As filed with the Securities and Exchange Commission on February 14, 2000
Registration No. 333-___________
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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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Uroplasty
(Exact Name of Registrant as Specified in its Charter)
Minnesota 41-1719250
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2718 Summer Street NE, Minneapolis, MN 55413-2820
612/378-1180
(Address and telephone number of
principal executive offices)
Uroplasty, Inc. 1995 Stock Option Plan, as amended December 7, 1999
(as so amended, the "1995 Plan")
Uroplasty, Inc. 1997 Stock Option Plan, as amended July 27, 1999 and
December 7, 1999
(as so amended, the "1997 Plan")
(Full Title of the Plans)
Daniel G. Holman, CEO, Uroplasty, Inc.
Donald A. Major, CFO, Uroplasty, Inc.
2718 Summer Street NE, Minneapolis, MN 55413; 612/378-1180
(Name and Address, including zip code, and telephone number,
including area code, of Agent for service)
Copy to:
Richard P. Keller, Esq.
c/o Keller & Lokken, P.A.
332 Minnesota Street
First National Bank Building, Suite W-790
St. Paul, Minnesota 55101
Approximate date of commencement of proposed sale of securities to the public:
As soon as practicable after the effective date of this Registration Statement.
CALCULATION OF REGISTRATION FEE
Title of Amount to be Proposed Proposed Amount of
Securities to Registered Maximum Maximum Registration
be Registered (Shares) Offering Aggregate Fee
Price Per Offering
Share* Price*
__________________________________________________________________________
Common Stock(1) 1,000,000 $2.50 $2,500,000 $ 660.00
Common Stock(2) 800,000 $2.50 $2,000,000 $ 588.00
Common Stock(3) 1,698,000 $2.50 $4,245,000 $ -0- (4)
Totals 3,498,000 $8,745,000 $1,188.00
______________________________________________________________________________
(1) Pertains to shares which may have been issued and which may be issued and
sold by the Registrant upon exercise of options under the 1995 Plan.
(2) Pertains to shares which may have been issued and which may be issued and
sold by the Registrant upon exercise of options under the 1997 Plan.
(3) Pertains to shares are not presently outstanding, but which may be acquired
by affiliates of the Registrant and may be reoffered or resold by affiliates
of the Registrant pursuant to the reoffer Prospectus (prepared in accordance
with Part I of Form S-3) contained herein. These shares are being registered
pursuant to General Instruction C of Form S-8.
(4) Pursuant to Rule 457(h)(3), there is no additional filing fee for
securities, such as these, which are to be offered for resale.
* Estimated solely for the purpose of calculating the Registration Fee
pursuant to Rules 457(c) and 457(h) and Section 6(c) under the Securities Act.
Based on the average of the bid price ($2.4375) and asked price ($2.5625) which
is $2.50 per share on the NASDAQ OTC Bulletin Board System on February 8, 2000,
as reported in the February 9, 2000 edition of the Star Tribune newspaper.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Uroplasty, Inc.
Registration Statement on Form S-8
Cross Reference Sheet Between Items of Form S-8 and the Employee Section 10(a)
Prospectus as Required by Rule 404(a).
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Note: This Cross Reference Sheet refers to the Employee Section 10(a)
Prospectus required by Part I of Form S-8. Such Prospectus is not filed with
this Form S-8, as provided in the Note to Part I. A separate cross reference
sheet for the reoffer Prospectus, included herein, which is intended to comply
with General Instruction C of Form S-8 and Part I of Form S-3, follows.
Item in Form S-8 Caption or Location in Prospectus
1. Plan Information Section 10(a) Prospectus - Item 1.
Plan Information *
2. Registrant Information and Section 10(a) Prospectus - Item 2.
Employee Plan Annual Information Registrant Information *
3. Incorporation of Documents Incorporation of Documents
by Reference by Reference **
4. Description of Securities Description of Securities **
5. Interests of Named Experts and Interests of Named Experts and **
Counsel Counsel
6. Indemnification of Directors and Indemnification of Directors
Officers and Officers **
7. Exemption from Registration Exemption from Registration
Claimed Claimed **
8. Exhibits Exhibits **
9. Undertakings Undertakings **
* Not filed with the Commission - available from Registrant.
** Contained in Part II of Registration Statement.
<PAGE>
Uroplasty, Inc.
Registration Statement on Form S-8
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Cross Reference Sheet Between Items in Part I of Form S-3
and Reoffer Prospectus as Required by Rule 404(a) *
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Item in Part I of Form S-3 Caption or Location in
Reoffer Prospectus
1. Forepart of the Registration Front Cover Page of
Statement and Outside Front Cover Prospectus
Page of Prospectus
2. Inside Front and Outside Back Inside Front Cover Page: Available
Cover Pages of Prospectus Information; Incorporation of
Information by Reference; Table of
Contents
3. Summary Information, Risk Prospectus Summary; Risk Factors
Factors and Ratio of
Earnings to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Selling Shareholders
8. Plan of Distribution Plan of Offering
9. Description of Securities Not Applicable
to be Registered
10. Interests of Named Experts and Not Applicable
Counsel
11. Material Changes Material Changes
12. Incorporation of Certain Incorporation of Information
Information by Reference by Reference
13. Disclosure of Commission Not Applicable
Position on Indemnification
for Securities Act Liabilities
* Cross reference sheet to Employee Section 10(a) Prospectus precedes these
pages.
NOTE: Pursuant to Rule 428(a) and the Note to Part I of Form S-8, under the
Securities Act of 1933, the information contained in Part I of this
Registration Statement on Form S-8 which constitutes the Employee Section
10(a) Prospectus has not been filed with the Commission, but will be delivered
to employees and will be maintained in a file by the Registrant for a minimum
of five years after it is last used to offer or sell securities pursuant to the
1995 Plan or the 1997 Plan and shall be made available to the Commission or its
staff, upon request, as required by said Rule 428(a).
The reoffer Prospectus pertains to those securities which are sold by the
Registrant pursuant to the Employee Section 10(a) Prospectus to certain
affiliates and then reoffered by those affiliates to other investors. Such
Prospectus, which is permitted by General Instruction C of Form S-8 and Rule
415, is included with this Registration Statement.
<PAGE>
Prospectus
UROPLASTY, INC.
1,698,000 shares of Common Stock
_______________
This prospectus relates to reoffers and resales of up to 1,698,000 shares of
our common stock by officers and directors of Uroplasty named in this
Prospectus. None of the 1,698,000 shares were outstanding as of the date of
this Prospectus, but they may be issued in the future by us to the selling
shareholders pursuant to the exercise of stock options, and the selling
shareholders may use this Prospectus to reoffer and resell such shares. The
number of shares offered may be adjusted as a result of a stock split, stock
dividend or any similar transaction.
Our common stock is traded in the over-the-counter market under the symbol
"UROP.OB" and is listed in the NASDAQ Electronic Bulletin Board System. The
closing price of our common stock on February 10, 2000 was $2-5/16 per share.
This investment involves a high degree of risk. See "Risk Factors" on page 6
of this prospectus for a discussion of material factors which you should
consider before investing in the common stock offered by this prospectus.
________________________
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Commission passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
_________________________
The shares covered by this Prospectus are being offered and sold by the selling
shareholders named in this Prospectus, each of whom is or was an officer or
director of Uroplasty. The selling shareholders may offer their shares of
common stock through public or private transactions, in the over-the-counter
markets, on any exchanges on which our common stock is traded at the time of
sale, at prevailing market prices or at privately negotiated prices. The
selling shareholders may engage brokers or dealers who may receive commissions
or discounts from the selling shareholders. We will pay substantially all of
the expenses of this offering except that the selling shareholders will be
responsible for any brokerage commissions. Selling shareholders will receive
all net proceeds from the sale of any shares covered by this Prospectus; we
will not receive any proceeds from the sale of any of these shares.
The date of this Prospectus is February 14, 2000.
No person is authorized to give any information or to make any representations
other than those contained herein and, if given or made, such information or
representations must not be relied upon as having been authorized. This
document does not constitute an offer or solicitation by anyone in any state in
which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person to
whom it is unlawful to make such offer or solicitation.
TABLE OF CONTENTS
Available Information 3
Incorporation of Information
by Reference 3
Prospectus Summary 5
Risk Factors 6
Material Changes 15
Plan of Offering 15
Use of Proceeds 16
Selling Shareholders 16
Legal Matters 17
Experts 17
Additional Information 17
AVAILABLE INFORMATION
From the Commission:
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 5th Street N.W., Room 1024, Washington,
D.C. 20549; Federal Plaza, Room 1100, New York, New York 10007; 10960 Wilshire
Boulevard, Suite 1710, Los Angeles, California 90024; and 219 South Dearborn
Street, Room 1228, Chicago, Illinois 60604; and copies of such material can be
obtained from the Public Reference Section of the Commission at 450 5th Street
N.W., Washington, D.C. 20549 at prescribed rates.
From the Company:
Some documents, or parts of documents, are incorporated by reference in this
Prospectus. The Company undertakes to provide, without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
written or oral request of such person, a copy of any and all of the
information that has been incorporated by reference in this Prospectus (not
including exhibits to the information that is incorporated by reference, unless
such exhibits are specifically incorporated by reference into the information
that the Prospectus incorporates). Such requests should be directed to Daniel
G. Holman, Chief Executive Officer, or Donald Major, Chief Financial Officer,
Uroplasty, Inc., 2718 Summer Street NE, Minneapolis, Minnesota 55413 (612/378-
1180).
INCORPORATION OF INFORMATION BY REFERENCE
Pursuant to applicable rules of the Securities and Exchange Commission, the
following documents are incorporated by reference into the Prospectus:
1. Form 10-KSB, Annual Report of the Company to the SEC for the fiscal year
ended March 31, 1999.
2. Form 10-QSB, Quarterly Report of the Company to the SEC for the fiscal
quarter ended June 30, 1999.
3. Form 10-QSB, Quarterly Report of the Company to the SEC for the fiscal
quarter ended September 30, 1999.
4. Form 10-QSB, Quarterly Report of the Company to the SEC for the fiscal
quarter ended December 31, 1999.
5. Item 11 of Form 10 of the Registrant, dated July 10, 1996, Exchange Act
File No. 000-20989, or comparable section, whichever is applicable, concerning
"Description of Registrant's Securities to be Registered", and any amendment or
report filed for the purpose of updating such description.
6. Proxy Statement of the Company, dated July 9, 1999.
In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering, or this Registration Statement, are deemed to be incorporated
by reference.
Any person desiring to obtain a copy, without charge, of any one or more of the
aforementioned documents should write or call Donald Major, CFO of the Company,
at the following address or telephone number:
Uroplasty, Inc.
2718 Summer Street NE
Minneapolis, MN 55413-2820
Telephone 612/378-1180
E-mail:[email protected]
FORWARD-LOOKING STATEMENTS
The Registrant may from time to time make written or oral "forward-looking
statements", including statements contained in this filing by the Company with
the Securities and Exchange Commission and in its reports to stockholders, as
well as elsewhere. "Forward-looking statements" are statements such as those
contained in projections, plans, objectives, estimates, statements of future
economic performance, and assumptions related to any of the foregoing, and may
be identified by the use of forward-looking terminology, such as "may,
"expect," "anticipate," "estimate, "goal," "continue," or other comparable
terminology. By their very nature, forward- looking statements are subject to
known and unknown risks and uncertainties relating to the Company's future
performance that may cause the actual results, performance or achievements of
the Company, or industry results, to differ materially from those expressed or
implied in any such "forward-looking statements". Any such statement is
qualified by reference to the following cautionary statements.
The Registrant's business operates in highly competitive markets and is subject
to changes in general economic conditions, competition, customer and market
preferences, government regulation, the impact of tax regulation, foreign
exchange rate fluctuations, the degree of market acceptance of products, the
uncertainties of potential litigation, as well as other risks and uncertainties
detailed elsewhere herein and from time to time in the Registrant's Securities
and Exchange Commission filings.
In this filing, the following sections contain "forward-looking statements":
"Description of Business"; Risk Factors"; and "Management's Discussion and
Analysis of Financial Condition and Results of Operation". Various factors and
risks (not all of which are identifiable at this time) could cause the
Company's results, performance or achievements to differ materially from that
contained in the Company's forward-looking statements, and investors are
cautioned that any forward-looking statement contained herein or elsewhere is
qualified by and subject to the warnings and cautionary statements contained
above and in the Risk Factors section of this filing.
The Company does not undertake and assumes no obligation to update any forward-
looking statement that may be made from time to time by or on behalf of the
Company.
PROSPECTUS SUMMARY
This summary is intended for quick reference only. It does not contain all the
information you may need to make your investment decision. You should read
the entire prospectus, as well as the more detailed information and financial
statements provided in this prospectus or in documents we have previously filed
with the Securities and Exchange Commission before making an investment
decision.
The terms "Uroplasty", "our company" and "we" as used in this prospectus refer
to Uroplasty, Inc. and its subsidiaries and predecessors as a combined entity,
except where it is made clear that such term means only the parent company.
We design, develop, manufacture and market medical products primarily for the
treatment of urinary incontinence and vesicoureteral reflux. Our key product is
Macroplastique(R), an injectable, soft tissue bulking agent currently used
primarily to treat certain types of stress urinary incontinence, the most
common form of urinary incontinence. Stress urinary incontinence refers to the
involuntary loss of urine as a result of activities that increase intra-
abdominal pressure, such as coughing, laughing or exercising. Macroplastique
is also used to treat vesicoureteral reflux, a condition occurring mostly in
children in which urine flows backward from the bladder into the kidney. In
addition, some doctors in Europe are beginning to use Macroplastique to treat
incontinence in men recovering from prostate surgery. In June 1996, we
received CE mark authorization for Macroplastique which enabled us to market
the product throughout the European Union. Macroplastique is not sold in the
United States because it has not been approved for marketing by the United
States Food and Drug Administration, (the "FDA"). However, we are currently
conducting human clinical trials relating to the treatment of female stress
urinary incontinence pursuant to an Investigational Device Exemption granted by
the FDA.
It is estimated that urinary incontinence afflicts about 5% of the general
population and women comprise about 85% of the sufferers. In Europe, currently
our largest market, approximately 17 million people suffer from various forms
of urinary incontinence and about 14.5 million of these sufferers are women.
Bulking agents such as Macroplastique can be used to treat women with stress
urinary incontinence caused by intrinsic sphincter deficiency, estimated by us
to comprise 10% of the female incontinence market or about 1.4 million women in
Europe alone. Of the estimated 2.6 million European men who are incontinent, we
believe about 25% are candidates for treatment with Macroplastique.
Vesicoureteral reflux is primarily a pediatric concern, with a prevalence
estimated to be as high as 1% of the pediatric population. We estimate about
half of this population are candidates for Macroplastique treatments.
Macroplastique consists of soft, flexible, solid, highly textured implants of
heat vulcanized polydimethylsiloxane (solid silicone) suspended in a water-
based biocompatible carrier gel. Macroplastique is not a silicone gel, the
compound which became controversial in its use in breast implants.
Macroplastique was first introduced in the European urological marketplace in
1991 and has been used to treat approximately 20,000 patients with no reported
serious product related adverse incidents.
For more information, see the description of our business in our Annual Report
on Form 10-K on file with the Securities and Exchange Commission or available
from us.
We are a Minnesota corporation. Our executive offices are located at 2718
Summer Street NE, Minneapolis, Minnesota 55113. Our telephone number is (612)
378-1180; our fax number is 612-378-2027; our internet address is
ww.uroplasty.com.
RISK FACTORS
The shares of Common Stock to which this Prospectus refers are speculative and
involve a high degree of risk.
In evaluating an investment in such shares potential investors should carefully
consider the following factors as well as the information included elsewhere in
this prospectus and in the documents incorporated by reference. Please note
that new risk factors may emerge from time to time, and we may be unable to
identify all of them until after their effects have been observed.
Need to comply with government regulation. Our product, manufacturing processes
and product development activities are subject to extensive and rigorous
regulation by governmental and regulatory authorities in foreign countries
similar to the U.S. Food and Drug Administration ("FDA"). In Europe, where we
have been marketing Macroplastique since 1991, our introduction of medical
devices as well as our design, manufacturing, labeling, distribution, sale,
marketing, advertising, promotion and recordkeeping procedures for our products
are subject to laws and regulations governing medical devices contained in the
European Medical Device Directives ("MDD"). In June, 1996, we received a
Certificate of Authorization for affixing the CE mark (Conformite Europeene) on
Macroplastique based upon compliance with the MDD.
In the United States, we cannot market or sell Macroplastique until pre-market
approval authorization for Macroplastique is received from the FDA. In
September 1999, we received approval from the FDA of an Investigatory Device
Exemption relating to a U.S. clinical trial for the treatment of female stress
urinary incontinence using Macroplastique. Upon successful completion of the
clinical trial, we plan to submit a pre-market approval application to the FDA
requesting approval to commercialize Macroplastique in the U.S. There can be
no assurance that the U.S. clinical trials will be successfully completed or
that the requisite approvals or certifications will be granted for
Macroplastique or any other product, on a timely basis, or at all, or that such
regulatory reviews will not involve delays that would conflict with our ability
to commercialize our products in the United States.
In summary, we are permitted to market Macroplastique throughout the European
Community and we are currently conducting a clinical trial in the U.S. for
Macroplastique.
If and when regulatory approval to market a product is obtained from the FDA,
this approval may necessitate limitations on the indicated uses of the product.
Marketing approval can also be withdrawn by the FDA in the United States (and
by regulatory authorities in foreign countries) due to failure to comply with
regulatory requirements or the occurrence of unforeseen problems following
initial approval. We may be required to make further filings with the FDA and
other regulatory authorities in foreign countries under certain circumstances,
such as the addition of product claims or product reformulation. The FDA and
other regulatory authorities in foreign countries could also limit or prevent
the manufacture or distribution of our products and have the power to demand
the recall of such products. FDA medical device regulations depend strongly on
administrative interpretation, and there can be no assurance that future
interpretation made by the FDA or other regulatory bodies, with possible
retroactive effect, will not adversely affect us. The FDA and various other
authorities either currently inspect or will inspect us and our facilities from
time to time to determine whether we are in compliance with regulations
relating to medical device manufacturing, including regulations concerning
design, manufacturing, testing, quality control, product labeling,
distribution, promotion and record keeping practices. A determination that we
are in material violation of such regulations could lead to the imposition of
civil penalties, including fines, product recalls, product seizures or, in
extreme cases, criminal sanctions.
Dependence on Single Product. We may continue to derive a substantial portion
of our revenues from sales of Macroplastique. Our failure to continue the
commercialization of Macroplastique in Europe could therefore have a material
adverse effect on our business, financial condition and results of operations.
We do not expect that commercialization of other new products will be feasible
without a substantial, continuing commitment to research and development for an
extended period of time or acquisitions of new products, or both. Also, new
medical products must typically undergo clinical trials and regulatory
clearance or approval before commercialization. There can be no assurance as to
whether or when commercialization of other products might begin or as to the
likelihood that any such initiative would be successful. The market for
medically-related products changes constantly, and if the market changes, or if
new or strengthened competition emerges, or customer preferences change, or if
new technology causes Macroplastique to be viewed as a less effective
treatment, our business, financial condition and results of operation would be
adversely affected. Unlike larger companies with many products in the
marketplace, we are dependent on one product and our fate is, consequently,
much more closely tied to market acceptance of that product.
Dependence on Patents and Proprietary Rights. Our success depends in part on our
ability to preserve trade secrets, obtain and maintain patent protection for our
products under United States and international patent laws and other
intellectual property laws and operate without infringing upon the proprietary
rights of third parties. Patents covering the materials, process and
applications have been issued to us by the Patent Offices in the United States,
United Kingdom, Japan, Germany and Canada. Applications are also currently
pending in various other European countries. No assurances can be given that
the scope of any patent protection will prevent competitors (most of which have
financial and other resources substantially greater than us) from introducing
products competitive with our products, our patents will be held valid if
subsequently challenged, others will not claim rights in or ownership of the
patents and other proprietary rights held by us, or our product and processes
will not infringe, or be alleged to infringe, the proprietary rights of others.
A number of patents have been issued to others in the area of injectable
bulking agents. The validity and breadth of claims covered in medical device
technology patents involve complex legal and factual questions and may
therefore be highly uncertain. We also rely upon unpatented trade secrets to
protect our proprietary technology. No assurance can be given that others will
not independently develop or otherwise acquire substantially equivalent
techniques and/or gain access to and disclose our proprietary technology.
Further, no assurance can be given that we can ultimately protect meaningful
rights to such unpatented proprietary technology. There has been substantial
litigation regarding patent and other intellectual property rights in the
medical device industry. Companies in the medical device industry have employed
intellectual property litigation to gain a competitive advantage. Litigation
may be necessary to enforce any patents issued to us, protect trade secrets or
proprietary information owned by us against claimed infringement of the rights
of others or determine the scope and validity of the proprietary rights of
others. The defense and prosecution of patent litigation or other legal and/or
administrative proceedings related to patents is costly and time-consuming
regardless of the outcome. An adverse outcome in any litigation could subject
us to significant liabilities to third parties, require disputed rights to be
licensed from others and/or require us to cease making, using or selling any
products. There can be no assurance that any licenses required under any
patents or proprietary rights would be made available on terms acceptable to
us, if at all.
Uncertainty Relating to Third-Party Reimbursement. Any success of ours will
depend, in part, upon satisfactory reimbursement for Macroplastique procedures
from third party health care payers. In the United States and many foreign
countries, third-party reimbursement is currently generally available for
surgical procedures for urinary incontinence, but there is no uniform policy
for such reimbursements. We sell Macroplastique to physicians, hospitals and
other users which bill various third-party payers, such as government health
programs, private health insurance plans, managed care organizations and other
similar programs for the health care products and services provided to their
patients. Payers may deny reimbursement if they determine that a product used
in a procedure was not used in accordance with established payer protocols
regarding cost-efficient treatment methods, was used for an unapproved
indication or was not otherwise covered. Third-party payers are increasingly
challenging the prices charged for medical products and services and, in some
instances, have pressured medical suppliers to lower their prices. The
availability of third-party reimbursement for Macroplastique or competitors'
products and continuing efforts to reduce the costs of health care by decreasing
reimbursement rates may reduce the price received by us for Macroplastique or
increase the relative expense to the consumer. We believe a material amount of
our Macroplastique revenues are received from third party payers; therefore,
failure to receive sufficient reimbursement from health care payers for
procedures using Macroplastique or adverse changes in governmental and third-
party payers' policies toward reimbursement for such procedures would materially
adversely affect our business, financial condition and results of operations.
Potential Unfavorable Public Reaction to Use of Silicone Products/Earlier
Silicone Controversies. Macroplastique is comprised of heat vulcanized
polydimethylsiloxane, which results in a solid flexible silicone elastomer. In
the 1990's the United States breast implant industry became the subject of
significant controversies (some of which continue at this time) surrounding the
possible effects upon the human body of the use of silicone gel in breast
implants. One consequence was a massive flood of products liability litigation,
leading to the bankruptcy of several companies, including Uroplasty's former
parent, Bioplasty, Inc. (which in turn caused Uroplasty, Inc. to file for
bankruptcy in 1993). We use only solid silicone material, and not semi-liquid
silicone gel (as was used in breast implants), in our Macroplastique product.
However, since the controversies in the United States surrounding the use of
silicone in breast implants have been so widespread and resulted in such
extensive litigation, there can be no assurance that the use by us and others of
solid silicone in medical devices implanted in the human body will not result in
controversies, or even litigation. There can be no assurance that studies or
research unknown to date will not some day cast doubt in the mind of the public
on the safety of our products and the appropriateness of their intended use.
We expect competitors will attempt to portray silicone as an undesirable feature
of Macroplastique, and the effects of such efforts cannot be predicted at this
time. The earlier silicone controversies may adversely affect our ability to
market Macroplastique in the United States if and when we receive pre-market
approval from the FDA.
Research and Development Expenses in Fiscal Year 2000; Expected Losses. Our
future success will depend upon, among other factors, our ability to introduce
and market Macroplastique on a timely basis in the United States, and to that
end, we have committed the largest portion of the proceeds resulting from our
private placement of Common Stock in May and June of 1998. Although we realized
net income during fiscal years 1997 through 1999, we expect to incur significant
operating losses in fiscal years 2000 and 2001 due largely to the significant
costs associated with clinical trials and other aspects of the FDA approval
process. The development and commercialization by us of Macroplastique and
other products in the United States will require substantial additional product
development, clinical, regulatory and other expenditures for the foreseeable
future.
Need for Additional Capital. We anticipate the net proceeds received from our
private placement in May and June 1998, together with cash flow from operations,
will be sufficient to fund the investigational device exemption clinical studies
in the U.S. for Macroplastique. However, if product sales or expenses differ
from expected levels, we may require additional financing to complete the
investigational device exemption clinical study and pre-market approval
application for Macroplastique. Further, we will need additional funds in order
to introduce Macroplastique to the U.S. for female SUI, as well as for
vesicoureteral reflux and male incontinence markets because separate regulatory
approval is needed for each of these indications. There can be no assurance that
additional capital will be available to us when needed or on terms acceptable to
us. The net proceeds of our private placement of shares in May and June 1998,
together with our existing capital resources and any funds provided by future
operations, will likely not be sufficient to fund new product development, and
funds for such purpose may not be available, on reasonable terms, and there can
be no assurance that other sources of funding will be available. If equity
capital is needed by us in the future, we would attempt to obtain it on terms we
consider favorable, but the demands of the business and the nature of financial
markets at the time may be such that any resulting issuance of equity securities
would result in dilution to then existing shareholders.
Lack of Marketability and Registration in All States. We are not required, and
do not intend, to register the shares in all states in which the holders of the
shares or options may presently or in the future reside.
Highly Competitive Industry. Competition in the urinary incontinence management
and treatment products market is fierce. The medical condition treated by using
our product also may be managed or treated using a variety of alternative
products or techniques, including adult diapers, absorbent pads, behavior
therapy, pelvic muscle exercises, drugs, surgery, implantable devices, other
injectable bulking agents and other medical devices. There is no assurance our
products will be a substitute for such alternative products or techniques or
that advancements in these alternative products or techniques will not make our
products obsolete. In addition, we believe some of our competitors who do not
currently have injectable bulking agents are attempting to develop injectable
bulking agents which will directly compete with Macroplastique. Many of our
existing as well as potential competitors have substantially greater capital
resources, name recognition, distribution capabilities, well-known and well-
established product lines and larger marketing, research and development staffs
and facilities than us. These competitors may also have greater expertise than
us in research and development, manufacturing, marketing and sales and
regulatory affairs. There can be no assurance that we and Macroplastique will
be able to compete effectively with such alternative products or techniques or
with such competitors and potential competitors.
In addition, our ability to compete in the urinary incontinence treatment market
will depend primarily upon physician, patient and healthcare payer acceptance of
Macroplastique as a safe, effective and cost-effective treatment for urinary
incontinence. Our ability to compete in this market will also depend upon
product pricing and the consistency of our product quality and delivery. Other
factors within or outside our control include our product development and
innovation capabilities, ability to obtain required regulatory approvals,
ability to protect our proprietary technology, manufacturing and marketing
capabilities and ability to attract and retain skilled employees.
Risks and Effects of Technological Developments. We compete in a market
characterized by technological innovation, extensive research efforts and
significant competition. Improvements in existing treatment options or
developments of new treatment methods may have a material adverse effect on our
ability to increase sales of Macroplastique and successfully commercialize any
future products and may render such products noncompetitive or obsolete. Other
companies are currently engaged in the development of products and innovative
methods for treating stress urinary incontinence that are similar to, or compete
with, Macroplastique. Significant developments by any of these companies or
advances by medical researchers at universities, government research facilities
or private research laboratories could eliminate the market for Macroplastique
or otherwise render Macroplastique obsolete. Although technological change has
not had a direct material impact on us in recent years, the potential that such
a change might occur is a continuing risk for us.
Risk of Product Liability; No Assurance Insurance is Adequate. The medical
products industry is subject to substantial litigation. As a manufacturer of an
implantable medical product, we face an inherent business risk of exposure to
product liability claims in the event that the use of our product is alleged to
have resulted in adverse effects to a patient. We maintain product liability
insurance in the amount of $2,000,000 per year, aggregate and per occurrence,
but there can be no assurance that such coverage limits are adequate to protect
us from any liabilities which we might incur in connection with the clinical
trials and commercialization of Macroplastique or any other product. Such
insurance is expensive and in the future may not be available on acceptable
terms, if at all. Furthermore, we may not receive insurance coverage for claims
of costs and losses resulting from any recall of our products due to alleged
defects, whether such a recall is instituted by us or required by a regulatory
agency. Consequently, a product liability claim, recall or other claim with
respect to uninsured liabilities or claims and/or losses in excess of insured
liabilities could have a material adverse effect on our business, financial
condition and results of operations.
Uncertainty of Future Market Acceptance. We currently sell Macroplastique in
Europe and other foreign countries. Acceptance of Macroplastique by physicians
in preference to other treatment options, including other bulking agents, will
depend upon the demonstration of its safety and effectiveness, relative
performance of Macroplastique compared to other market approved products, ease
of use and relative cost compared to other bulking agents and treatment
alternatives. Physicians may elect not to prescribe treatment using
Macroplastique unless adequate reimbursement from health care payers is
available. Health care payer acceptance of a treatment utilizing Macroplastique
will require, among other things, evidence of the cost effectiveness of this
treatment as compared to other treatment options. There can be no assurance that
the acceptance of Macroplastique by urological and gynecological health care
providers will continue to grow in Europe and other areas where Macroplastique
is already used.
We do not sell Macroplastique in the United States. There can be no assurance
that Macroplastique will achieve any significant degree of market acceptance in
the United States among physicians, health care payers or patients, even if the
safety and effectiveness of Macroplastique is established in the United States
and the necessary regulatory approvals are obtained. Even if those approvals
were granted, our future success in the United States market would be entirely
dependent on the successful commercialization and market acceptance of
Macroplastique. Accordingly, any delay or failure by us in demonstrating that
Macroplastique is safe and effective, obtaining favorable results from clinical
studies, receiving required regulatory approvals to market Macroplastique or
achieving significant market acceptance of Macroplastique in the United States
among physicians, health care payers and/or patients would have a material
adverse effect on our business, financial condition and results of operations.
In addition, the earlier controversies surrounding silicone, and possible
lingering public concerns about it, could impede the acceptance of
Macroplastique.
Dependence on Key Personnel. Our success depends to a significant degree upon
the continued contributions of our key management personnel, including Daniel G.
Holman, President, CEO and Chairman. We believe that our future success will
depend in large part on our ability to attract and retain highly skilled
managerial, engineering, operations and marketing personnel who are in great
demand. Failure to attract and retain key personnel could have a material
adverse effect on our ability to effectively manage our worldwide consolidated
operations and our resulting financial condition and results of operations. We
do not maintain key person life insurance for any of our employees.
Risks Associated with International Operations; Currency Risks. At this time, we
only sell Macroplastique outside the United States through our wholly-owned
foreign subsidiaries. Sales and operations outside of the United States are
subject to certain inherent risks, including, without limitation, fluctuations
in the value of the U.S. dollar relative to foreign currencies, tariffs, quotas,
taxes and other market barriers, political and economic instability,
restrictions on the import and export of technology, difficulties in staffing
and managing international operations, difficulties in obtaining work permits
for employees, difficulties in collecting receivables, potentially adverse tax
consequences, potential language barriers, and difficulties in operating in a
different culture and legal system. There can be no assurance that any of these
factors will not have a materially adverse effect on our financial condition or
results of operations. In particular, because our international sales are
denominated primarily in Dutch guilders, currency fluctuations in countries
where we do business may render our products less price competitive than those
of competing companies whose sales are denominated in weaker currencies. We
report our financial results in U.S. dollars, and fluctuations in the value of
either the dollar or the currencies in which we transact business can have a
negative impact on its financial condition or results of operations.
Consequently, we do have exposure to foreign currency exchange risks. We
attempt to lessen that exposure by keeping to a minimum the amount of time that
trade payables and receivables are outstanding and by denominating sales of our
products in a currency which historically has been more stable than other
foreign currencies. However, there can be no assurance that historical
stability of any currency is any indication of its future stability.
Dependence on Suppliers. We currently purchase all raw materials from single
sources. Alternative suppliers for these materials exist should the current
suppliers discontinue production or distribution. However, we would need to
complete additional testing to qualify the materials obtained from any new
suppliers. Additionally, limited notice of the need to switch suppliers for any
of these materials could result in production delays and inventory depletion.
We have not experienced any shortage of these materials to date; however, no
assurance can be given that shortages of these materials will not be experienced
in the future.
Limited Public Market for Common Stock; Possible Stock Price Volatility.
Announcements of new products and services by us or our competitors,
technological innovations, disputes regarding patents or other proprietary
rights, regulatory developments and economic and other external factors, as well
as period-to-period fluctuations in our financial results, could cause the
market price of our Common Stock to fluctuate significantly. In addition, the
stock market in general and, in particular the market prices for medical
technology companies, have historically experienced significant volatility
which has affected the market price of securities of many companies and which
has sometimes been unrelated to the operating performance of such companies.
Such volatility may adversely affect the market price of our Common Stock.
Absence of Long-Term Human Clinical Studies. Although we are currently
conducting a controlled human clinical trial pursuant to an investigational
device exemption approved by the FDA and although we believe that Macroplastique
is safe when used as recommended by us, no controlled human clinical studies
have yet been completed on this product. Accordingly, no assurance can be given
that Macroplastique, even when used as recommended, will have the effects
intended or will not have adverse effects over a patient's lifetime. For
example, there can be no assurance as to whether or how frequently patients will
require additional injections of Macroplastique and whether any such additional
injections will be effective or will have a negative effect on physician, payer
or patient acceptance.
Fluctuations In Quarterly Operating Profit and Net Income. We may experience
variability in our net sales and operating profit on a quarterly basis as a
result of many factors, including, among others, buying habits of European
health care providers, size and timing of orders by certain customers, shifts in
demand for types of products, technological changes and industry announcements
of new products. If revenues do not meet expectations in any given quarter,
operating results may be materially adversely affected. We may, in addition,
experience variability in our net income on a quarterly basis as a result of
many factors, including currency fluctuations. As a result of these potential
fluctuations in quarterly results, period-to-period comparisons of our financial
results should be approached cautiously.
Potential Control of Company by a Small Number of Persons. The officers and
directors of Uroplasty combined own 19% of our outstanding shares (if they
exercise all their options) and one officer/director shareholder owns 6% of our
outstanding shares. One shareholder who is neither an officer or director owns
an additional 16% of our outstanding shares. If all of such persons cooperated,
they could potentially have the ability to elect our Board of Directors and
affect control of Uroplasty.
Possible Adverse Market Effect of Shares Eligible for Future Sale. Sales of
substantial amounts of Common Stock (including shares issued upon the exercise
of outstanding options and warrants) in the public market could have an adverse
effect on the price of our common stock. Such sales may also make it more
difficult for us to sell equity or equity-related securities in the future at a
time and price that we would deem appropriate.
Possible Adverse Effect of Anti-Takeover Provisions and Staggered Board. As a
Minnesota corporation, we are subject to certain anti- takeover provisions of
the Minnesota Business Corporation Act. The authority of the Board with regard
to the anti-takeover provisions of such Act could have the effect of delaying,
deferring or preventing a change in control of Uroplasty, may discourage bids
for our common stock at a premium over the then prevailing market price of the
Common Stock, and may adversely affect the market price of, and the voting and
other rights of the holders of, Common Stock. Should we issue additional
shares, whether for purposes of raising additional capital or otherwise, it
could have the effect of making a takeover more difficult.
Our Articles of Incorporation and Bylaws include certain provisions (the
"Staggered Board Provisions") for staggering the election of the members of our
Board of Directors. The Board is divided into three classes with each class
serving for an independent term. The classification of directors is intended to
make it more difficult to change the composition of the Board. At least two
shareholders' meetings, instead of one, will generally be required for
shareholders to effect a change in control of the Board. The Staggered Board
Provisions will apply to every election of directors, whether or not a change in
the Board, in the opinion of some or a majority of our shareholders, would be
desirable. The Staggered Board Provisions relating to the removal of directors
and the filling of vacancies are designed to protect the staggered Board
structure in the event a third party gains control of a majority of our voting
power and could discourage an attempt to gain control of Uroplasty.
Applicability of "Penny Stock Rules"; Possible Impact on Liquidity of Stock.
Our Common Stock is presently considered a "penny stock" under applicable rules
and is not traded on the NASDAQ Small Cap market. If we fail to become listed
on NASDAQ or, after such listing, fail to satisfy the NASDAQ requirements to
maintain listing on NASDAQ in the future, our Common Stock will likely continue
to be quoted only in the local over-the-counter "pink sheets" market (which may
include, as it presently does, the NASDAQ Bulletin Board market). The public
trading market for our Common Stock could be adversely affected by such limited
quotation, and there would likely be fewer market makers for our stock, less
interest by potential institutional investors and less coverage by analysts and
the financial media.
In order to be listed in the NASDAQ Small Cap Market, we would need $4,000,000
in net tangible assets, a minimum bid price of $4.00 per share for at least 30
calendar days and three market makers, as well as meet certain other
requirements. As of September 30, 1999, we had over $5,000,000 in net tangible
assets, the recent bid prices per share for its Common Stock has been in the
range of $2.00 to $3.00 per share and we had only one market maker. We intend
to apply for listing on the NASDAQ Small Cap Market when we meet the share price
and market maker requirements, and we will continue our efforts to expand our
business in a prudent manner so that our chances of reaching those goals are
increased.
In addition, as long as our Common Stock continues not to be listed in the
NASDAQ Small Cap Market, we will be subject, as we presently are, to SEC rules
under the Securities Exchange Act of 1934 relating to "penny stocks." The "penny
stock rules", which apply to companies whose Common Stock trades at less than
$5.00 per share, require brokers who sell securities subject to such rules to
persons other than established customers and "institutional accredited
investors" to complete certain documentation, make suitability inquiries of
investors and provide investors with certain information concerning the risks of
trading in the security. The application of these rules may restrict the ability
of brokers to sell our Common Stock, may adversely affect the liquidity of the
shares, and may affect the ability of purchasers to sell the shares in the
secondary market.
No Dividends. We have never paid any cash dividends on our Common Stock and do
not anticipate paying such dividends for the foreseeable future.
Net Operating Loss Carryforwards; Effect of International Operations on Tax
Position. As of March 31, 1999, we had net operating loss carryforwards for
U.S. income tax reporting purposes of approximately $2,414,000, which can be
used to offset U.S. taxable income in future years. A sale of our voting common
stock, combined with sales of such shares during the prior three years,
including the private equity offering in 1998, could cause a change in ownership
under Section 382 of the Internal Revenue Code of 1996. Application of Section
382 would limit the annual use of our U.S. net operating loss carryforwards
existing as of the date of the ownership change. Notwithstanding the application
of Section 382, it is not anticipated that any limitation would have a material
adverse effect on us.
We have significant operations in the United States and internationally. United
States net operating loss carryforwards cannot be used to offset taxable income
in foreign jurisdictions. Furthermore, repatriation of dividends to the U.S.
parent may result in additional foreign or U.S. taxes.
MATERIAL CHANGES
Reference is made to the documents or reports filed with the SEC, subsequent to
the date hereof, all of which are incorporated herein by reference and described
under "Incorporation of Information by Reference," above. A copy of any of such
documents or reports is available directly from the SEC or from the Company.
PLAN OF OFFERING
All of the shares offered are owned or will be owned by the Selling
Shareholders. None of the shares offered hereby is owned by the Company, and
the Company will receive none of the proceeds of any of the shares offered
hereby.
The selling shareholders may from time to time offer and sell their shares of
common stock offered by this prospectus. We have registered their shares for
resale to provide them with freely tradable securities. However, registration
does not necessarily mean that they will offer and sell any of their shares.
Selling shareholders will make their own arrangements for sale of any of the
shares offered hereby and will be responsible for all sales and brokerage
commissions associated with such sales. The Company will bear the other costs
of registration, such as legal, accounting, filing fees, printing expenses and
the like.
The selling shareholders, or their pledgees, donees, transferees or other
successors in interest, may offer and sell their shares of common stock in the
following manner:
- -- on the Nasdaq Stock Market's National or Small Cap Market if our common
stock is so traded at the time of sale;
- -- in the over-the-counter market or otherwise at prices and at terms then
prevailing or at prices related to the then current market price;
- -- a block trade in which a broker or dealer will attempt to sell the shares
as agent, but may position and resell a portion of the block as principal to
facilitate the transaction;
- -- ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
The Company has no control over and no knowledge of the broker-dealer firms that
may be used by Selling Shareholders in making sales of shares hereunder.
USE OF PROCEEDS
We are registering the shares of common stock offered by this prospectus for the
account of the selling shareholders identified in the section of this prospectus
entitled "Selling Shareholders". When the selling shareholders offer and sell
their shares of common stock, all of the net proceeds from the sale of the
shares of common stock will belong to the shareholders. We will not receive any
part of the proceeds from the sale of any of the shares. All of the shares
offered are owned by the selling shareholders, and none of the proceeds from
sales of the shares will become our property.
SELLING SHAREHOLDERS
All of the shares of the Company's Common Stock offered hereby are being offered
by certain shareholders of the Company (referred to herein as the "Selling
Shareholders"), all of whom are affiliates of the Company.
The names of the Selling Shareholders are listed below. Each of such persons
has held a position or office or has had a material relationship with the
Company within the past three years. The position or office which each of such
persons has held with the Company, and the number of shares of the Company's
Common Stock owned by each of such persons as of a recent date is contained in
the Company's Proxy Statement, dated July 9, 1999, which is incorporated by
reference and available upon request.
This Prospectus pertains only to shares which such persons may acquire upon
exercise of options which may be granted under either the 1995 Plan or the 1997
Plan. As of the date hereof, such persons held the number of options under such
Plans set forth opposite their respective names below:
Name Position Number of Options
Daniel G. Holman officer 185,000
Susan Hartjes Holman officer 140,000
Donald A. Major officer 80,000
Larry Heinneman officer 50,000
Chris Harris officer 65,000
Arie Koole officer 56,200
R. Patrick Maxwell director 105,000
Joel R. Pitlor director 105,000
Alex Gerwer director 60,000
TOTAL 846,200
This offering will not affect the number of shares of common stock or common
stock equivalents outstanding nor the number of shares of common stock or
percentage of ownership which persons, other than the selling shareholders,
beneficially own. Because the selling shareholders may sell all, part or none
of their shares of common stock pursuant to this prospectus and this offering is
not being underwritten on a firm commitment basis, we cannot estimate the number
and percentage of shares of common stock that the selling shareholders will hold
at the end of this offering.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for the Company
by Keller & Lokken, P.A., 332 Minnesota Street, First National Bank Building,
Suite W-790, St. Paul, Minnesota 55101.
EXPERTS
The financial statements of the Company as of March 31, 1999, and 1998, and for
each of the years in the two-year period ended March 31, 1999, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Washington Office of the Securities and Exchange
Commission, Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549, a
Registration Statement on Form S-8 under the Securities Act of 1933, as amended,
with respect to the shares offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement. For further
information with respect to the Company and the securities offered hereby,
reference is made to such Registration Statement, including the exhibits
thereto. Copies of such materials may be examined without charge at the
Commission's Washington Office, Judiciary Plaza, 450 Fifth Street N.W.,
Washington, D.C. 20549. Copies of such materials may be obtained upon payment
of prescribed fees from the Public Reference Section of the Securities and
Exchange Commission at Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C.
20549. The statements contained in this Prospectus as to the contents of any
contracts or other documents filed as an exhibit are of necessary brief
descriptions thereof and are not necessarily complete; each such statement is
qualified in its entirety by reference to such contract or document.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
Pursuant to applicable Rules of the Securities and Exchange Commission, the
following documents are incorporated by reference in the Registration Statement:
1. Form 10-KSB, Annual Report of the Registrant for the fiscal year ended March
31, 1999.
2. Form 10-QSB, Quarterly Report of the Registrant for the fiscal quarter ended
June 30, 1999.
3. Form 10-QSB, Quarterly Report of the Registrant for the fiscal quarter ended
September 30, 1999.
4. Form 10-QSB, Quarterly Report of the Registrant for the fiscal quarter ended
December 31, 1999.
5. Item 11 of Form 10 of the Registrant, dated July 10, 1996, Exchange Act File
No. 000-20989, or comparable section, whichever is applicable, concerning
"Description of Registrant's Securities to be Registered", and any amendment or
report filed for the purpose of updating such description.
6. Proxy Statement of the Registrant, dated July 9, 1999.
In addition, all documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
shall be deemed to be incorporated by reference in this Registration Statement
on Form S-8 and to be a part hereof from the date of filing of any of such
documents; such incorporation by reference to continue as stated until the
Registrant files a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold.
As provided in Item 3 of Form S-8, the above documents are not required to be
filed with this Registration Statement on Form S-8. Any person desiring to
obtain a copy, without charge, of any one or more of the aforementioned
documents, should write or call Donald A. Major, CFO of the Company, at 2718
Summer Street NE, Minneapolis, Minnesota, 55413, telephone 612/378-1180, e-mail
[email protected]
Item 4. Description of Securities. Not applicable.
Item 5. Interests of Named Experts and Counsel. Not applicable.
Item 6. Indemnification of Directors and Officers.
Under Sections 302A.161(1) and (22), and Section 302A.521, Minnesota Statutes,
the Registrant is required to indemnify its directors, officers, employees, and
agents against liability under certain circumstances, including liability under
the Securities Act of 1933, as amended, unless its Articles of Incorporation or
Bylaws prohibit or limit such indemnification. The Registrant's Articles of
Incorporation and Bylaws do not contain any such prohibition or limitation.
Article five of the Registrant's Bylaws, incorporated by reference as Exhibit
3.2, requires indemnification to the full extent required by Minnesota law.
The general effect of such provisions is to relieve the directors and officers
of the Registrant from personal liability which may be imposed for certain acts
performed in their capacity as directors or officers of the Registrant, except
where such persons have not acted in good faith.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
(a) Exhibits required by or referenced in Item 6.1 of Regulation S-B and filed
with this Registration Statement.
5.1 Opinion of Keller & Lokken, P.A. regarding legality of securities.
10.1 Uroplasty, Inc. 1995 Stock Option Plan, as amended December 7, 1999.
10.2 Uroplasty, Inc. 1997 Stock Option Plan, as amended, July 27, 1999 and
December 7, 1999.
23.1 Consent of KPMG LLP, Independent Certified Public Accountants.
23.2 Consent of Keller & Lokken, P.A. Contained in Exhibit 5.1 to this
Registration Statement.
(b) Exhibits required by or referenced in Item 6.1 of Regulation S-B and
incorporated by reference.
13.1 Form 10-KSB, Annual Report of the Registrant for the fiscal year ended
March 31, 1999.
13.2 Form 10-QSB, Quarterly Report of the Registrant for the fiscal quarter
ended June 30, 1999.
13.3 Form 10-QSB, Quarterly Report of the Registrant for the fiscal quarter
ended September 30, 1999.
13.4 Form 10-QSB, Quarterly Report of the Registrant for the fiscal quarter
ended December 31, 1999.
13.4 Item 11 of Form 10 of the Registrant, dated July 10, 1996, Exchange Act
File No. 000-20989, or comparable section, whichever is applicable, concerning
"Description of Registrant's Securities to be Registered", and any amendment or
report filed for the purpose of updating such description.
20.1 Proxy Statement, dated July 9, 1999, of the Registrant, filed pursuant to
Section 14 of the Exchange Act.
Item 9. Undertakings.
(a) Undertaking pursuant to Item 512(a) of Regulation S-B: Rule 415 Offering.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, 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 which, individually or
together represent a fundamental change in the information in the registration
statement;
iii. To include any additional or changed material information on the plan of
distribution;
Provided, however, that the foregoing paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 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, to treat each such post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities at that
time to be the initial bona fide offering.
3. To file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Signatures
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 Minneapolis, State of Minnesota, on the _____th day
of February, 2000.
Uroplasty, Inc.
______________________________________
By: Daniel G. Holman, Its Chief Executive Officer
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 Dated:
__________________ Chairman, President, Chief Executive February __, 2000
Daniel G. Holman Officer, Director (Principal Executive
Officer)
__________________ Chief Financial Officer, Secretary February __, 2000
Donald A. Major (Principal Financial Officer)
__________________ Controller (Principal February __, 2000
Arie Koole Accounting Officer)
__________________ Director February __, 2000
Joel R. Pitlor
__________________ Director February __, 2000
R. Patrick Maxwell
__________________ Director February __, 2000
Alex Gerwer
The Plan. Not applicable.
Signatures
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 Minneapolis, State of Minnesota, on the 10th day of
February, 2000.
Uroplasty, Inc.
/s/ Daniel G. Holman
By: Daniel G. Holman, Its Chief Executive Officer
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 Dated:
/s/ Daniel G. Holman Chairman, President, Chief Executive February 10, 2000
Daniel G. Holman Officer, Director (Principal Executive
Officer)
/s/ Donald A. Major Chief Financial Officer, Secretary February 10, 2000
Donald A. Major (Principal Financial Officer)
/s/ Arie Koole Controller (Principal February 10, 2000
Arie Koole Accounting Officer)
/s/ Joel R. Pitlor Director February 10, 2000
Joel R. Pitlor
/s/ R. Patrick Maxwell Director February 10, 2000
R. Patrick Maxwell
/s/ Alex Gerwer Director February 10, 2000
Alex Gerwer
The Plan. Not applicable.
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Uroplasty, Inc.:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
/s/KPMG LLP
Minneapolis, Minnesota
February 11, 2000
Exhibit 5.1
[KELLER & LOKKEN LETTERHEAD]
February 14, 2000
Uroplasty, Inc.
2718 Summer Street NE
Minneapolis, MN 55413
Re: Sale of up to 1,698,000 Shares of Common Stock
Dear Sir/Madam:
We are acting as special legal counsel to Uroplasty, Inc., (the "Company") in
connection with the proposed public offer and sale of up to 1,698,000 Shares of
the Company's Common Stock (hereinafter referred to as the "Shares") pursuant to
the Company's 1995 Stock Option Plan as amended December 7, 1999, and its 1997
Stock Option Plan, as amended July 27, 1999 and December 7, 1999. The Shares
will be issued and sold by the Company pursuant to the terms and conditions set
forth in the Company's Registration Statement on Form S-8, under the Securities
Act of 1933, to be filed on or about February 14, 2000, (as so filed, the
"Registration Statement").
In acting as counsel for the Company, and arriving at the opinions expressed
below, we have examined and relied upon originals or copies, certified or
otherwise identified to our satisfaction, of such records of the Company,
agreements and other instruments, certificates of officers and representatives
of the Company, certificates of public officials and other documents as we have
deemed necessary or appropriate as a basis for the opinions expressed herein.
Based upon the foregoing, it is our opinion that:
1. The Company has the corporate authority to issue the Shares in the manner
and under the terms set forth in the Registration Statement.
2. The Shares have been duly authorized and, when issued, delivered and paid
for in accordance with the terms and conditions stated in the Registration
Statement, will be validly issued, fully-paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement, to its use as a part of the Registration Statement and
to the use of our name under the caption "Legal Matters" in the Prospectus which
forms part of the Registration Statement.
Very truly yours,
KELLER & LOKKEN, P.A.
By /s/ Richard P. Keller
Richard P. Keller
RPK/clm
Exhibit 10.1
UROPLASTY, INC.
1995 STOCK OPTION PLAN
As Amended December 7, 1999
1. PURPOSE
The purpose of this Stock Option Plan (the "Plan") is to promote the
interests of UROPLASTY, INC., a Minnesota Corporation (the "Company"), by
providing employees of the Company with an opportunity to acquire a proprietary
interest in the Company and thereby develop a stronger incentive to contribute
to the Company's continued success and growth. In addition, the opportunity to
acquire a proprietary interest in the Company by the offering and availability
of stock options will assist the Company in attracting and retaining key
personnel of outstanding ability.
2. DEFINITIONS
Wherever used in the Plan, the following terms have the meanings set
forth below:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
2.3 "Committee" means the Committee which may be designated from time to
time by the Board pursuant to Section 3.5 of the Plan.
2.4 "Non-Statutory Stock Option" or "NSO" means a stock option to
purchase stock that does not qualify as an incentive stock option as defined in
Section 422 of the Code.
2.5 "Option" means, where required by the context of the Plan, a NSO
granted pursuant to the Plan.
2.6 "Optionee" means a Participant in the Plan who has been granted one
or more Options under the Plan.
2.7 "Participant" means an individual described in Section 5 of this Plan
who may be granted Options under the Plan.
2.8 "Stock" means the Common Stock, $.01 par value, of the Company.
2.9 "Subsidiary" means any corporation other than the Company in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns 50% or
more of the voting stock in one of the other corporations in such chain.
3. ADMINISTRATION
3.1 The Plan shall be administered by the Board, which shall have full
power, subject to the provisions of the Plan, to grant Options, construe and
interpret the Plan, establish rules and regulations with respect to the Plan and
Options granted hereunder, and perform all other acts, including the delegation
of administrative responsibilities, that it believes reasonable and necessary.
3.2 The Board shall have the sole discretion, subject to the provisions
of the Plan, to determine the Participants eligible to receive Options pursuant
to the Plan and the amount, type and terms of any Options and the terms and
conditions of option agreements relating to any Option.
3.3 The Board may correct any defect, supply any omission or reconcile
any inconsistency in the Plan or in any Option granted hereunder in the manner
and to the extent it shall deem necessary to carry out the terms of the Plan.
3.4 Any decision made, or action taken, by the Board arising out of or
in connection with the interpretation and administration of the Plan shall be
final, conclusive and binding upon Optionees.
3.5 The Board may designate a Committee from time to time to administer
the Plan. If designated, the Committee shall be composed of not less than three
persons (who need not be members of the Board) who are appointed from time to
time by the Board. If the Board has appointed a Committee pursuant to this
Section 3.5, then the Committee may administer the Plan and exercise all of the
rights and powers granted to the Board in this Plan including, without
limitation, the right to grant Options pursuant to the Plan and to establish the
Option price as provided in the Plan.
4. SHARES SUBJECT TO THE PLAN
4.1 Number. The total number of shares of Stock reserved for issuance
upon exercise of Options under the Plan is one million (1,000,000). Such shares
shall consist of authorized but unissued Stock. If any Option granted under the
Plan lapses or terminates for any reason before being completely exercised, the
shares covered by the unexercised portion of such Option may again be made
subject to Options under the Plan.
4.2 Changes in Capitalization. In the event of any change in the outstanding
shares of Stock in the Company by reason of any stock dividend, split,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares or rights offering to purchase stock at a price substantially below
fair market value or other similar corporate change, the aggregate number of
shares which may be subject to Options under the Plan and the terms of any
outstanding Option, including the number and kind of shares subject to such
Options and the purchase price per share thereof, shall be appropriately
adjusted by the Board, consistent with such change and in such manner as the
Board, in its sole discretion, may deem equitable to prevent substantial
dilution or enlargement of the rights granted to or available for Optionees.
Notwithstanding the preceding sentence, in no event shall any fraction of a
share of Stock be issued upon the exercise of an Option.
5. ELIGIBLE PARTICIPANTS
Non-Statutory Stock Options may be granted pursuant to the Plan to
(i) any employee of the Company or any Subsidiary, including any officer or
director who is also an employee of the Company or any Subsidiary, (ii) any non-
employee director of the Company or any Subsidiary and (iii) any consultant to,
or other independent contractor of, the Company.
6. GRANT OF OPTIONS
6.1 Subject to the terms, conditions and limitations set forth in this Plan,
the Company, by action of its Board, may from time to time grant Options to
purchase shares of the Company's Stock to those eligible Participants as may be
selected by the Board, in such amounts and on such other terms as the Board in
its sole discretion shall determine. Such Options shall be "Non-Statutory Stock
Options" that, when granted, do not qualify as incentive stock options under
Section 422 of the Code. The date on which the Board approves the granting of
an Option shall be the date of grant of such Option. Each grant of an Option
under the Plan shall be evidenced by a written stock option agreement between
the Company and the Optionee setting forth the terms and conditions, not
inconsistent with the Plan, under which the Option so granted may be exercised
pursuant to the Plan and containing such other terms with respect to the Option
as the Board in its sole discretion may determine.
6.2 Change in Control. If a change in control occurs, the exercisability of
all outstanding options, including those subject to vesting and/or performance
targets, will automatically accelerate immediately before the effective date of
the change in control. This means that all options outstanding immediately
before the effective date of the change in control shall become fully
exercisable for all of the shares of common stock subject to each option at that
time.
A change in control is defined as:
(i) a third person, including a syndicate or group deemed to
be a person under Section 13(d)(3) of the Exchange Act, becomes the beneficial
owner (as so determined) of Stock having thirty percent (30%) or more of the
total number of votes which may be cast for the election of members of the
Board;
(ii) all or substantially all of the assets and business of
the Company are sold, transferred or assigned to, or otherwise acquired by, any
other entity or entities; or
(iii) as a result of, or in connection with, any cash tender
or exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions, the
persons who are members of the Board before any such transaction shall cease to
constitute a majority of the Board of the Company or any successor to the
Company.
Notwithstanding the foregoing, in no event shall the distribution of stock in
a subsidiary by the Company to its stockholders be deemed a Change in Control.
7. OPTION PRICE AND FORM OF PAYMENT
The purchase price for a share of Stock subject to an Option granted
hereunder shall not be less than 100% of the fair market value of the Stock.
For purposes of this Section 7, the "fair market value" of the Stock shall be
determined as follows:
(a) If the Stock of the Company is listed or admitted to unlisted
trading privileges on a national securities exchange, the fair market value on
any given day shall be the closing sale price for the Stock, or if no sale is
made on such day, the closing bid price for such day on such exchange;
(b) If the Stock is not listed or admitted to unlisted trading privileges on
a national securities exchange, the fair market value on any given day shall be
the closing sale price for the Stock as reported on the NASDAQ National Market
System on such day, or if no sale is made on such day, the closing bid price for
such day as entered by a market maker for the Stock;
(c) If the Stock is not listed on a national securities exchange, is not
admitted to unlisted trading privileges on any such exchange, and is not
eligible for inclusion in the NASDAQ National Market System, the fair market
value on any given day shall be the average of the closing representative bid
and asked prices as reported by the National Quotation Bureau, Inc. or, if the
Stock is not quoted on the National Association of Securities Dealers Automated
Quotations System, then as reported in any publicly available compilation of the
bid and asked prices of the Stock in any over-the-counter market on which the
Stock is traded; or
(d) If there exists no public trading market for the stock, the fair
market value on any given day shall be an amount determined in good faith by the
Board in such manner as it may reasonably determined in its discretion, provided
that such amount shall not be less than the book value per share, as reasonably
determined by the Board as of the date of determination, or less than the par
value of the Stock.
Except as provided herein, the purchase price of each share of Stock
purchased upon the exercise of any Option shall be paid:
(a) in United States dollars in cash or by check, bank draft or money
order payable to the order of the Company;
(b) at the discretion of the Board, through the delivery of shares of
Stock, which have been held by the option holder for one hundred eighty (180)
days or more and have an aggregate fair market value (as determined in the
manner provided under this Plan) equal to the Option price;
(c) at the discretion of the Board, by a combination of both (a) and (b)
above; or
(d) by such other method as may be permitted in the written stock option
agreement between the Company and the Optionee.
If such form of payment is permitted, the Board shall determine
procedures for tendering Stock as payment upon exercise of an Option and may
impose such additional limitations and prohibitions on the use of Stock as
payment upon the exercise of an Option as it deems appropriate.
8. EXERCISE OF OPTIONS
8.1 Manner of Exercise. An Option, or any portion thereof, shall be
exercised by delivering a written notice of exercise to the Board and paying to
the Company the full purchase price of the Stock acquired upon the exercise of
the Option. Until certificates for the Stock acquired upon the exercise of an
Option are issued to an Optionee, such Optionee shall not have any rights as a
shareholder of the Company.
8.2 Limitations and Conditions on Exercise of Options. In addition to
any other limitations or conditions contained in this Plan or that may be
imposed by the Board from time to time or in the stock option agreement to be
entered into with respect to Options granted hereunder, the following
limitations and conditions shall apply to the exercise of Options granted under
this plan:
8.2.1 No Incentive Stock Option may be exercisable by its terms after the
expiration of five (5) years from the date of the grant thereof.
8.2.2 No Incentive Stock Option granted to an eligible Participant then
owning more than 10% of the voting power of all classes of the Company's stock
may be exercisable by its terms after the expiration of five years from the date
of the grant thereof.
9. INVESTMENT PURPOSES
Unless a registration statement under the Securities Act of 1933 is
in effect with respect to Stock to be purchased upon exercise of Options to be
granted under the Plan, the Company shall require that an Optionee agree with
and represent to the Company in writing that he or she is acquiring such shares
of Stock for the purpose of investment and with no present intention to
transfer, sell or otherwise dispose of such shares of Stock other than by
transfers which may occur by will or by the laws of descent and distribution,
and no shares of Stock may be transferred unless, in the opinion of counsel of
the Company, such transfer would be in compliance with applicable securities
laws. In addition, unless a registration statement under the Securities Act of
1933 is in effect with respect to the Stock to be purchased under the Plan, each
certificate representing any shares of Stock issued to an Optionee hereunder
shall have endorsed thereon a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND WITHOUT
REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS, IN RELIANCE UPON
EXEMPTION(S) CONTAINED THEREIN. NO TRANSFER OF THESE SHARES OR ANY INTEREST
THEREIN MAY BE MADE EXCEPT PURSUANT TO EFFECTIVE REGISTRATION STATEMENTS UNDER
SAID LAWS UNLESS THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY
TO IT THAT SUCH TRANSFER OR DISPOSITION DOES NOT REQUIRE REGISTRATION UNDER SAID
LAWS AND, OR ANY SALES UNDER RULE 144 OF THE ACT, SUCH EVIDENCE AS IT SHALL
REQUEST FOR COMPLIANCE WITH THAT RULE, OR APPLICABLE STATE SECURITIES LAWS."
10. TRANSFERABILITY OF OPTIONS
No Option granted under the Plan shall be transferable by an Optionee
(whether by sale, assignment, hypothecation or otherwise) other than by will or
the laws of descent and distribution, and Options shall be exercisable during
the Optionee's lifetime only by the Optionee.
11. TERMINATION OF EMPLOYMENT
11.1 Generally. Except as otherwise provided in this Section 11 or
otherwise provided in the stock option agreement between the Company and the
Optionee, if an Optionee's employment with the Company or Subsidiary is
terminated (hereinafter "Termination") other than by death of Disability (as
hereinafter defined), the Optionee may exercise any Option granted under the
Plan, to the extent the Optionee was entitled to exercise the Option at the date
of Termination, for a period of three (3) months after the date of Termination
or until the term of the Option has expired, whichever date is earlier.
11.2 Death or Disability of Optionee. In the event of the death or
Disability of an Optionee prior to expiration of an Option held by him or her,
the following provisions shall apply:
11.2.1 If the Optionee is at the time of his or her Disability
employed by the Company or a Subsidiary and has been in continuous employment
(as determined by the Board in its sole discretion) since the date of grant of
the Option, then the Option may be exercised by the Optionee until the earlier
of one year following the date of such Disability or the expiration date of the
Option, but only to the extent the Optionee was entitled to exercise such Option
at the time of his or her Disability. For the purpose of this Section, the term
"Disability" shall have the meaning given to it in Section 22(e)(3) of the Code.
The determination of whether an Optionee has a Disability within the meaning of
Section 22(e)(3) shall be made by the Board in its sole discretion.
11.2.2 If the Optionee is at the time of his or her death employed by
the Company or a Subsidiary and has been in continuous employment (as determined
by the Board in its sole discretion) since the date of grant of the Option, then
the Option may be exercised by the Optionee's estate or by a person who acquired
the right to exercise the Option by will or the laws of descent and
distribution, until the earlier of one year from the date of the Optionee's
death or the expiration date of the Option, but only to the extent the Optionee
was entitled to exercise the Option at the time of death.
11.2.3 If the Optionee dies within three (3) months after
Termination, the Option may be exercised until the earlier of nine (9) months
following the date of death or the expiration date of the Option, by the
Optionee's estate or by a person who acquires the right to exercise the Option
by will or the laws of descent or distribution, but only to the extent the
Optionee was entitled to exercise the Option at the time of Termination.
11.3 Breach of Other Agreements; Termination for Cause. If the Optionee
breaches any of the Company's Employee Confidentiality, Inventions, Non-Compete
and Non-Solicitation Agreement, Employee Patent and Confidential Information
Agreement, any Employment Agreement, if applicable, or any similar agreement
having an equivalent purpose or effect, or if the employment of an Optionee is
terminated by the Company or a Subsidiary for cause, then the Board shall have
the right to cancel the Options granted to the Optionee under the Plan.
12. AMENDMENT AND TERMINATION OF PLAN
12.1 The Board, without approval by the shareholders of the Company, may
at any time and from time to time suspend or terminate the Plan in whole or in
part or amend it from time to time in such respects as may be in the best
interest of the Company.
12.2 No amendment, suspension or termination of this Plan shall, without
the Optionee's consent, alter or impair any of the rights or obligations under
any Option theretofore granted to the Optionee under the Plan.
13. MISCELLANEOUS PROVISIONS
13.1 Right to Continued Employment. No person shall have any claim or
right to be granted an Option under the Plan, and the grant of an Option under
the Plan shall not be construed as giving an Optionee the right to continued
employment with the Company. The Company further expressly reserves the right
at any time to dismiss an Optionee or reduce an Optionee's compensation with or
without cause, free from any liability, or any claim under the Plan, except as
provided herein or in a stock option agreement.
13.2 Withholding Taxes. The Company shall have the right to require that
payment or provision for payment of any and all withholding taxes due upon the
grant or exercise of an Option hereunder or the disposition of any Stock or
other property acquired upon exercise of an Option be made by an Optionee. In
connection herewith, the Board shall have the right to establish such rules and
regulations or impose such terms and conditions in any agreement relating to an
Option granted hereunder with respect to such withholding as the Board may deem
necessary and appropriate.
13.3 Governing Law. The Plan shall be administered in the State of
Minnesota, and the validity, construction, interpretation and administration of
the Plan and all rights relating to the Plan shall be determined solely in
accordance with the laws of such state, unless controlled by applicable federal
law, if any.
14. EFFECTIVE DATE
The effective date of the Plan is March 27, 1995. No Option may be
granted after March 26, 2005 provided, however, that the Plan and all
outstanding Options shall remain in effect until such outstanding Options have
expired or been cancelled.
Exhibit 10.2
UROPLASTY, INC.
1997 STOCK OPTION PLAN
As Amended July 29, 1999 and December 7, 1999
1. PURPOSE
The purpose of this 1997 Stock Option Plan (the "Plan") is to promote
the interests of UROPLASTY, INC., a Minnesota Corporation (the
"Company") by providing employees of the Company with an opportunity to
acquire a proprietary interest in the Company and thereby develop a
stronger incentive to contribute to the Company's continued success and
growth. In addition, the opportunity to acquire a proprietary interest
in the Company by the offering and availability of stock options will
assist the Company in attracting and retaining key personnel of
outstanding ability.
2. DEFINITIONS
Wherever used in the Plan, the following terms have the meanings set
forth below:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Code" means the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
2.3 "Committee" means the Committee which may be designated from time
to time by the Board pursuant to Section 3.5 of the Plan.
2.4 "Incentive Stock Option" or "ISO" means a stock option which is
intended to qualify as an incentive stock option as defined in Section
422 of the Code.
2.5 "Non-Statutory Stock Option" or "NSO" means a stock option to
purchase stock that does not qualify as an incentive stock option as
defined in Section 422 of the Code.
2.6 "Option" means, where required by the context of the Plan, an ISO
and/or NSO granted pursuant to the Plan.
2.7 "Optionee" means a Participant in the Plan who has been granted
one or more Options under the Plan.
2.8 "Participant" means an individual described in Section 5 of this
Plan who may be granted Options under the Plan.
2.9 "Stock" means the Common Stock, $.01 par value, of the Company.
2.10 "Subsidiary" means any corporation other than the Company in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns
50% or more of the voting stock in one of the other corporations in such
chain.
3. ADMINISTRATION
3.1 The Plan shall be administered by the Board, which shall have
full power, subject to the provisions of the Plan, to grant Options,
construe and interpret the Plan, establish rules and regulations with
respect to the Plan and Options granted hereunder, and perform all other
acts, including the delegation of administrative responsibilities, that
it believes reasonable and necessary.
3.2 (a) The Board shall have the sole discretion, subject to the
provisions of the Plan, to determine the Participants eligible to
receive Options pursuant to the Plan and the amount, type and terms of
any Options and the terms and conditions of option agreements relating
to any Option, including vesting restrictions and minimum performance
targets.
(b) Performance targets may be based on financial criteria, such as
the fair market value of Stock or other measures of financial
performance of the Company, or may be based on the performance of a
Subsidiary or division of the Company or the performance of a
Participant.
(c) Minimum performance targets may include (i) the achievement by
the Company of a specified target earnings per share, return on equity
or net income, all as adjusted to exclude items that the Board
determines to be inappropriate for purposes of the Option, (ii) the
Company's stock price, (iii) the achievement by a business unit of the
Company of a specified target net income as adjusted to exclude items
that the Board determines to be inappropriate for purposes of the Option
or market share, or (iv) any combination of the goals set forth in (i)
through (iii) above. If an Option is granted on such basis, the Board
shall establish such goals prior to the beginning of the Company's
fiscal plan year or other period during which the performance is
measured. As a condition to the exercise of any Option granted under
this Section 3.2 (c), the Board shall, within 120 days after the end of
such period, certify in writing the goals used as the basis for any such
Option and any other material terms were satisfied.
3.3 The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or in any Option granted
hereunder in the manner and to the extent it shall deem necessary to
carry out the terms of the Plan.
3.4 Any decision made or action taken by the Board arising out of or
in connection with the interpretation and administration of the Plan
shall be final, conclusive and binding upon Optionees.
3.5 The Board may designate a Committee from time to time to
administer the Plan. If designated, the Committee shall be composed of
not less than three persons (who need not be members of the Board) who
are appointed from time to time by the Board. If the Board has
appointed a Committee pursuant to this Section 3.5, then the Committee
may administer the Plan and exercise all of the rights and powers
granted to the Board in this Plan including, without limitation, the
right to grant Options pursuant to the Plan and to establish the Option
price as provided in the Plan.
4. SHARES SUBJECT TO THE PLAN
4.1 Number. The total number of shares of Stock reserved for
issuance upon exercise of Options under the Plan is eight hundred
thousand (800,000). Such shares shall consist of authorized but
unissued Stock. If any Option granted under the Plan lapses or
terminates for any reason before being completely exercised, the shares
covered by the unexercised portion of such Option may again be made
subject to Options under the Plan.
4.2 Changes in Capitalization. In the event of any change in the
outstanding shares of Stock in the Company by reason of any stock
dividend, split, recapitalization, reorganization, merger,
consolidation, combination, exchange of shares or rights offering to
purchase stock at a price substantially below fair market value or other
similar corporate change, the aggregate number of shares which may be
subject to Options under the Plan and the terms of any outstanding
Option, including the number and kind of shares subject to such Options
and the purchase price per share thereof, shall be appropriately
adjusted by the Board consistent with such change and in such manner as
the Board, in its sole discretion, may deem equitable to prevent
substantial dilution or enlargement of the rights granted to or
available for Optionees. Notwithstanding the preceding sentence, in no
event shall any fraction of a share of Stock be issued upon the exercise
of an Option.
5. ELIGIBLE PARTICIPANTS
The following persons are eligible to participate in the Plan:
5.1 Incentive Stock Options. Incentive Stock Options may be granted
only to employees of the Company or any Subsidiary, including officers
and directors who are also employees of the Company or any Subsidiary.
5.2 Non-Statutory Stock Options. Non-Statutory Stock Options may be
granted to (i) any employee of the Company or any Subsidiary, including
any officer or director who is also an employee of the Company or any
Subsidiary, (ii) any non-employee, director of the Company or any
Subsidiary and (iii) any consultant to, or other independent contractor
of, the Company.
6. GRANT OF OPTIONS
6.1 Options to be Granted. Subject to the terms, conditions and
limitations set forth in this Plan, the Company, by action of its Board,
may from time to time grant Options to purchase shares of the Company's
Stock to those eligible Participants as may be selected by the Board in
such amounts and on such other terms as the Board in its sole discretion
shall determine. Such Options may be (i) "Incentive Stock Options" so
designated by the Board and which, when granted, are intended to qualify
as incentive stock options as defined in Section 422 of the Code; (ii)
"Non-Statutory Stock Options" so designated by the Board which, when
granted, do not qualify as incentive stock options under Section 422 of
the Code; or (iii) a combination of both. The date on which the Board
approves the granting of an Option shall be the date of grant of such
Option. Notwithstanding the foregoing, with respect to the grant of any
Incentive Stock Option under the Plan the aggregate fair market value of
Stock (determined as of the date of the Option is granted) with respect
to which such Options are exercisable for the first time by an Optionee
in any calendar year (under all such stock option plans of the Company
or Subsidiaries) shall not exceed $100,000.
6.2 Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a written stock option agreement between the Company and
the Optionee setting forth the terms and conditions, not inconsistent
with the Plan, under which the Option so granted may be exercised
pursuant to the Plan and containing such other terms with respect to the
Option as the Board in its sole discretion may determine.
6.3 Change in Control. If a change in control occurs, the
exercisability of all outstanding options, including those subject to
vesting and/or performance targets, will automatically accelerate
immediately before the effective date of the change in control. This
means that all options outstanding immediately before the effective date
of the change in control shall become fully exercisable for all of the
shares of common stock subject to each option at that time.
A change in control is defined as:
(i) a third person, including a syndicate or group deemed to be a
person under Section 13(d)(3) of the Exchange Act, becomes the
beneficial owner (as so determined) of Stock having thirty percent (30%)
or more of the total number of votes which may be cast for the election
of members of the Board;
(ii) all or substantially all of the assets and business of the
Company are sold, transferred or assigned to, or otherwise acquired by,
any other entity or entities; or
(iii) as a result of, or in connection with, any cash tender or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions,
the persons who are members of the Board before any such transaction
shall cease to constitute a majority of the Board of the Company or any
successor to the Company.
Notwithstanding the foregoing, in no event shall the distribution of
stock in a subsidiary by the Company to its stockholders be deemed a
Change in Control.
7. OPTION PRICE AND FORM OF PAYMENT
The purchase price for a share of Stock subject to an Option granted
hereunder shall not be less than 100% of the fair market value of the
Stock. For purposes of this Section 7, the "fair market value" of the
Stock shall be determined as follows:
(a) If the Stock of the Company is listed or admitted to unlisted
trading privileges on a national securities exchange, the fair market
value on any given day shall be the closing sale price for the Stock, or
if no sale is made on such day, the closing bid price for such day on
such exchange;
(b) If the Stock is not listed or admitted to unlisted trading
privileges on a national securities exchange, the fair market value on
any given day shall be the closing sale price for the Stock as reported
on the National Association of Securities Dealers Automated Quotations
("NASDAQ") System on such day, or if no sale is made on such day, the
closing bid price for such day as entered by a market maker for the
Stock;
(c) If the Stock is not listed on a national securities exchange is
not admitted to unlisted trading privileges on any such exchange, and is
not eligible for inclusion in the NASDAQ National Market System, the
fair market value on any given day shall be the average of the closing
representative bid and asked prices as reported by the National
Quotation Bureau, Inc. or, if the Stock is not quoted on the NASDAQ
System, then as reported in any publicly available compilation of the
bid and asked prices of the Stock in any over-the-counter market on
which the Stock is traded; or
(d) If there exists no public trading market for the Stock, the fair
market value on any given day shall be an amount determined in good
faith by the Board in such manner as it may be reasonably determined in
its discretion, provided that such amount shall not be less than the
book value per share, as reasonably determined by the Board as of the
date of determination, or less than the par value of the Stock.
Notwithstanding the foregoing, in the case of an Incentive Stock Option
granted to any Optionee then owning more than 10% of the voting power of
all classes of the Company's stock, the purchase price per share of the
Stock subject to such Option shall not be less than 110% of the fair
market value of the Stock on the date of grant of the Incentive Stock
Option, determined as provided above.
Except as provided herein, the purchase price of each share of Stock
purchased upon the exercise of any Option shall be paid:
(a) In United States dollars in cash or by check, bank draft or money
order payable to the order of the Company;
(b) At the discretion of the Board, through the delivery of shares of
Stock, which have been held by the option holder for one hundred eighty
(180) days or more and have an aggregate fair market value (as
determined in the manner provided under this Plan) equal to the Option
price;
(c) At the discretion of the Board, by a combination of both (a) and
(b) above; or
(d) By such other method as may be permitted in the written Stock
Option Agreement between the Company and the Optionee.
If such form of payment is permitted, the Board shall determine
procedures for tendering Stock as payment upon exercise of an Option and
may impose such additional limitations and prohibitions on the use of
Stock as payment upon the exercise of an Option as it deems appropriate.
8. EXERCISE OF OPTIONS
8.1 Manner of Exercise. An Option, or any portion thereof, shall be
exercised by delivering a written notice of exercise to the Board and
paying to the Company the full purchase price of the Stock acquired upon
the exercise of the Option. Until certificates for the Stock acquired
upon the exercise of an Option are issued to an Optionee, such Optionee
shall not have any rights as a shareholder of the Company.
8.2 Limitations and Conditions on Exercise of Options. In addition
to any other limitations or conditions contained in this Plan or which
may be imposed by the Board from time to time or in the Stock Option
Agreement to be entered into with respect to Options granted hereunder,
the following limitations and conditions shall apply to the exercise of
Options granted under this Plan:
(a) No Incentive Stock Option may be exercisable by its terms after
the expiration of five years from the date of the grant thereof.
(b) No Incentive Stock Option granted to an eligible Participant then
owning more than 10% of the voting power of all classes of the Company's
Stock may be exercisable by its terms after the expiration of five years
from the date of the grant thereof.
9. INVESTMENT PURPOSES
Unless a registration statement under the Securities Act of 1933 is in
effect with respect to Stock to be purchased upon exercise of Options to
be granted under the Plan, the Company shall require an Optionee agree
with and present to the Company in writing he or she is acquiring such
shares of Stock for the purpose of investment and with no present
intention to transfer, sell or otherwise dispose of such shares of Stock
other than by transfers which may occur by will or by the laws of
descent and distribution, and no shares of Stock may be transferred
unless, in the opinion of counsel of the Company, such transfer would be
in compliance with applicable securities laws. In addition, unless a
registration statement under the Securities Act of 1933 is in effect
with respect to the Stock to be purchased under the Plan, each
certificate representing any shares of Stock issued to an Optionee
hereunder shall have endorsed thereon a legend in substantially the
following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
AND WITHOUT REGISTRATION UNDER ANY APPLICABLE STATE SECURITIES LAWS, IN
RELIANCE UPON EXEMPTION(S) CONTAINED THEREIN. NO TRANSFER OF THESE
SHARES OR ANY INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT TO EFFECTIVE
REGISTRATION STATEMENTS UNDER SAID LAWS UNLESS THE CORPORATION HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER OR
DISPOSITION DOES NOT REQUIRE REGISTRATION UNDER SAID LAWS AND, OR ANY
SALES UNDER RULE 144 OF THE ACT, SUCH EVIDENCE AS IT SHALL REQUEST FOR
COMPLIANCE WITH THAT RULE, OR APPLICABLE STATE SECURITIES LAWS.
10. TRANSFERABILITY OF OPTIONS
No Option granted under the Plan shall be transferable by an Optionee
(whether by sale, assignment, hypothecation or otherwise) other than by
will or the laws of descent and distribution, and Options shall be
exercisable during the Optionee's lifetime only by the Optionee.
11. TERMINATION OF EMPLOYMENT
11.1 Generally. Except as otherwise provided in this Section 11, if
an Optionee's employment with the Company or Subsidiary is terminated
(hereinafter "Termination") other than by death or Disability (as
hereinafter defined), the Optionee may exercise any Option granted under
the Plan, to the extent the Optionee was entitled to exercise the Option
at the date of Termination, for a period of three months after the date
of Termination or until the term of the Option has expired, whichever
date is earlier.
11.2 Death or Disability of Optionee. In the event of the death or
Disability of an Optionee prior to expiration of an Option held by him
or her, the following provisions shall apply:
(a) If the Optionee is at the time of his or her Disability employed
by the Company or a Subsidiary and has been in continuous employment (as
determined by the Board in its sole discretion) since the date of grant
of the Option, then the Option may be exercised by the Optionee until
the earlier of one year following the date of such Disability or the
expiration date of the Option, but only to the extent the Optionee was
entitled to exercise such Option at the time of his or her Disability.
For the purpose of this Section, the term "Disability" shall have the
meaning given to it in Section 22(e)(3) of the Code. The determination
of whether an Optionee has a Disability within the meaning of Section
22(e)(3) shall be made by the Board in its sole discretion.
(b) If the Optionee is at the time of his or her death employed by
the Company or a Subsidiary and has been in continuous employment (as
determined by the Board in its sole discretion) since the date of grant
of the Option, then the Option may be exercised by the Optionee's estate
or by a person who acquired the right to exercise the Option by will or
the laws of descent and distribution, until the earlier of one year from
the date of the Optionee's death or the expiration date of the Option,
but only to the extent the Optionee was entitled to exercise the Option
at the time of death.
(c) If the Optionee dies within three months after Termination, the
Option may be exercised until the earlier of nine months following the
date of death or the expiration date of the Option, by the Optionee's
estate or by a person who acquires the right to exercise the Option by
will or the laws of descent or distribution, but only to the extent the
Optionee was entitled to exercise the Option at the time of Termination.
11.3 Breach of Agreements; Termination for Cause. If the Optionee
breaches any of the Company's Employee Confidentiality, Inventions, Non-
Compete and Non-Solicitation Agreement, Employee Patent and Confidential
Information Agreement, any Employment Agreement, if applicable, or any
similar agreement having an equivalent purpose or effect, or if
employment of an Optionee is terminated by the Company or a Subsidiary
for cause, then the Board shall have the right to cancel the Options
granted to the Optionee under the Plan.
12. AMENDMENT AND TERMINATION OF PLAN
12.1 The Board, without approval by the shareholders of the Company,
may at any time and from time to time suspend or terminate the Plan in
whole or in part or amend it from time to time in such respects as may
be in the best interest of the Company; provided, however, that no such
amendment shall be made without approval of the shareholders if it
would: (i) materially modify the eligibility requirements for
Participants; (ii) increase the total number of shares of Stock which
may be issued pursuant to Options, except in accordance with Section 4.2
of the Plan; (iii) reduce the minimum Option price per share as set
forth in Section 7 of the Plan, except in accordance with Section 4.2 of
the Plan; (iv) extend the period of granting Options; or (v) materially
increase in any other way the benefits accruing to Optionees.
12.2 No amendment, suspension or termination of this Plan shall,
without the Optionee's consent, alter or impair any of the rights or
obligations under any Option theretofore granted to the Optionee under
the Plan.
12.3 The Board may amend the Plan, subject to the limitations cited
above, in such manner as it deems necessary to permit the granting of
Incentive Stock Options meeting the requirements of future amendments to
the Code.
13. MISCELLANEOUS PROVISIONS
13.1 Right to Continued Employment. No person shall have any claim
or right to be granted an Option under the Plan, and the grant of an
Option under the Plan shall not be construed as giving an Optionee the
right to continued employment with the Company. The Company further
expressly reserves the right at any time to dismiss an Optionee or
reduce an Optionee's compensation with or without cause, free from any
liability, or any claim under the Plan, except as provided herein or in
a stock option agreement.
13.2 Withholding Taxes. The Company shall have the right to require
payment or provision for payment of any and all withholding taxes due
upon the grant or exercise of an Option hereunder or the disposition of
any Stock or other property acquired upon exercise of an Option be made
by an Optionee. In connection herewith, the Board shall have the right
to establish such rules and regulations or impose such terms and
conditions in any agreement relating to an Option granted hereunder with
respect to such withholding as the Board may deem necessary and
appropriate.
13.3 Rule 16b-3. This Plan is intended to comply with the applicable
provisions of Rule 16b-3 under the Securities Exchange Act of 1934 or
any successor provision and to the extent any provision of this Plan or
any action by the Board or the Committee fails to comply with said Rule,
such provision or action shall be deemed amended so as to cause the
provision or action to comply.
13.4 Governing Law. The Plan shall be administered in the State of
Minnesota and the validity, construction, interpretation and
administration of the Plan and all rights relating to the Plan shall be
determined solely in accordance with the laws of such state, unless
controlled by applicable federal law, if any.
14. EFFECTIVE DATE
The effective date of the Plan is April 28, 1997. No Option may be
granted after April 28, 2002 provided, however, the Plan and all
outstanding Options shall remain in effect until such outstanding
Options have expired or been cancelled.
UROPLASTY, INC.
