(3) of the
Code), such Option shall terminate on the last day of the twelfth month from the
date such Optionee ceases to perform services for the Company, or on the date on
which the Option expires by its terms, whichever occurs first.
(v) In the event of the death of the Optionee, the Option granted to
such Optionee shall terminate on the last day of the twelfth month from the date
of death, or on the date on which the Option expires by its terms, whichever
occurs first.
(b) Extent of Exercisability
(i) Except as provided below, if the Optionee ceases to perform
services for the Company, the Option shall be exercisable only to the extent
that the right to purchase Shares under such Option has accrued and is in effect
on the date such Optionee ceases to perform services for the Company.
(ii) If the Optionee ceases to perform services for the Company
because he or she has become Permanently Disabled (within the meaning of Section
22(e)(3) of the Code), the Option shall be exercisable to the full number of
Shares covered by such Option.
(iii) In the event of the death of the Optionee, the Option may be
exercised with respect to the full number of Shares covered thereby whether or
not under the provisions of Section 3 hereof the Optionee was entitled to do so
at the date of his or her death, by the estate of such Optionee, or by any
person or persons who acquired the right to exercise such Option by bequest or
inheritance or by reason of the death of such Optionee.
2
<PAGE>
5. Manner of Exercise of Option
(a) To the extent that the right to exercise the Option has accrued and is
in effect, the Option may be exercised in full or in part by giving written
notice to the Company stating the number of Shares as to which the Option is
being exercised and accompanied by payment in full for such Shares. No partial
exercise may be made for less than one hundred (100) full Shares of Common
Stock. Payment shall be made in accordance with the terms of the Plan. Upon such
exercise, delivery of a certificate for paid-up, non-assessable Shares shall be
made at the principal office of the Company to the person exercising the Option,
not less than thirty (30) and not more than ninety (90) days from the date of
receipt of the notice by the Company.
(b) The Company shall at all times during the term of the Option reserve
and keep available such number of Shares of its Common Stock as will be
sufficient to satisfy the requirements of the Option.
6. Non-Transferability
The right of the Optionee to exercise the Option shall not be assignable
or transferable by the Optionee otherwise than by will or the laws or descent
and distribution or pursuant to a domestic relations order as defined in the
Code or Title 1 of the Employee Retirement Income Security Act or the rules
thereunder, and the Option may be exercised during the lifetime of the Optionee
only by him or her. The Option shall be null and void and without effect upon
the bankruptcy of the Optionee or upon any attempted assignment or transfer,
except as herein provided, including without limitation any purported
assignment, whether voluntary or by operation of law, pledge, hypothecation or
other disposition contrary to the provisions hereof, or levy of execution,
attachment, trustee process or similar process, whether legal or equitable, upon
the Option.
7. Representation Letter and Investment Legend
In the event that for any reason the Shares to be issued upon exercise of
the Option shall not be effectively registered under the Securities Act of 1933,
as amended ("1933 Act"), upon any date on which the Option is exercised in whole
or in part, the person exercising the Option shall give a written representation
to the Company in the form attached hereto as Exhibit 1 and the Company shall
place an "investment legend", so-called, as described in Exhibit 1, upon any
certificate for the Shares issued by reason of such exercise.
8. Adjustments on Changes in Capitalization
Adjustments on changes in capitalization and the like shall be made in
accordance with the Plan, as in effect on the date of this Option.
9. No Special Employment Rights
The provisions of this Section 9 are applicable only to Optionees who are
employees of the Company. Nothing contained in the Plan or this Option shall be
construed or deemed by any person under any circumstances to bind the Company to
continue the employment of the Optionee for the period within which this Option
may be exercised. However, during the period
3
<PAGE>
of the Optionee's employment, the Optionee shall render diligently and
faithfully the services which are assigned to the Optionee from time to time by
the Board of Directors or by the executive officers of the Company and shall at
no time take any action which directly or indirectly would be inconsistent with
the best interests of the Company.
10. Rights as a Stockholder
The Optionee shall have no rights as a stockholder with respect to any
Shares which may be purchased by exercise of this Option unless and until a
certificate or certificates representing such Shares are duly issued and
delivered to the Optionee. Except as otherwise expressly provided in the Plan,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
11. Withholding Taxes
Whenever Shares are to be issued upon exercise of this Option, the Company
shall have the right to require the Optionee to remit to the Company an amount
sufficient to satisfy all Federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for the Shares. The
Company may agree to permit the Optionee to authorize the Company to withhold
Shares of Common Stock purchased upon exercise of the Option to satisfy the
above-mentioned withholding requirement; provided, however, no such agreement
may be made by an Optionee who is an officer or director within the meaning of
Section 16 of the Securities Exchange Act of 1934, as amended, except pursuant
to a standing election to so withhold Shares of Common Stock purchased upon
exercise of the Option, such election to be made in the form set forth in
Exhibit 2 hereto and to be made not less than six (6) months prior to such
exercise. Such election may be revoked only upon providing six (6) months prior
written notice to the Company.
12. Plan Provisions Control
In the event of any inconsistency between the provisions of this Agreement
and the provisions of the Plan, the inconsistent provision(s) of this Agreement
shall be superseded by the Plan provision(s) to the extent necessary to
reconcile the inconsistency.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed,
and the Optionee has hereunto set his or her hand, all as of the _______________
day of ____________________ 2000.
LIFE MEDICAL SCIENCES, INC.
By:_________________________________________
Title:
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<PAGE>
OPTIONEE
Print Name: ________________________________
Sign Name: ________________________________
Address: __________________________________
Social Security Number: ___________________
OPTION INFORMATION
Total Number of Shares Underlying Option: _______________
Purchase Price Per Share: ________________
Vesting And Expiration Schedule
Vesting Date Number of Shares Expiration Date
------------ ---------------- ---------------
5
<PAGE>
EXHIBIT 1
TO STOCK OPTION AGREEMENT
Gentlemen:
In connection with the exercise by me of an option to purchase shares of
Common Stock, $.00l par value, of Life Medical Sciences, Inc (the "Company"), I
hereby acknowledge that I have been informed as follows:
1. The shares of Common Stock of the Company to be issued to me pursuant
to the exercise of said option (the "Shares") have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") and, accordingly, must
be held indefinitely unless the Shares are subsequently registered under the
Securities Act, or an exemption from such registration is available.
2. Routine sales of securities made in reliance upon Rule 144 under the
Securities Act can be made only after the holding period provided by that Rule
has been satisfied, and, in any sale to which that Rule is not applicable,
registration or compliance with some other exemption under the Securities Act
will be required.
3. The availability of Rule 144 is dependent upon adequate current public
information with respect to the Company being available and, at the time that I
may desire to make a sale pursuant to that Rule, the Company may neither wish
nor be able to comply with such requirement.
In consideration of the issuance of certificates for the Shares to me, I
hereby represent and warrant that I am acquiring the Shares for my own account
for investment, and that I will not sell, pledge or transfer the Shares in the
absence of an effective registration statement covering the same, except as
permitted by the provisions of Rule 144 if applicable, or some other applicable
exemption under the Securities Act. In view of this representation and warranty,
I agree that there may be affixed to the certificates for the Shares to be
issued to me, and to all certificates issued hereafter representing the Shares
(until in the opinion of counsel, which opinion must be reasonably satisfactory
in form and substance to counsel for the Company, it is no longer necessary or
required) a legend as follows:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and were acquired by the
registered holder pursuant to a representation and warranty that such
holder was acquiring the Shares for his own account and for investment,
with no intention of transfer or disposition of the same in violation of
the registration requirements of that Act. These securities may not be
sold, pledged, or transferred in the absence of an effective registration
statement under such Act, or an opinion of counsel, which opinion is
reasonably satisfactory to counsel to the Company, to the effect that
registration is not required under such Act."
I further agree that the Company may place a stop transfer order with its
transfer agent, prohibiting the transfer of the Shares, so long as the legend
remains on the certificates representing the Shares.
Very truly yours,
Dated:_______________________
<PAGE>
EXHIBIT 2
TO STOCK OPTION AGREEMENT
Gentlemen:
The undersigned Optionee hereby elects and agrees that, whenever the
undersigned exercises a stock option (including any options which now or may
hereafter be granted), Life Medical Sciences, Inc. (the "Company") shall
withhold from that exercise such number of Shares equal in value to the Federal
and state withholding taxes due upon such exercise. The undersigned further
acknowledges and agrees that this election may not be revoked without six (6)
months prior written notice to the Company.
OPTIONEE:
________________________________________
(Signature)
________________________________________
(Print Name)
________________________________________
(Social Security Number)
7
LIFE MEDICAL SCIENCES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
NOT UNDER THE PLAN
AGREEMENT entered into as of the date set forth on the signature
page hereto by and between Life Medical Sciences, Inc., a Delaware corporation,
with a principal place of business at 379 Thornall Street in Edison, New Jersey
(together with its subsidiaries, if any, the "Company"), and the undersigned
individual (the "Optionee").
WHEREAS, the Company desires to grant to the Optionee a
non-qualified stock option to acquire shares of the Company's Common Stock,
$.00l par value per share (the "Shares").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Optionee hereby
agree as follows:
1. Grant of Option.
The Company hereby grants to the Optionee a non-qualified stock
option (the "Option") to purchase all or any part of an aggregate of the number
of Shares set forth on the signature page to this Agreement on the terms and
conditions hereinafter set forth. This Option is not granted under the Company's
stock option plan and shall not be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price.
The purchase price ("Purchase Price") for the Shares covered by the
Option shall be the dollar amount per Share set forth on the signature page to
this Agreement.
3. Time of Vesting and Exercise of Option.
Subject to Section 4 hereof, the Option shall vest and become
exercisable on the dates and as to the installment amounts set forth on the
signature page to this Agreement. To the extent the Option (or any portion
thereof) is not exercised by the Optionee when it becomes exercisable, it shall
not expire, but shall be carried forward and shall be exercisable, on a
cumulative basis, until the Expiration Date (as hereinafter defined) or until
earlier termination as hereinafter provided.
4. Term; Extent of Exercisability.
(a) Term.
(i) The Option shall expire as to each installment amount on
the date set forth next to each such amount on the
signature page to this Agreement (the "Expiration
Date"), subject to earlier termination as herein
provided.
<PAGE>
(ii) Except as otherwise provided in this Section 4, if the
Optionee ceases to be employed, retained by or otherwise
perform services for the Company, the Option granted to
the Optionee hereunder shall terminate thirty (30) days
after the effective date of the cessation of such
services, or on the date on which the Option expires by
its terms, whichever occurs first, provided, however, if
(i) the Optionee ceases to render services to the
Company on account of his voluntary resignation and (ii)
within thirty (30) days after such resignation the Board
of Directors of the Company (the "Board") determines in
good faith that termination for cause would have been
warranted based on information that becomes known to the
Company, then the Option shall terminate on the date the
Optionee voluntarily resigned from the Company. The
Company shall have the right to postpone any exercise of
this Option for a period of up to thirty (30) days
following voluntary resignation by the Optionee.
(iii) If the Optionee's employment, retention or other
arrangement pursuant to which services are performed for
the Company is terminated because of dismissal for cause
or because the Optionee is in breach of any agreement
with the Company, the Option will terminate on the
effective date of such termination. The determination of
"cause" shall be made in good faith by the Company's
Board of Directors (whose determination shall be final)
with a written explanation thereof provided to the
Optionee.
(iv) If the Optionee's employment, retention or other
arrangement pursuant to which services are performed for
the Company is terminated because the Optionee has
become Permanently Disabled (within the meaning of
Section 22(e)(3) of the Code), the Option shall
terminate one year from the effective date of such
termination, or on the date on which the Option expires
by its terms, whichever occurs first.
(v) In the event of the death of the Optionee, the Option
shall terminate one year from the date of death, or on
the date on which the Option expires by its terms,
whichever occurs first.
(b) Extent of Exercisability.
(i) Except as provided below, if the Optionee ceases to be
employed, retained by, or otherwise perform services
for, the Company, the Option granted to the Optionee
hereunder shall be exercisable only to the extent that
the right to purchase Shares under such Option has
accrued and is in effect on the effective date of the
cessation of such services.
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<PAGE>
(ii) If the Optionee's employment, retention or other
arrangement pursuant to which services are performed for
the Company is terminated because the Optionee has
become Permanently Disabled, as defined above, the
Option may be exercised as to the full number of Shares
covered thereby whether or not under the provisions of
Section 3 hereof the Optionee was entitled to do so on
the effective date of such termination.
(iii) In the event of the death of the Optionee, the Option
may be exercised as to the full number of Shares covered
thereby whether or not under the provisions of Section 3
hereof the Optionee was entitled to do so at the date of
his or her death, by the executor, administrator or
personal representative of the Optionee, or by any
person or persons who acquired the right to exercise the
Option by bequest or inheritance or by reason of the
death of the Optionee.
5. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has accrued
and is in effect, the Option may be exercised in full or in part by giving
written notice to the Company stating the number of Shares as to which the
Option is being exercised and accompanied by payment in full for such Shares. No
partial exercise may be made for less than one hundred (100) full Shares.
Payment may be either wholly in cash or in whole or in part in shares of Common
Stock already owned by the person exercising the Option, valued at fair market
value as of the date of exercise, provided, however, that payment of the
exercise price by delivery of shares of Common Stock may be made only if such
payment does not result in a charge to earnings for financial accounting
purposes as determined by the Board. Upon such exercise, delivery of a
certificate for paid-up, non-assessable Shares shall be made at the principal
office of the Company to the person exercising the Option, not less than thirty
(30) and not more than ninety (90) days from the date of receipt by the Company
of the notice of exercise.
(b) The Company shall at all times during the term of the Option
reserve and keep available such number of Shares of its Common Stock as will be
sufficient to satisfy the requirements of the Option.
6. Non-Transferability.
The right of the Optionee to exercise the Option shall not be
assignable or transferable by the Optionee otherwise than by will or the laws of
descent and distribution, and the Option may be exercised during the lifetime of
the Optionee only by him or her. The Option shall be null and void and without
effect upon the bankruptcy of the Optionee or upon any attempted assignment or
transfer, except as hereinabove provided, including without limitation any
purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition contrary to the provisions hereof, or levy of
execution, attachment, trustee process or similar process, whether legal or
equitable, upon the Option.
7. Representation Letter and Investment Legend.
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<PAGE>
(a) In the event that for any reason the Shares to be issued upon
exercise of the Option shall not be effectively registered under the Securities
Act of 1933, as amended ("1933 Act"), upon any date on which the Option is
exercised in whole or in part, the person exercising the Option shall give a
written representation to the Company in the form attached hereto as Exhibit 1
and the Company shall place an "investment legend", so-called, as described in
Exhibit 1, upon any certificate for the Shares issued by reason of such
exercise.
(b) The Company shall be under no obligation to qualify Shares or to
cause a registration statement or a post-effective amendment to any registration
statement to be prepared for the purposes of covering the Option or exercise
thereof.
8. Adjustments on Changes in Capitalization and Other Events.
(a) In the event that the outstanding shares of the Common Stock of
the Company are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by reason of
any reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, combination of shares, or dividends payable in capital stock,
appropriate adjustment shall be made in the number and kind of shares as to
which the unexercised portion of the Option shall be exercisable, to the end
that the proportionate interest of the Optionee shall be maintained as before
the occurrence of such event; such adjustment shall be made without change in
the total price applicable to the unexercised portion of the Option and with a
corresponding adjustment in the Purchase Price per Share.
(b) In addition, unless otherwise determined by the Board in its
sole discretion, in the case of any (i) sale or conveyance to another entity of
all or substantially all of the property and assets of the Company or (ii)
Change in Control (as hereinafter defined) of the Company, the purchaser(s) of
the Company's assets or stock, in his, her, or its sole discretion, may deliver
to the Optionee the same kind of consideration that is delivered to the
shareholders of the Company as a result of such sale, conveyance or Change in
Control, or the Board may cancel the Option in exchange for consideration in
cash or in kind, which consideration in both cases shall be equal in value to
the value of those shares of stock or other securities the Optionee would have
received had the Option been exercised (but only to the extent then exercisable)
and had no disposition of the Shares acquired upon such exercise been made prior
to such sale, conveyance or Change in Control, less the full Purchase Price
therefor. Upon receipt of such consideration, the Option (whether or not then
exercisable) shall immediately terminate and be of no further force and effect.
The value of the stock or other securities the Optionee would have received if
the Option had been exercised shall be determined in good faith by the Board.
(c) The Board shall also have the power and right to accelerate the
exercisability of the Option, notwithstanding any limitation in this Agreement,
upon such a sale, conveyance or Change in Control.
(d) A "Change in Control" shall be deemed to have occurred if any
person or any two or more persons acting as a group, and all affiliates of such
person or persons, who prior to such time owned less than fifty percent (50%) of
the then outstanding Common Stock, shall acquire such additional shares of
Common Stock in one or more transactions, or series of
4
<PAGE>
transactions, such that following such transaction or transactions, such person
or group and affiliates beneficially own fifty percent (50%) or more of the
Common Stock outstanding.
(e) Upon dissolution or liquidation of the Company, the Option shall
terminate, but the Optionee (if at such time in the employ of or otherwise
associated with the Company or any of its subsidiaries as a director, agent or
consultant) shall have the right, immediately prior to such dissolution or
liquidation, to exercise the Option to the extent then exercisable.
(f) No fraction of a Share shall be purchasable or deliverable upon
the exercise of the Option, but in the event any adjustment hereunder in the
number of Shares underlying the Option shall cause such number to include a
fraction of a Share, such fraction shall be adjusted to the nearest smaller
whole number.
9. No Special Employment Rights.
The provisions of this Section 9 are applicable only to Optionees
who are employees of the Company. Nothing contained in this Agreement shall be
construed or deemed by any person under any circumstances to bind the Company to
continue the employment of the Optionee for the period within which this Option
may be exercised. However, during the period of the Optionee's employment, the
Optionee shall render diligently and faithfully the services which are assigned
to the Optionee from time to time by the Company and shall at no time take any
action which directly or indirectly would be inconsistent with the best
interests of the Company.
10. Rights as a Stockholder.
The Optionee shall have no rights as a stockholder with respect to
any Shares which may be purchased by exercise of this Option unless and until a
certificate or certificates representing such Shares are duly issued and
delivered to the Optionee.
11. Withholding Taxes.
Whenever Shares are to be issued upon exercise of the Option, the
Company shall have the right to require the Optionee to remit to the Company an
amount sufficient to satisfy all Federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
Shares. The Company may agree to permit the Optionee to withhold Shares
purchased upon exercise of the Option to satisfy the above-mentioned withholding
requirement; provided, however, no such agreement may be made by an Optionee who
is an officer or director within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, except pursuant to a standing election to so
withhold Shares of Common Stock purchased upon exercise of an option, such
election to be made in the form set forth in Exhibit 2 hereto and to be made not
less than six (6) months prior to such exercise. Such election may be revoked
only upon six (6) months prior written notice to the Company.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed, and the Optionee has hereunto set his or her hand and seal, all as of
the ____ day of ________________, 2000.
LIFE MEDICAL SCIENCES, INC.
By:________________________________________
Title:
OPTIONEE
Print Name:________________________________
Sign Name:_________________________________
Address:___________________________________
Social Security Number:____________________
OPTION INFORMATION
Total Number of Shares Underlying Option: _______
Purchase Price Per Share: ______________________
Vesting And Expiration Schedule
Vesting Date Number of Shares Expiration Date
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<PAGE>
EXHIBIT 1
TO STOCK OPTION AGREEMENT
Gentlemen:
In connection with the exercise by me of an option to purchase
shares of Common Stock, $.00l par value, of Life Medical Sciences, Inc. (the
"Company"), I hereby acknowledge that I have been informed as follows:
1. The shares of Common Stock of the Company to be issued to me pursuant
to the exercise of said option (the "Shares") have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") and, accordingly, must
be held indefinitely unless the Shares are subsequently registered under the
Securities Act, or an exemption from such registration is available.
2. Routine sales of securities made in reliance upon Rule 144 under the
Securities Act can be made only after the holding period provided by that Rule
has been satisfied, and, in any sale to which that Rule is not applicable,
registration or compliance with some other exemption under the Securities Act
will be required.
3. The availability of Rule 144 is dependent upon adequate current public
information with respect to the Company being available and, at the time that I
may desire to make a sale pursuant to that Rule, the Company may neither wish
nor be able to comply with such requirement.
In consideration of the issuance of certificates for the Shares to
me, I hereby represent and warrant that I am acquiring the Shares for my own
account for investment, and that I will not sell, pledge or transfer the Shares
in the absence of an effective registration statement covering the same, except
as permitted by the provisions of Rule 144, if applicable, or some other
applicable exemption under the Securities Act. In view of this representation
and warranty, I agree that there may be affixed to the certificates for the
Shares to be issued to me, and to all certificates issued hereafter representing
the Shares (until in the opinion of counsel, which opinion must be reasonably
satisfactory in form and substance to counsel for the Company, it is no longer
necessary or required) a legend as follows:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and were acquired by the
registered holder pursuant to a representation and warranty that such
holder was acquiring the Shares for his own account and for investment,
with no intention of transfer or disposition of the same in violation of
the registration requirements of that Act. These securities may not be
sold, pledged, or transferred in the absence of an effective registration
statement under such Act, or an opinion of counsel, which opinion is
reasonably satisfactory to counsel to the Company, to the effect that
registration is not required under such Act."
I further agree that the Company may place a stop transfer order
with its transfer agent, prohibiting the transfer of the Shares, so long as the
legend remains on the certificates representing the Shares.
Very truly yours,
Dated: ____________
<PAGE>
EXHIBIT 2
TO STOCK OPTION AGREEMENT
Gentlemen:
The undersigned Optionee hereby elects and agrees that, whenever the
undersigned exercises a stock option (including any options which now or may
hereafter be granted), Life Medical Sciences, Inc. (the "Company") shall
withhold from that exercise such number of Shares equal in value to the Federal
and state withholding taxes due upon such exercise. The undersigned further
acknowledges and agrees that this election may not be revoked without six (6)
months prior written notice to the Company.
OPTIONEE:
____________________________________
(Signature)
____________________________________
(Print Name)
____________________________________
(Social Security Number)
January 14, 2000
Life Medical Sciences, Inc.
370 Thornall Street
Edison, New Jersey 08837
Ladies and Gentlemen:
We have acted as counsel to Life Medical Sciences, Inc., a Delaware
corporation (the "Company") , in connection with the preparation of its
Registration Statement on Form S-8 under the Securities Act of 1933, as amended
(the "Registration Statement"), to which this opinion is to be filed as an
exhibit. The Registration Statement relates to (i) the issuance of up to an
aggregate of 1,000,000 shares (the "Plan Shares") of the Company's common stock,
par value $.00l per share (the "Common Stock"), pursuant to stock options which
may be granted under the Company's 2000 Non-Qualified Stock Option Plan (the
"Plan") and (ii) the issuance of up to an aggregate of 3,662,149 shares (the
"Non-plan Shares") of Common Stock pursuant to stock options granted not under
the Plan to employees, consultants and advisors of the Company.
Based upon the foregoing, and having regard for such legal
considerations as we deem relevant, we are of the opinion that (i) the Plan
Shares, when issued in accordance with the terms and conditions of the Plan, and
(ii) the Non-plan Shares, when issued in accordance with the terms and
conditions of the applicable stock option agreement, against payment therefor,
will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, and the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
GRAHAM & JAMES LLP
ACCOUNTANTS' CONSENT
We consent to the incorporation by reference in this Registration
Statement on Form S-8 of Life Medical Sciences, Inc., of our report dated March
2, 1999 on our audit of the financial statements of Life Medical Sciences, Inc.,
included in the December 31, 1998 Annual Report on Form 10-K of Life Medical
Sciences, Inc.
Richard A. Eisner & Company, LLP
Certified Public Accountants
New York, New York
January 20, 2000
