As filed with the Securities and Exchange Commission on May 19, 1997
Registration No.
__________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FONAR CORPORATION
__________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 11-2464137
__________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
__________________________________________________________________
110 Marcus Drive, Melville, New York 11747
__________________________________________________________________
(Address of Principal Executive Office) (Zip Code)
1997 Non-Statutory Stock Option Plan 1997 Stock Bonus Plan
__________________________________________________________________
(Full Title of the plans)
David B. Terry, 110 Marcus Drive, Melville, New York 11747
__________________________________________________________________
(Name and address of agent for service)
(516) 694-2929
__________________________________________________________________
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Title of Amt. to be Proposed Proposed Amount of
securities registered maximum maximum registration
to be registered offering aggregate fee
price per offering
unit* price
- ------------------------------------------------------------------
Common Stock
par value $.0001 5,000,000 $2.56 $12,800,000 $4,413.79
- ------------------------------------------------------------------
Common Stock 5,000,000 $2.56 $12,800,000 $4,413.79
par value $.0001
underlying non-
statutory stock
options
- ------------------------------------------------------------------
Total 10,000,000 $2.56 $25,600,000 $8,827.58
- ------------------------------------------------------------------
* Pursuant to Rule 457, subsections (h) and (c) Specified Date:
May 16, 1997
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of documents by reference.
The following documents, filed with, or furnished to, the
Commission are incorporated in this registration statement by reference:
(a) The registrant's latest annual report on Form 10-K filed
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
(b) All other reports filed by the registrant pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered
by the annual report on Form 10-K referred to in (a) above.
(c) The description of securities which is contained in Form 8-A
filed by the registrant pursuant to Section 12 of the Exchange Act including
any amendment or report filed for the purpose of updating such description.
All documents subsequently filed by the registrant pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which either indicates that all securities
offered have been sold or deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the date of filing such documents.
Item 4. Description of Securities.
The class of securities to be offered is registered under Section
12 of the Exchange Act.
Item 5. Interests of Named Experts and Counsel.
The validity of the securities being registered will be passed upon
by Henry T. Meyer, Esq., General Counsel to the registrant, 110 Marcus
Drive, Melville, New York 11747. Mr. Meyer is an employee of the registrant
and eligible to receive, in the discretion of the appropriate Committee or
the Board of Directors, awards of shares and options under the 1997
Non-Statutory Stock Option Plan and 1997 Stock Bonus Plan.
Item 6. Indemnification of Directors and Officers.
Article Eighth of the Certificate of Incorporation, as amended, of
the registrant provides as follows:
The personal liability of directors to the Corporation or its
stockholders for monetary damages for breach of their fiduciary duties as
directors is eliminated, provided however, that this provision shall not
eliminate the liability of a director (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or
knowing violation of the law, (iii) under Section 174 of the Delaware
General Corporation law, or (iv) for any transaction from which the director
derived an improper personal benefit.
Article V of the By-Laws of the registrant generally provides for
indemnification of its officers and directors to the full extent permitted
by Delaware Corporation Law.
Section 145 of the Delaware General Corporation Law permits
indemnification of officers, directors and employees of the Company under
certain conditions and subject to certain limitations.
Item 7. Exemption From Registration Claimed.
Not applicable. No restricted securities are to be reoffered or
resold pursuant to this registration statement.
Item 8. Exhibits.
4.1 Article Fourth of the Certificate of Incorporation, as amended by
the Certificate of Amendment filed June 9, 1995, incorporated herein by
reference to Exhibit 4.1 to the registrant's registration statement on Form
S-8, Commission File No. 33-62099.
4.2 Specimen Common Stock Certifice incorporated herein by reference to
Exhibit 4.1 to the registrant's registration statement on Form S-1,
Commission File No. 33-13365.
5 Opinion of Counsel re Legality.
24.1 Consent of Certified Public Accountants.
24.2 Consent of Counsel is included in Exhibit 5.
28.1 1997 Non-Statutory Stock Option Plan.
28.2 1997 Stock Bonus Plan.
Item 9. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that 1 (i) and 1(ii) do not apply if the information
required to be included in a post-effective amendment thereby 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, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The Certificate of Incorporation and By-Laws of the registrant
contain various provisions for limitation of liability and indemnification
of officers and directors, as described in Item 6. Section 145 of the
Delaware General Corporation law permits indemnification of officers,
directors and employees under certain conditions.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Village of Melville, State of New York, on
May 16, 1997.
FONAR Corporation
By: /s/ Raymond V. Damadian
Raymond V. Damadian, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Raymond V. Damadian Chairman of the Board May 16, 1997
Raymond V. Damadian of Directors, President
and a Director (Principal
Executive Officer)
/s/ Claudette Chan Director May 16, 1997
Claudette Chan
/s/ Robert J. Janoff Director Robert J. Janoff May 16, 1997
/s/ Herbert Maisel Director May 16, 1997
Herbert Maisel
EXHIBIT 5
OPINION OF COUNSEL RE: LEGALITY
May 16, 1997
Fonar Corporation 110 Marcus Drive Melville, NY 11747
Dear Sirs:
I refer to the Registration Statement on Form S-8 to which this
opinion is an Exhibit (the "Registration Statement"), being filed by Fonar
Corporation, a Delaware corporation (the "Company"), with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating
to: 5,000,000 shares of the Company's Common Stock issuable pursuant to
non-statutory stock options which may be granted under the Company's 1997
Non-Statutory Stock Option Plan ("NSOP Common Stock") and 5,000,000 shares
of the Company's Common Stock which may be issued pursuant to the Company's
1997 Stock Bonus Plan ("Bonus Common Stock").
As counsel for the Company, I have examined the originals or
photostatic or certified copies of such records, certificates and
instruments of the Company, certificates of officers of the Company and of
public officials and such other instruments and documents as I have deemed
relevant and necessary for the purposes of rendering the opinions set forth
below. In such examination, I have assumed the genuineness of all
signatures, the authenticity of all documents submitted to me as originals,
the conformity to original documents of all documents submitted to me as
certified or photostatic copies and the authenticity of the originals of
such copies and the correctness of all statements of fact contained therein.
Based upon the foregoing, I am of the opinion that:
(i) The NSOP Common Stock has been duly and validly authorized, and
when issued in accordance with the terms of the Company's 1997 Non-Statutory
Stock Option Plan and the applicable options granted thereunder, will be
legally issued, fully paid and non-assessable; and
(ii) The Bonus Common Stock has been duly and validly authorized, and
when issued in accordance with the terms of the Company's 1997 Stock Bonus
Plan and any applicable bonus stock awards made thereunder will be legally
issued, fully paid and non-assessable.
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me in Item 5 of the
Registration Statement.
Very truly yours,
/s/Henry T. Meyer
Henry T. Meyer,
Esq. General Counsel
EXHIBIT 24.1
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this registration statement on Form S-8
of our report of the Consolidated Financial Statements of Fonar
Corporation and Subsidiaries included in the annual report of
Fonar Corporation on Form 10-K for the fiscal year ended June 30,
1996, which report is incorporated in this registration statement
by reference.
The Consolidated Financial Statements consist of the Consolidated
Balance Sheets as at June 30, 1996 and June 30, 1995 and the
related Consolidated Statement of Operations, Stockholders' Equity
and Cash Flows for the years ended June 30, 1996, 1995 and 1994
with related notes.
/s/ Tabb, Conigliaro & McGann, P.C.
Tabb, Conigliaro & McGann, P.C.
New York, New York
May 16, 1997
EXHIBIT 24.2
(CONSENT OF COUNSEL IS INCLUDED IN EXHIBIT 5)
Consent of Counsel
The consent of Henry T. Meyer, Esq. is included in his
opinion filed as Exhibit 5 to this Registration Statement.
EXHIBIT 28.1
1997 NON-STATUTORY STOCK OPTION PLAN
1. PURPOSES OF THE PLAN.
The purposes of this Plan (the "Plan") are to assist FONAR
Corporation, a Delaware corporation (the "Corporation"), and its
subsidiaries in attracting and retaining the services of key employees,
non-employee directors, advisors and consultants, and to thereby secure
for the Corporation and its subsidiaries the benefits of the incentive
inherent in ownership of the Corporation's equity securities by parties
rendering valuable services to the Corporation. The Plan provides a means
by which such parties may be given an opportunity, as an incentive to
service or continued service to the Corporation or a subsidiary, to
purchase shares of the Common Stock of the Corporation upon the exercise
of non-statutory stock options.
For the purposes of this Plan, the term "subsidiary" and/or
"subsidiaries" shall mean any corporation of which the majority of the
outstanding voting stock is owned directly or indirectly by the
Corporation.
2. SHARES SUBJECT TO THE PLAN.
Subject to the provisions of Section 9 of the plan, an aggregate of
5,000,000 shares of Common Stock, par value $.0001 per share, of the
Corporation ("Common Stock"), are available for issuance upon the exercise
of options under the Plan.
The shares to be issued upon the exercise of options under the Plan
may be authorized but unissued shares of Common Stock or issued shares of
Common Stock which are held in the treasury of the Corporation. If an
option shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares which were subject thereto
shall, unless the plan shall have been terminated, be added to the shares
otherwise available for options under the Plan.
3. TERM OF THE PLAN.
Subject to the provisions of Section 10 and 11, the Plan shall
commence effective as of May 9, 1997 and options granted under the Plan
must be granted no later than May 8, 2007.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee which shall consist
of three or such greater or lesser number of members, as shall be
determined by the Board of Directors from time to time, who shall be
appointed by the Board of Directors of the Corporation (the "Committee")
or, in the absence of such a Committee, by the Board of Directors of the
Corporation. Directors of the Corporation who are either eligible to
receive options, or to whom options have been granted, may vote on any
matters affecting the administration of the Plan or the granting of
options under the Plan. Any action of the Committee may be taken by a
written instrument signed by a majority of the members of the Committee
then in office. Members of the Committee need not be members of the Board
of Directors.
Subject to the express provisions of the Plan, the Committee or the
Board or Directors, as the case may be, shall have the authority, in its
discretion: (i) to determine the parties to receive options, the times
when they shall receive options, the number of shares to be subject to
each option, the exercise price for shares of Common Stock subject to each
option, the term of each option, the date each option shall become
exercisable in whole, in part or in installments, and, if in installments,
the number of shares to be subject to each installment, the date each
installment shall become exercisable and the term of each installment; to
accelerate the date of exercise of any installment; to determine whether
Common Stock may be issued upon exercise of an option as partly paid and,
if so, the date when future installments of the exercise price shall
become due and the amounts of such installments, and to determine the
other terms and provisions of each option granted under the Plan; (ii) to
construe and interpret the terms of the respective option certificates and
the Plan; (iii) to establish, amend and rescind rules and regulations for
the administration of the Plan; and (iv) to make all other determinations
deemed by it necessary or advisable for administering the Plan. At the
time of the issuance of any option pursuant to the Plan, the Committee or
the Board of Directors, as the case may be, in lieu of specifying an
exercise price or prices, or if the option is to be exercised in
installments, in lieu of specifying the date an installment or
installments shall become exercisable, may establish such formulas,
criteria or contingencies pursuant to which the exercise price or the
exercise date may be determined. The determinations of the Committee or
the Board of Directors, as the case may be, on the matters referred to in
this Section 4, shall be final and conclusive.
5. ELIGIBILITY AND SELECTION.
The Committee or the Board of Directors, as the case may be, shall
have sole and absolute discretion to issue options under the Plan to
reward employees, nonemployee directors, advisors and consultants for
services rendered or to be rendered to or for the benefit of the
Corporation or any of its subsidiaries. In determining the parties to
whom options shall be granted under the Plan and the number of shares of
Common Stock as to which options may be granted to such a party, the
Committee or the Board of Directors, as the case may be, shall consider
the duties of the recipients, their present and potential contributions to
the success of the business of the Corporation, and such other factors as
the Committee or the Board of Directors deems relevant in furthering the
purposes of the granting of such options and the interests of the
Corporation. A party may receive more than one option under the Plan.
6. NONSTATUTORY STOCK OPTIONS.
(a) Each option granted under the Plan (the "Option"), and the
terms and conditions thereof, shall be evidenced by a written stock option
certificate (the "Certificate") which shall be duly executed by the
Corporation and acknowledged and accepted by the recipient; PROVIDED that
to the extent permitted by law and consistent with the terms and
conditions of the Plan and option, the Committee or the Board of Directors
may make such modifications in the terms and conditions of the Option as
it shall deem necessary or advisable.
(b) Each Option under the Plan (i) shall specify the exercise
price (or the basis on which it is to be determined) per share of Common
Stock; (ii) shall be exercisable during a period no longer than ten (10)
years from the date on which it is granted, as determined by the Committee
or the Board of Directors at the time of grant; (iii) shall be exercisable
at such time or times as may be determined by the Committee or the Board
of Directors at the time of grant (or the basis on which such time or
times shall be determined); (iv) shall not be transferable by the holder
of the Option (other than by will or the laws of descent and
distribution), and shall be exercisable during the lifetime of the holder
of the Option only by such holder, unless the terms of the Option shall
otherwise provide and (v) shall contain such other terms and conditions or
be in such other form as may be determined by the Committee or the Board
of Directors at the time of grant, PROVIDED that such other terms and
conditions shall be permitted by law and shall not be inconsistent with
the Plan. To the extent permitted by law, and without limitation to the
foregoing, the Committee or Board of Directors may make such modifications
in the provisions of any particular Option under the Plan as it shall deem
advisable.
(c) The Options issuable under this plan are NOT intended to
qualify as "incentive stock options" under Section 422A of the Internal
Revenue Code of 1954, as amended (the "Code").
7. EXERCISE OF OPTIONS.
Each Option shall be exercised, in whole or in part, as to such
number of shares of Common Stock and at such time or times in accordance
with the terms of the Option. Options shall be exercised only by the
giving by the holder thereof of written notice to the Corporation at its
principal office, or at such other office as may be designated by the
Corporation, specifying the number of shares purchased and accompanied by
payment in full by certified or bank cashier's check, or by any other
property, or in any other form specified in the Certificate, or as may be
acceptable to the Committee or the Board of Directors, as the case may be.
Certificates representing the shares of stock purchased upon exercise
shall be issued as promptly as practicable thereafter. The holder of an
Option shall not have any of the rights of a stockholder of the
Corporation with respect to the shares of Common Stock issuable upon
exercise of the Option until one or more certificates evidencing such
shares of Common Stock shall have been issued to the holder of the Option.
In no event may a fraction of a share be purchased or issued under the
Plan.
8. Non-Transferability of Options.
Options shall not be transferable other than by the last will and
testament of the holder of the Option or the applicable laws of descent
and distribution, and during the lifetime of the holder, Options may be
exercised only by the holder thereof. Options may not be assigned, sold,
transferred, pledged, hypothecated or disposed of in any way (whether by
operation of law or otherwise) except to the extent expressly provided for
in the Plan, and shall not be subject to execution, attachment or similar
process.
Any assignment, sale, transfer, pledge, hypothecation or other
disposition of any Option attempted contrary to the provisions of this
Plan or the terms of the Option, or any levy or execution, attachment or
other process attempted upon an Option, will be null and void and without
effect. Any attempt to make any such assignment, sale, transfer, pledge,
hypothecation or other disposition of any Option or any attempt to make
any such levy, execution, attachment or other process will cause the
Option to be terminated immediately upon the happening of any such event
if the Corporation, at any time, should, in the sole discretion of the
Committee or the Board of Directors, so elect, by written notice to the
person then entitled to exercise the Option; PROVIDED that any such
termination of the Option under the foregoing provisions of this Section 8
will not prejudice any rights or remedies which the Corporation or any
subsidiary may have under the Plan, any Stock Option Certificate, or
otherwise.
9. ADJUSTMENTS.
Unless the terms of the Option shall otherwise provide, if (a) the
Corporation shall declare a dividend payable in, or shall subdivide or
combine its Common Stock, or (b) any other event, such as a
recapitalization, merger, consolidation, reorganization, combination or
exchange of shares of Common Stock, shall occur which in the judgment of
the Committee or the Board of Directors necessitates action by way of
adjusting the terms of the outstanding Options, the Committee or the Board
of Directors, as the case may be, shall take any such action as in its
judgment shall be necessary to preserve to the holders of Options rights
substantially proportionate to the rights existing prior to such event.
Such action shall include, where deemed appropriate, an increase or
decrease in the number of shares of Common Stock subject to Options
outstanding under the Plan and the aggregate number of shares of Common
Stock available under Section 2 of the Plan for issuance upon exercise of
Options. The determination of the Committee or the Board of Directors, as
the case may be, with respect to any matter referred to in this Section 9
shall be conclusive and binding upon each holder of an Option under the
Plan.
10. TERMINSTION AND AMENDMENT OF THE PLAN.
Unless sooner terminated, as hereinafter provided, this Plan shall
terminate at 11:59 p.m. on May 8, 2007, and no Options shall be granted
hereunder after that date. The Board of Directors may terminate or amend
this Plan at any time without notice, or make such modifications of this
Plan as it shall deem advisable; PROVIDED that the Committee and Board of
Directors may not permit the exercise of an Option after the date on which
such Option would otherwise terminate pursuant to the terms thereof. No
termination, amendment or modification of the Plan, without the consent of
the person to whom any Option has been granted, may adversely affect the
rights of such person under any unexercised portion of such Option.
11. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS.
Anything in this Plan to the contrary notwithstanding, the Board of
Directors may substitute new Options for prior Options of a constituent
corporation (as hereinafter defined) or assume the prior options of such
constituent corporation. The term "constituent corporation" shall mean
any corporation which has been merged into or consolidated with the
corporation, or whose assets or stock have been purchased or acquired by
or liquidated into the Corporation or by or into one or more subsidiaries
of the Corporation, or any parent or any subsidiary or any such
corporation.
12. INDEMNIFICATION OF THE COMMITTEE.
In addition to such other rights of indemnification as they may
have as directors or as members of the Committee, the members of the
Committee shall be indemnified by the Corporation against the reasonable
expenses, including attorney's fees actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act under or in
connection with the Plan or any Option granted thereunder, and against all
amounts paid by them in settlement thereof (provided that such settlement
is approved by the Corporation) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to
matters as to which it shall be adjudicated in such action, suit or
proceeding that such Committee member or director, as the case may be, is
liable for negligence or misconduct in the performance of his duties;
PROVIDED that within 10 days after institution of any such action, suit or
proceeding a Committee member or director, as the case may be, shall offer
the Corporation in writing the opportunity, at its own expense, to handle
and defend the same.
13. EFFECTIVENESS OF THE PLAN.
The Plan shall become effective on May 9, 1997.
EXHIBIT 28.2
1997 STOCK BONUS PLAN
1. PURPOSES OF THE PLAN.
The purpose of this Stock Bonus Plan (the "Plan") is to assist
FONAR Corporation, a Delaware corporation (the "Corporation"), and its
subsidiaries (as hereinafter defined) in attracting and retaining the
services of key employees, non-employee directors, officers, advisors and
consultants, and to secure for the Corporation and its subsidiaries the
benefits of the incentive inherent in ownership of the Corporation's
equity securities by parties who are responsible for the continuing growth
and success of the Corporation and its subsidiaries.
For the purposes of this plan, the term "subsidiary" and/or
"subsidiaries" shall mean any corporation of which the majority of the
outstanding voting stock is owned directly or indirectly by the
Corporation.
2. SHARES SUBJECT TO THE PLAN.
Subject to the provisions of Section 7 of the Plan, an aggregate of
5,000,000 shares of Common Stock, par value $.0001 per share, of the
Corporation ("Common Stock"), are available for the issuance under the
Plan as compensation for services to the Corporation ("Bonus Stock").
The shares to be issued as Bonus Stock under the Plan may be
authorized but unissued shares of Common Stock or issued shares of Common
Stock which are held in the treasury of the Corporation.
3. TERM OF THE PLAN.
Subject to the provisions of Section 8 and 10, the Plan shall
commence effective as of May 9, 1997, and Bonus Stock awarded under the
Plan must be issued no later than May 8, 2007.
4. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee which shall consist
of three or such greater or lesser number of members, as determined by the
Board of Directors from time to time, who shall be appointed by the Board
of Directors of the Corporation (the "Committee") or, in the absence of
such a Committee, by the Board of Directors of the Corporation. Directors
of the Corporation who are either eligible to receive Bonus Stock, or to
whom Bonus Stock has been granted, may vote on any matters affecting the
administration of the plan or the granting of Bonus Stock under the Plan.
Any action of the Committee may be taken by a written instrument signed by
a majority of the members of the Committee then in office. Members of the
Committee need not be members of the Board of Directors.
Subject to the express provisions of the Plan, the Committee or the
Board or Directors, as the case may be, shall have the authority, in its
discretion: (i) to determine the parties to receive Bonus Stock, the
times when they shall receive such awards, the number of shares to be
issued, and the time, terms and conditions of the issuance of any such
shares; (ii) to construe and interpret the terms of the Plan; (iii) to
establish, amend and rescind rules and regulations for the administration
of the Plan; and (iv) to make all other determinations necessary or
advisable for administering the Plan. The determinations of the Committee
or the Board of Directors, as the case may be, on the matters referred to
in this Section 4 shall be final and conclusive.
5. Eligibility and Selection.
The Committee or the Board of Directors, as the case may be, shall
have sole and absolute discretion to issue Bonus Stock under the Plan to
reward employees, non-employee directors, advisors and consultants for
services rendered or to be rendered to or for the benefit of the
Corporation, or any of its subsidiaries (the grant of Bonus Stock under
this Plan shall be referred to as a "Bonus Stock Award"). In determining
the parties to whom Bonus Stock Awards shall be granted under the Plan and
the number of shares of Common Stock which may be granted to such persons,
the Committee or the Board of Directors, as the case may be, shall
consider the duties of the parties, their present and potential
contributions to the success of the Corporation, and such other factors as
the Committee or the Board of Directors deems relevant in furthering the
purposes of the granting of such Bonus Stock and the interests of the
Corporation. A party may receive more than one Bonus Stock Award under
the Plan.
6. BONUS STOCK AWARDS.
(a) The Committee or the Board of Directors, as the case may be,
shall determine for each party chosen to participate in the Plan
("Participant") the number of shares of Common Stock to be covered by each
Bonus Stock Award and the installments, if any, in which the Bonus Stock
will be granted.
(b) The Committee or the Board of Directors shall determine the
terms, conditions and restrictions, if any, to which such Bonus Stock or
its issuance will be subject. Any restrictions imposed shall be evidenced
by a written agreement executed by the Participant. Such agreement shall
also include any terms and conditions required by applicable securities
laws.
(c) The Corporation shall deliver to the Participant on the date
specified, or as soon thereafter as is practicable, the number of shares
of Common Stock specified in such Participant's Bonus Stock Award,
subject to and in accordance with the Bonus Stock Award.
(d) Bonus Stock Awards shall not be transferable other than by the
last will and testament of the holder of the Bonus Stock Award or the
applicable laws of descent and distribution. Bonus Stock Awards may not
be assigned, sold, transferred, pledged, hypothecated or disposed of in
any way (whether by operation of law or otherwise) except to the extent
expressly provided for in the Plan and shall not be subject to execution,
attachment or similar process.
7. DILUTION AND OTHER ADJUSTMENTS.
In the event of any change in the outstanding Common Shares by
reason of any stock dividend or split, recapitalization, merger,
consolidation, reorganization, combination or exchange of shares of Common
Stock, or other similar corporate change, the Committee or the Board of
Directors, as the case may be, shall make such adjustments as it, in its
absolute discretion, deems equitable in the number of kind of shares of
Common Stock authorized by the Plan and, with respect to outstanding
shares of Common Stock covered by Stock Bonus Awards but not yet issued,
in the number of kind of stock covered by Stock Bonus Awards made under
the Plan.
8. TERMINATION AND AMENDMENT OF THE PLAN.
Unless sooner terminated, as hereinafter provided, this Plan shall
terminate at 11:59 p.m. on May 8, 2007, and no Bonus Stock shall be
granted hereunder after that date. The Board of Directors may terminate
or amend this Plan at any time without notice, or make such modifications
of this Plan as it shall deem advisable. No termination, amendment or
modification of the Plan may adversely affect the rights of any party to
whom a Bonus Stock Award has been made without such party's consent.
9. INDEMNIFICATION.
In addition to such other rights of indemnification as they may
have as directors or as members of the Committee, the members of the
Committee and the Board of Directors shall be indemnified by the
Corporation against the reasonable expenses, including attorney's fees
actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Bonus Stock
Award granted thereunder, and against all amounts paid by them in
settlement thereof (provided that such settlement is approved by the
Corporation) or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, except in relation to matters as to which it
shall be adjudicated in such action, suit or proceeding that such
Committee member or director, as the case may be, is liable for negligence
or misconduct in the performance of his duties; PROVIDED that within 10
days after institution of any such action, suit, or proceeding a Committee
member or director, as the case may be, shall offer the Corporation in
writing the opportunity, at its own expense, to handle and defend the
same.
10. EFFECTIVENESS OF THE PLAN.
The Plan shall become effective on May 9, 1997.
