SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
POSITRON
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE>
POSITRON
1304 Langham Creek Drive, Suite 300
Houston, Texas 77084
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 17, 1999
-----------------
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Positron
Corporation, a Texas corporation (the "Company"), will be held on Friday,
December 17, 1999, at 10:00 a.m., local time, at the Company's headquarters
offices located at 1304 Langham Creek Drive, Suite 300, Houston, Texas 77084,
for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve the adoption of the 1999 Stock Option Plan and the
authorization of 4,000,000 common shares issuable pursuant to that
Plan.
3. To approve the adoption of the 1999 Non-Employee Directors' Stock
Option Plan and the authorization of 500,000 common shares issuable
pursuant to that Plan.
4. To approve the adoption of the 1999 Stock Bonus Plan and the
authorization of 1,000,000 common shares issuable pursuant to that
Plan.
5. To approve the adoption of the 1999 Employee Stock Purchase Plan and
the authorization of 500,000 common shares issuable pursuant to that
Plan.
6. To ratify the appointment of Ham, Langston & Brezina as the
Company's independent auditors for the fiscal year ended December
31, 1998.
7. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on November 16, 1999
are entitled to notice of and to vote at the meeting and at any continuation or
adjournment thereof.
By order of the Board of Directors,
/s/ Gary H. Brooks
Gary H. Brooks
Secretary
Houston, Texas
November 29, 1999
- --------------------------------------------------------------------------------
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
PERSON. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE URGED TO VOTE, SIGN, AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PREPAID
ENVELOPE ENCLOSED FOR THAT PURPOSE.
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<PAGE>
POSITRON
1304 LANGHAM CREEK DRIVE, SUITE 300
HOUSTON, TEXAS 77084
---------------
PROXY STATEMENT
---------------
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Positron Corporation, a Texas corporation (the "Company"), for use at the annual
meeting of shareholders to be held on December 17, 1999 at 10:00 a.m. local
time, at which shareholders of record of voting securities on November 16, 1999
will be entitled to vote. The voting securities of the Company are shares of its
common stock and of its Series A 8% cumulative redeemable preferred stock
("Series A preferred stock.") Voting with the common stock, each share of Series
A preferred stock entitles the holder to that number of votes equal to the
number of shares of common stock in which such shares of Series A preferred
stock would be converted. On October 31, 1999 the Company had issued and
outstanding 57,534,660 shares of common stock and 980,948 shares of Series A
preferred stock which could be converted into 980,948 shares of common stock.
The annual meeting will be held at the Company's headquarters offices located at
1304 Langham Creek Drive, Suite 300, Houston, Texas 77084.
VOTING AND REVOCABILITY OF PROXIES
All properly executed proxies that are not revoked will be voted at the
meeting in accordance with the instructions contained therein. Proxies
containing no instructions regarding the proposals specified in the form of
proxy will be voted FOR approval of all proposals in accordance with the
recommendation of the Company's Board of Directors. Any person giving a proxy in
the form accompanying this statement has the power to revoke such proxy at any
time before its exercise. The proxy may be revoked by filing with the Secretary
of the Company at the Company's principal executive office an instrument of
revocation or a duly executed proxy bearing a later date, or by filing written
notice of revocation with the secretary of the meeting prior to the voting of
the proxy or by voting the shares subject to the proxy by written ballot.
Directors are elected by a plurality of the voting power of the common
stock and Series A preferred stock voting together a class. Cumulative voting is
not permitted in the election of directors. Votes that are withheld will be
excluded entirely from the vote and will have no effect. Approval of each of the
proposals regarding the 1999 Stock Option Plan, the 1999 Non-Employee Directors'
Stock Option Plan, the 1999 Stock Bonus Plan, the 1999 Employee Stock Purchase
Plan, and ratification of the Company's outside independent accountants requires
the affirmative vote of the holders of a majority of the votes cast at the
annual meeting by the shareholders of common stock and Series A preferred stock
as a class and entitled to vote, with abstentions not counted as votes for or
against.
SOLICITATION
The Company will bear the entire cost of solicitation, including
preparation, assembly, printing, and mailing of this proxy statement, the proxy,
and any additional material furnished to sharehold-
<PAGE>
ers. Original solicitation of proxies by mail may be supplemented by telephone,
telegram, or personal solicitation by directors, officers, or employees of the
Company; no additional compensation will be paid for any such services. Except
as described above, the Company does not intend to solicit proxies other than by
mail.
Arrangements will also be made with brokerage firms and other custodians,
nominees and fiduciaries to forward proxy material to certain beneficial owners
of the Company's Common Stock, and the Company will reimburse such brokerage
firms, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith.
The Company intends to mail this proxy statement on or about November 30,
1999.
The Annual Report to Shareholders covering the Company's fiscal year ended
December 31, 1998, including audited financial statements, and the Quarterly
Report on Form 10-QSB for the period ended September 30, 1999, are enclosed.
DISSENTERS' RIGHTS
Under Texas law, the holders of common stock and preferred stock are not
entitled to any dissenters' rights in connection with any of the proposals to be
considered at the meeting.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Proposals of shareholders that are intended to be presented at the
Company's 2000 annual meeting of shareholders must be received by the Company no
later than January 7, 2000 in order to be included in the proxy statement and
proxy relating to that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
Each director to be elected will hold office until the next annual meeting
of shareholders and until his successor is elected and has qualified, or until
his death, resignation, or removal.
There are four nominees for the four Board positions currently established
pursuant to the Company's Bylaws. Three of the four nominees are currently
directors of the Company. Each person nominated for election has agreed to serve
if elected, and management has no reason to believe that any nominee will be
unavailable to serve. Unless otherwise instructed, the proxy holders will vote
the proxies received by them for the four nominees named below. The four
candidates receiving the highest number of affirmative votes of the shares
entitled to vote at the annual meeting will be elected directors of the Company.
2
<PAGE>
MANAGEMENT RECOMMENDS A VOTE FOR EACH
OF THE NOMINEES FOR DIRECTOR NAMED BELOW
NOMINEES
Four directors will be elected at the annual meeting to serve for one year
expiring on the date of the annual meeting in 2000. Proxies can be voted for no
more than four nominees. Set forth below is information regarding the nominees,
including information furnished by them.
PERCENTAGE OF 1999
BOARD OR COMMITTEE
NAME AGE MEETINGS ATTENDED(1) EXECUTIVE POSITION
- ------ ----- ---------------------- ----------------------
S. Lewis Meyer 54 100%
Gary H. Brooks 51 100% President,
Chief Financial Officer
(Acting) &
Secretary
Gary B. Wood, Ph.D. 48 100%
Antonio P. Falcao 27 N/A(2)
- -------------------------
1 The percentage of meetings attended is based on the total number of Board
and Committee meetings which the particular director was eligible to attend
2 Mr. Falcao is a nominee for election as a director. He did not serve as a
director during 1999 or any prior year.
Mr. Meyer was appointed to the Board on January 22, 1999 in connection
with a series of agreements entered into by Company and Imatron Inc. of South
San Francisco ("Imatron") in May 1998, pursuant to which Imatron purchased
9,000,000 shares of Company common stock, representing a majority of the
Company's common stock at the time. ("Imatron Transaction."). Also on January
22, 1999 Mr. Meyer was appointed as Chairman of the Board. Mr. Meyer also
continues to serve as Chief Executive Officer of Imatron, which position he has
held since June 23, 1993. From April 1991 until joining Imatron, he was Vice
President, Operations of Otsuka Electronics (U.S.A.), Inc., Fort Collins,
Colorado, a manufacturer of clinical MR systems and analytical NMR
spectrometers. From August 1990 to April 1991 he was a founding partner of
Medical Capital Management, a company engaged in providing consulting services
to medical equipment manufacturers, imaging services providers and related
medical professionals. Prior thereto he was Founder, President and Chief
Executive Officer of American Health Services Corp., (now Insight Health
Services) a developer and operator of diagnostic imaging and treatment centers.
Mr. Meyer is a director of Imatron, and of FiNet.com, Inc. and the Chairman of
its Compensation Committee. Mr. Meyer received his B.S. degree in Physics from
the University of the Pacific, Stockton, California in 1966, an M.S. degree in
Physics from Pursue University in 1968, and a Ph.D. in Physics from Purdue
University in 1971.
Mr. Brooks has served as a director since January 22, 1999, appointed also
in connection with the Imatron Transaction. Also on that date he was appointed
as President, Secretary and Treasurer of the Company and served in those
capacities on a part-time basis until September 1, 1999, when he assumed those
responsibilities on a full-time basis. Prior to joining the Company on a
full-time basis, Mr. Brooks served as Vice President of Finance and
Administration, Chief Financial Officer and Secretary for Imatron since December
1993. Prior to joining Imatron he was Chief Financial Officer and Director for
five years at Avocet, a privately-held sports electronics manufacturer located
in Palo Alto, CA. Mr. Brooks received his B.A. in Zoology in 1971 from the
University of California, Berkeley, and an M.B.A. in Finance and Accounting in
1973 from the University of California, Los Angeles.
Dr. Wood has served as a director from April 1990 to the present, and as
its Chairman until January 1999. From October 1, 1994 to December 31, 1995 when
Dr. Werner Haas was appointed to
3
<PAGE>
those positions, he also acted as President and Chief Executive Officer of the
Company. He assumed those offices again from February 1997 when Dr. Haas
resigned until January 1999 when Mr. Brooks was appointed President. Dr. Wood is
also President of Concorde Financial Corporation, a private investment,
management and consulting firm which he founded in 1981 and is the founder,
chairman and a principal shareholder of OmniMed Corporation, a venture capital
investment firm founded in 1986. Dr. Wood is also the founder and Chairman of
Uro-Tech Management Corporation (now a wholly owned subsidiary of OmniMed)
founded in 1983. Both Uro-Tech and OmniMed specialize in investing in the
biotechnology and health care industries. Dr. Wood holds a BS and MS in
Electrical Engineering (with special emphasis in biomedical instrumentation) and
an interdisciplinary Doctorate of Philosophy from Texas Tech University. Certain
of the entities controlled by Dr. Wood are principal shareholders of Positron.
Antonio P. Falcao is a nominee for director. Since 1994 he has been the
Chief Financial Officer for several companies of the A. Amorim Group, a business
group based in Portugal that owns Banco Nacional de Credito Imobiliario, a
Portugese real estate bank. An affiliate of Amorim is a principal shareholder of
the Company. The A. Amorim Group, which is affiliated with Americo Ferreira
Amorim, also has interest in the cork, textile, hotel, oil, finance and
telecommunications industries. In addition, since February 1999 Mr. Falcao has
served as a director of FiNet.com, Inc., an on-line mortgage banking company.
Mr. Falcao received his degree in Finance and Economics from the University of
Oporto.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
S. Lewis Meyer, pursuant to authorization of the Board of Directors,
borrowed $10,000 from the Company in June 1999 pursuant to a promissory note
bearing 7.0% simple interest, with interest payable quarterly beginning October
1, 1999. The purpose of the loan was to enable Mr. Meyer to purchase 1,500,000
warrants granted to him at that time.
Gary H. Brooks, pursuant to authorization of the Board of Directors,
borrowed $20,000 from the Company in June 1999 pursuant to a promissory note
bearing 7.0% simple interest, with interest payable quarterly beginning October
1,1999. The purpose of the loan was to enable Mr. Brooks to purchase 3,000,000
warrants granted to him at that time.
In January 1995 the Company and Dr. Wood extended an existing Consulting
Agreement whereby Dr. Wood continued to provide certain managerial, financial,
marketing and organization services to the Company. The Company incurred fees of
approximately $80,000 in each of 1996 and 1997 pursuant to the Agreement, and
fees of approximately $80,000 in 1998 as payment for Dr. Wood's services as
Chief Executive Officer during that year. By its terms, the Agreement expired as
of December 31, 1998 and was not renewed. We paid Dr. Wood fees of $6,667 in
1999 for his services as President and Chief Executive Officer until the
appointment of Gary Brooks as President on January 22, 1999.
During 1995 and 1996, in order to fund its activities, the Company
borrowed a total of $1,313,000 from Uro-Tech, Ltd., an affiliate of the Company
and a Texas limited partnership. The general partner of Uro-Tech is OmniMed
Corporation, of which Dr. Wood beneficially owns 63.7% of the outstanding stock.
The loan bore interest at 13.8% per year, matured on April 30, 1997 and was
thereafter extended in connection with the Imatron Transaction. The Uro-Tech
loan was collateralized by liens and security interests encumbering most of the
Company's assets, which security interest was thereafter subordinated to a loan
from Imatron as part of the Imatron Transaction. In connection with the loan
from Uro-Tech in 1995 and 1996, the Company granted Uro-Tech warrants to
purchase 67,500 shares of common stock at an exercise price of $2.00 per share
exercisable through February 7, 2001. The Company fully retired the Uro-Tech
Loan, including all principal and interest due, in September 1999 and in
connection therewith and Uro-Tech's forgiveness of certain sums of interest due
it by the Company, replaced and cancelled the warrant to purchase 67,500 common
shares at an exercise price of $2.00 with a warrant to purchase 100,000 common
shares at an exercise price of $1.00. The replacement warrant is exercisable
through September 20, 2001.
4
<PAGE>
The Company and Mr. Brooks entered into an Employment Agreement, effective
with his appointment as President on January 22, 1999 pursuant to which Mr.
Brooks agreed to be employed by the Company on a part-time basis from the
effective date through August 31, 1999 and thereafter on a full time basis. Mr.
Brook's initial appointment is as President. Pursuant to the Agreement, which
runs initially through June 15, 2000 and then on a rolling six-month basis
thereafter, the gross amount of Mr. Brooks's base salary was $1,000 monthly from
January 22, 1999 to June 15, 1999, $3,416.67 monthly from June 15, 1999 through
August 31, 1999, and $185,000 on an annualized basis on and after September 1,
1999. Mr. Brooks is also entitled to reimbursement for up to $20,000 of
relocation expenses to relocate his residence to Houston, Texas, an auto
allowance of $500 per month, the right to purchase for $20,000 a warrant to
purchase up to three million shares of the Company's common stock exercisable at
$0.30 per share, participation in the Company's benefit plans consistent with
other executives, and severance on termination without cause in the amount of
the greater of the base salary he would have earned to the end of the term or
six months. The warrants Mr. Brooks can purchase vest immediately but are
subject to the Company's right of repurchase, which right lapses 25% on grant
and the remainder quarterly over the next three years. In the event his
employment is terminated by the Company without cause or on a change of control,
the Company's repurchase right regarding his warrants lapses entirely and any
other equity participation he may have in company securities vests immediately.
BOARD COMMITTEES AND MEETINGS
During 1999 the Board of Directors held three meetings in person and one
action by unanimous written consent. The Board of Directors has an Audit
Committee whose function is to recommend the engagement of the Company's
independent accountants, approve services performed by such accountants, and
review and evaluate the Company's accounting system and system of internal
controls. The Audit Committee, which consists entirely of non-employee
directors, currently consists of Messrs. Meyer and Wood and held one meeting
during the fiscal year.
The Board of Directors also has a Compensation Committee which makes
recommendations to the Board of Directors concerning salaries and incentive
compensation paid to officers; administers the Company's 1994 and 1999 Stock
Option Plans, including the grant of options, the 1999 Non-Employee Directors'
Stock Option Plan, the 1999 Stock Bonus Incentive Plan, and the 1999 Employee
Stock Purchase Plan; and performs such other functions regarding compensation as
the Board may delegate. The Compensation Committee, which consists of Messrs.
Meyer and Wood, held one meeting during the year.
COMPENSATION OF DIRECTORS
We reimburse directors for their reasonable expenses associated with
attending meetings of the Board. Directors who are full-time employees of
Positron Corporation are not separately compensated for their service on the
Board. In addition, until January 22, 1999 we paid non-employee directors
$12,500 annually for their services and attendance at regular Board meetings,
and $500 for each additional Board or committee meeting attended, not to exceed
an additional $2,500 per year. The Chairman of the Board also received an
additional annual retainer of $2,000. Due to the financial liquidity problems we
were having during this period, we made no cash payments to any directors during
1996, 1997 of 1998 for their services as director. Since January 22, 1999, and
until further notice, non-employee directors are not separately compensated for
their services on the Board, although they continue to be reimbursed for their
reasonable expenses associated with attending board and committee meetings.
Non-Employee Director Options. In connection with their services to the
Company, directors who were not employees of the Company were entitled to
receive an initial grant of 10,500 options to purchase common stock under the
1994 Stock Option Plan (the "1994 Stock Option Plan") upon election to the
Board, and subsequent grants at each reelection to the Board of an option to
purchase that number of common shares equaling the quotient derived by dividing
$15,000 by the fair market
5
<PAGE>
value of the common stock on the grant date. The options vested one-third
immediately and one-third on each of the next two anniversaries. Unexercised
options expired on the optionee ceasing to be a director, unless due to death,
disability, or the optionee not being nominated or elected to serve despite
his/her willingness to do so.
Effective October 6, 1999 the Board terminated the 1994 Stock Option Plan
and adopted other plans in its place, including the 1999 Non-Employee Directors'
Stock Option Plan. Provided it is approved by the shareholders (SEE PROPOSAL
THREE OF THIS STATEMENT), upon being appointed to the Board, each non-employee
director will be entitled automatically to receive an option to purchase 25,000
shares of common stock at an exercise price equal to 85% of the fair market
value of the common stock on the date of grant. In addition, so long as the Plan
is in effect and there are shares available for grant, each director in service
on January 1 of each year (provided the director has served continuously for at
least the preceding 30 days) is entitled to receive an option to purchase 25,000
shares of common stock at an exercise price equal to 85% of the fair market
value of the common stock on the date of grant. Initial options as well as
annual options granted under the Plan are subject to one of two vesting
schedules, either vesting over four years or vesting fully on the date of grant.
In the latter event, the common stock acquired upon exercise of such options is
subject to the Company's right of repurchase, which right lapses in four equal
installments, beginning on the first anniversary of the date of grant.
The Board may suspend or terminate the Non-Employee Directors' Plan at any
time. If no such termination occurs, the Non-Employee Directors' Plan will
terminate by its terms on December 31, 2009.
Employee Director Compensation. Employees who serve as directors of the
Company (Mr. Brooks) receive no additional compensation for such service. Mr.
Brooks is also a named executive officer of the Company and his compensation is
reflected in the Summary Compensation Table contained elsewhere in this
statement.
EXECUTIVE OFFICERS
Our executive officers are elected by the Board of Directors and serve at
the Board's discretion. The current executive officers are Gary H. Brooks, who
serves as the President, Chief Financial Officer (Acting) and Secretary, and
John J. Ariatti, who serves as Vice President, Sales and Marketing.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables, based in part upon information supplied by officers,
directors and principal shareholders, set forth certain information regarding
the ownership of the Company's voting securities as of October 31, 1999 by (i)
all those known by the Company to be beneficial owners of more than five percent
of any class of the Company's voting securities; (ii) each director; (iii) each
named executive officer; and (iv) all executive officers and directors of the
Company as a group. Unless otherwise indicated, each of the shareholders has
sole voting and investment power with respect to the shares beneficially owned,
subject to community property laws where applicable.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS(A)
<TABLE>
<CAPTION>
% OF
NAME AND ADDRESS NUMBER OF OUTSTANDING NUMBER OF SHARES % OF OUTSTANDING
OF BENEFICIAL SHARES OF COMMON OF SERIES A SERIES A
OWNER COMMON STOCK STOCK PERFERRED STOCK PREFERRED STOCK
-------------------- -------------- ------------ -------------------- ----------------
<S> <C> <C> <C> <C>
Uro-Tech Ltd.(b) 1,174,787 2.0% 433,329 44.2%
Imatron Inc.(c) 9,000,000 15.6%
Banco Privado
Portuges(d) 5,000,000 8.7%
Amorim
Dessenvolvimento,
S.G.P.S., S.A.(e) 5,000,000 8.7%
Dapicod Investments
Co., Ltd.(f) 5,000,000 8.7%
</TABLE>
- ------------------------
(a) Security ownership information for beneficial owners is taken from
statements filed with the Securities and Exchange Commission pursuant to
Sections 13(d), 13(g) and 16(a) and information made known to the company.
(b) Includes 424,787 shares of common stock owned by Uro-Tech, Ltd., a Texas
limited partnership, the general partner of which is OmniMed Corporation
("OmniMed"). Includes 433,329 shares of common stock issuable upon
conversion of 433,329 shares of Series A 8% cumulative convertible
redeemable preferred stock, and 216,671 warrants to purchase common stock
acquired upon conversion of $650,000 in principle amount of the Uro-Tech
loan. Also includes 100,000 shares issuable upon conversion of warrants
acquired in connection with extending and retiring the Uro-Tech loan. Dr.
Wood is a director and beneficially owns 63.7% of the outstanding voting
securities of OmniMed. All shares beneficially owned by OmniMed have been
included in the total number of shares beneficially owned by Dr. Wood.
(c) Represents all securities purchased in connection with Imatron Transaction
See Proposal 1 of this Statement. The headquarters offices of Imatron are
located at 389 Oyster Point blvd., So. San Francisco, CA 94080.
(d) R. Muezinho da Silveira, 12, 1250 Lisbon, Portugal.
(e) Edificio Amorim, Rua de Melandas No. 380 (Apartado 20), 4536 Mozelos VFR
Codex, Portugal.
(f) Edificio Peninsula, Praca do Bom Sucesso 127/131 - 7th, ESC. 702, Ap.
551236EC Galiza, 4051-401 Porto, Portugal.
7
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The table below presents the security ownership of the Company's Directors
and Named Executive Officers.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (AA) PERCENT OF CLASS (BB)
- -------------- ---------------------------- -------------------------- ---------------------
<S> <C> <C> <C>
Common Gary H. Brooks 3,050,000(cc) 5.0%
Common S. Lewis Meyer 1,579,000(dd) 2.7%
Common Gary B. Wood, Ph.D 80,793(ee) *
Common John J. Ariatti 40,625(ff) *
Common All Directors and Executive
Officers as a Group 4,750,418 7.7%
</TABLE>
- -----------------------
* Does not exceed 1% of the referenced class of securities.
(aa) Ownership is direct unless indicated otherwise.
(bb) Calculation based on 57,534,660 common shares outstanding as of October
31, 1999.
(cc) Includes 50,000 shares owned directly and 3,000,000 shares issuable upon
the exercise of warrants that are exercisable as of October 31, 1999 or
that will become exercisable within 60 days thereafter.
(dd) Includes 79,000 shares owned directly and 1,500,000 shares issuable upon
the exercise of warrants that are exercisable as of October 31, 1999 or
that will become exercisable within 60 days thereafter.
(ee) Includes 7,304 shares of common stock issuable upon exercise of a warrant
held by Dr. Wood and 50,000 shares of common stock issuable upon exercise
of options granted to Dr. Wood in March 1995, 7,000 shares of common stock
issuable upon exercise of options granted to Dr. Wood in June 1994 and
1,209 shares of common stock issuable upon exercise of options granted to
Dr. Wood in June 1995. Also includes 15,280 shares of common stock
beneficially owned by OmniMed. Dr. Wood owns 63.7% of the outstanding
voting securities of OmniMed.
(ff) Mr. Ariatti was granted an option to purchase 650,000 shares of common
stock in connection with his employment, none of which options has yet
vested, but 40,625 of which will vest within 60 days of October 31, 1999.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION OF NAMED EXECUTIVES
The Summary Compensation Table shows certain compensation information for
each person who served as Chief Executive Officer during the year and the other
most highly compensated executive officers whose aggregate compensation exceeded
$100,000 for services rendered in all capacities during fiscal year 1998 and for
the first 10 months of fiscal year 1999 (collectively referred to as the "Named
Executive Officers"). Compensation data is shown for the fiscal years ended
December 31, 1998 and 1997 and for the first ten months of fiscal year 1999.
This information includes the dollar value of base salaries, bonus awards, the
number of stock options granted, and certain other compensation, if any, whether
paid or deferred.
8
<PAGE>
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($)(a) BONUS SARS COMPENSATION(b)
- --------------------------- ----- ------------- ------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Gary H. Brooks, 1999 $48,375(c) -0- -0- -0-
President
Gary B. Wood, Ph.D., 1999 6,667 -0- -0- -0-
President and Chief 1998 80,004 -0- -0-
Executive Officer (2/1/97 1997 33,333 -0- -0-
to 1/22/99)
John J. Ariatti 1999 $15,801(d) -0- 650,000(d)
Howard Baker 1998 $155,739(e) -0- -0- $1,986
1997 $86,008 -0- -0-
</TABLE>
- -----------------------------
(a) Amounts shown include cash and non-cash compensation earned with respect
to the year shown above.
(b) Represents the Company's matching contributions to its 401(k) plan.
(c) Mr. Brooks served as President on a part-time basis from January 22, 1999
until September 1, 1999, and thereafter on a full-time basis. This number
reflects compensation paid through October 31, 1999. Mr. Brooks also
received $20,000 in reimbursement of relocation expenses in 1999.
(d) Mr. Ariatti was appointed Vice President, Sales and Marketing effective
September 27, 1999. This number reflects compensation paid him from that
date through October 31, 1999. In connection with his employment he was
granted options to purchase 650,000 shares of Positron common stock
exercisable at $0.47, the market price of the stock on the grant date. The
options vest quarterly over the first four years from the date of grant.
None of the options is currently exercisable, but 40,625 are exercisable
within 60 days of October 31, 1999.
(e) Mr. Baker served as EVP, Sales and Marketing until December 1998 when he
resigned.
INCENTIVE AND REMUNERATION PLANS
1999 STOCK BONUS INCENTIVE PLAN
In October 1999 the Board adopted a Stock Bonus Incentive Plan, which
provides, subject to shareholder approval (SEE PROPOSAL FOUR OF THIS STATEMENT)
for the grant of bonus shares to any Positron employee or consultant to
recognize exceptional service and performance beyond the service recognized by
the employee's salary or consultant's fee. The Stock Bonus Plan is currently
administered by the Board or by delegation to the Stock Bonus Committee. Each
grant of bonus shares is in an amount determined by the Board, up to a maximum
of 40% of the participant's salary in the case of any employee or, in the case
of a consultant, in an amount determined by the Board in its discretion. The
shares becomes exercisable according to a schedule to be established by the
Board at the time of grant. The Committee has exclusive authority to act on the
following matters: selection of the persons among the eligible participants
(which consists of all employees, including officers and directors of the
Company, and consultants to the Company) who are to participate in the Stock
9
<PAGE>
Bonus Plan; the determination of each participant's stock bonus opportunity and
actual bonus; changes in the Plan, and all other actions the Committee deems
necessary or advisable to administer the Plan.
The total number of shares of Common Stock which may be issued under the
Stock Bonus Plan is 1,000,000 shares with no more than 200,000 shares available
for issuance in any single calendar year.
STOCK PARTICIPATION AND OPTION PLANS
1987 STOCK OPTION PLAN
The Company adopted an Amended and Restated 1987 Stock Option Plan (the
"1987 Plan") which was adopted by the Board of Directors and shareholders of the
Company effective June 1, 1987, was amended on March 13, 1991, and further
amended in March 1992, September 1992 and November 1993. The plan provided for
options exercisable for up to a total of 188,522 shares of Common Stock. The
1987 Plan provided that incentive options which satisfied the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), could
be granted to executives and other key employees (including officers who may be
members of the Board of Directors) of the Company and that nonqualified options
could be granted to such directors, executive employees and other key employees
(including officers who may be members of the Board of Directors of the
Company), each as the Board of Directors determined from time to time. If any
options granted under the 1987 Plan expired or terminated without being
exercised, the shares covered thereby were added back to the shares reserved for
issuance under the 1987 Plan.
The Compensation Committee of the Board of Directors administered the 1987
Plan. The 1987 Plan provided that options could be granted at no less than 75%
of the fair market value of the Common Stock on the date of the grant (or 110%
of the fair market value for options granted to participants who owned 10% or
more of the Company's outstanding Common Stock).
The Compensation Committee determined, at its discretion, the persons to
be granted options, option prices, date of grant and vesting periods, although
no option could extend for longer than ten years (five years for incentive stock
options granted to 10% or greater shareholders). Payment of the exercise price
were made by check or in such other form as was acceptable to the Board of
Directors including, under certain circumstances, the delivery of Common Stock.
No options could be granted under the 1987 Plan after June 1, 1997.
Options were not transferable by the optionee, other than by will or the
applicable laws of descent and distribution. In the event of termination of
employment, the option expired on the earlier of its stated expiration or three
months (six months in the case of the optionee's death) after termination of
employment.
In the event of a recapitalization, reorganization or other change in the
Company's capital structure or a merger or consolidation or the sale or transfer
of all or part of its assets, the 1987 Plan provided for adjustment of the
shares of Common Stock covered by the 1987 Plan and outstanding options granted
pursuant to the 1987 Plan.
The 1987 Plan could be amended at any time by the Board of Directors,
provided that amendments increasing the number of shares issuable under the 1987
Plan and amendments changing the eligibility of participants required the
approval of the holders of at least a majority of the outstanding Common Stock.
In November 1993, the Board of Directors canceled all of the outstanding
options under the 1987 Plan. Concurrently with such cancellation, the Company
entered into agreements with the holders of the canceled options providing for
the reissuance of such options at an exercise price of $6.1875 per share. In
April 1994, the Company issued options replacing the previously canceled options
and issued additional options for a total of 185,229 shares of Common Stock at
an exercise price of $6.1875 per share. All of such options vested on January 1,
1995.
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<PAGE>
On February 23, 1995, the exercise price of all outstanding options under
the 1987 Plan was amended to reflect a new exercise price of $2.625 per share,
which was the market price of the Common Stock on such date. In addition, on
such date an additional 62,500 options were awarded under the 1987 Plan at the
$2.625 exercise price leaving only 12,431 options available for future awards
under the 1987 Plan.
1994 INCENTIVE AND NON-STATUTORY OPTION PLAN
On June 3, 1994, the shareholders of the Company approved the 1994
Incentive and Non-statutory Option Plan (the "1994 Plan"). The 1994 Plan was an
arrangement under which certain individuals could be granted options for
incentive stock options and non-statutory stock options as described below.
Subject to adjustment as set forth in the 1994 Plan, the aggregate number of
shares of the Common Stock that was the subject of awards was 610,833. Of the
610,833 shares of Common Stock available under the 1994 Plan, 160,000 were
reserved for issuance to non-employee directors. As of December 31, 1996,
345,481 options had been granted to employees and 113,724 options had been
granted to non-employee directors. As of December 31, 1997, 572,678 options had
been granted in the aggregate to employees and non-employee directors. No
additional options were granted to employees in 1998.
The Compensation Committee of the Board of Directors administered the 1994
Plan. The Compensation Committee consisted of directors who, except for
automatic grants for non-employee directors under Section 7 of the 1994 Plan,
were not eligible and had not, within one year prior to the appointment of the
Compensation Committee, received equity securities of the Company under the 1994
Plan or any other incentive plan of the Company.
Under the 1994 Plan, the Compensation Committee had wide discretion and
flexibility, enabling the Compensation Committee to administer the 1994 Plan in
the manner that it determined was in the best interest of the Company. The
Compensation Committee had the authority to designate recipients of options
under the 1994 Plan, to interpret and construe the provisions of the 1994 Plan
and any options granted thereunder, and to do all things necessary or
appropriate to administer the 1994 Plan in accordance with its terms.
On October 6,1999 the Board terminated the 1994 Plan and adopted or
otherwise ratified four other compensation and/or option plans.
THE 1999 EMPLOYEE STOCK OPTION PLAN
The 1999 Stock Option Plan, adopted effective June 15, 1999, ratified by
the Board on October 6, 1999 and subject to shareholder approval (SEE PROPOSAL
TWO OF THIS STATEMENT) provides for the grant of options to officers, employees
(including employee directors) and consultants. The 1999 Plan is administered by
the Board of Directors which is authorized to determine the terms of each option
granted under the plan, including the number of shares, exercise price, term and
exercisability. Options granted under the plan may be incentive stock options or
nonqualified stock options. The exercise price of incentive stock options may
not be less than 100% of the fair market value of the common stock as of the
date of grant (110% of the fair market value in the case of an optionee owns
more than 10% of the total combined voting power of all classes of Positron
capital stock). Options may not be exercised more than ten years after the date
of grant (five years in the case of 10% stockholders). The Board has authorized
issuance of up to 4,000,000 shares of common stock pursuant to this Stock Option
Plan.
Upon termination of employment for any reason other than death or
disability, each option may be exercised for a period of 90 days, to the extent
it is exercisable on the date of termination. In the case of a termination due
to death or disability, an option will remain exercisable for a period of one
year, to the extent it is exercisable on the date of termination.
As of October 6, 1999, the date on which the Board terminated the 1994
Plan, there were 29,155 shares available for grant under the 1994 Plan. As of
October 31, 1999, there were 3,205,000 shares available for grant under the 1999
Plan, provided we obtain shareholder approval of that Plan.
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<PAGE>
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
The 1999 Non-Employee Directors' Stock Option Plan was adopted by the
Board on October 6, 1999 simultaneously with the termination of the 1994 Plan.
Subject to shareholder approval (SEE PROPOSAL THREE OF THIS STATEMENT) the Plan
provides for the automatic grant of an option to purchase 25,000 shares of
common stock to non-employee directors upon their initial election or
appointment to the Board, and subsequent annual grants also in the amount of
25,000 shares as of January 1 of each year they continue to serve as a
director.. The exercise price of the options is 85% of the fair market value of
the common stock on the date of grant. The Directors' Plan is administered by
the Board. Options granted under the Directors' Plan become exercisable in one
of two ways: either in four equal annual installments, commencing on the first
anniversary of the date of grant, or immediately but subject to the Company's
right to repurchase, which repurchase right lapses in four equal annual
installments, commencing on the first anniversary of the date of grant. To the
extent that an option is not exercisable on the date that a director ceases to
be a director of the company, the unexercisable portion terminates. The Plan
provides that up to 500,000 common shares are issuable pursuant to this Plan.
1999 EMPLOYEE STOCK PURCHASE PLAN
A total of 500,000 shares of common stock has been reserved for issuance,
subject to shareholder approval of the Plan (SEE PROPOSAL FIVE OF THIS
STATEMENT) under Positron's Employee Stock Purchase Plan (the "Purchase Plan"),
none of which has as yet been issued. The Purchase Plan permits eligible
employees to purchase Common Stock at a discount through payroll deductions
during offering periods of up to 27 months. The initial offering period will
begin no earlier than January 1, 2000. The price at which stock is purchased
under the Purchase Plan will be equal to 85% of the fair market value of common
stock on the first or last day of the offering period, whichever is lower.
Eligible employees are offered the opportunity to purchase Common Stock by means
of payroll deductions of 2%, 4%, 6%, 8% or 10% of compensation. The specific
percentage selected is at the employee's option, up to a yearly maximum
established from time to time (currently established at $7,000) of the fair
market value of the Stock, determined on the Offering Date, and so long as the
participant would not own 5% or more of the voting power of the Company's stock
following the purchase. Each participant may begin participation in the Plan at
the beginning of the Offering Period or any Interim Offering Period, may
decrease but not increase participation during the Offering Period, and may
terminate participation in the Plan before the end of any Interim Offering
Period, all subject to certain notice and filing requirements.
Administration of the Plan is by the Company's Board, or Compensation
Committee by delegation. The Committee is comprised of at least two members of
the Company's Board, each of whom must be disinterested as defined in Securities
and Exchange Commission regulations. The Committee has the powers of the Board
pursuant to the Plan, including the power to determine questions of policy and
expediency that may arise in the administration of the Plan, all subject to the
provisions of the Plan. Members of the Committee receive no compensation for
their services in connection with the administration of the Plan.
To participate in the Plan, employees must submit the appropriate
documentation authorizing deductions from payroll in specified amounts to the
Company prior to the Offering Period or Interim Offering Period. Funds deducted
during the quarter are used to purchase shares of the Company's Common Stock,
the number of which is determined (in whole shares) on the final day of that
quarter by dividing the amount in the participant's Plan Account by the purchase
price of the stock as determined above. Participants receive certificates
quarterly for all shares purchased during that quarter. They may retain the
certificated shares or sell them in the open market or otherwise, subject to
securities and tax law restrictions. Upon termination of employment,
participants will receive certificates evidencing previously purchased shares
and a return of any balance remaining in the participant's account on the date
of termination.
The Board reserves the right to amend or discontinue the Plan, provided
that no participant's existing rights are adversely affected, and provided
further that without Shareholder approval, no amendment will be effective: (1)
increasing the aggregate number of shares authorized for purchase
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<PAGE>
under the Plan or to be purchased by any participant; (2) materially changing
the requirements for eligibility to participate, or reducing the purchase price
formula in the Plan, or materially increasing the benefits accruing to
participants under the Plan; (3) extending the term of the Plan; or (4)
otherwise modifying the Plan if the modification requires shareholder approval
to satisfy applicable statutes or Internal Revenue Service and/or Securities and
Exchange Commission regulations.
401(k) PLAN
The Company has a 401(k) Retirement Plan and Trust (the "401(k) Plan")
which became effective as of January 1, 1989. Employees of the Company who have
completed one-quarter year of service and have attained age 21 are eligible to
participate in the 401(k) Plan. Subject to certain statutory limitations, a
participant may elect to have his or her compensation reduced by up to 20% and
have the Company contribute such amounts to the 401(k) Plan on his or her behalf
("Deferral Contributions"). The Company makes contributions in an amount equal
to 25% of the participant's Deferral Contributions up to 6% of his or her
compensation ("Employer Contributions"). Additionally, the Company may make such
additional contributions as it shall determine each year in its discretion. All
Deferral and Employer Contributions made on behalf of a participant are
allocated to his or her individual accounts and such participant is permitted to
direct the investment of such accounts.
A participant is fully vested in the current value of that portion of his
or her accounts attributable to Deferral Contributions. A participant's interest
in that portion of his or her accounts attributable to Employer Contributions is
generally fully vested after five years of employment. Distributions under the
401(k) Plan are made upon termination of employment, retirement, disability and
death. In addition, participants may make withdrawals in the event of severe
hardship or after the participant attains age fifty-nine and one-half.
The 401(k) Plan is intended to qualify under Section 401 of the Code, so
that contributions made under the 401(k) Plan, and income earned on
contributions, are not taxable to participants until withdrawal from the 401(k)
Plan.
The Company's contributions to the 401(k) Plan on behalf of all employees
in the years ended December 31, 1998, December 31, 1997 and December 31, 1996
were $11,420, $26,306 and $36,000, respectively.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the options granted during the last fiscal
year to each of the named executive officers of the Company:
<TABLE>
<CAPTION>
Option/SAR Grants In Fiscal Year 1998
- ---------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
FOR OPTION TERM
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDER GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE MARKET EXPIRATION
NAME (#) YEAR(a) ($/SH) PRICE DATE 0%($) 5%($)(b)
- ------ ---------- ----------- ------------ -------- ----------- ------ ---------
Gary B. Wood -0- -0- -0- -0- -0- -0- -0-
</TABLE>
- -------------------------------
(a) No options were granted to any employee, including executive officers,
during the last fiscal year.
(b) Based on 5-year option term and annual compounding; results in total
appreciation of 27.6% (at 5% per year) and 61.1% (at 10% per year).
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<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth the options exercised during the last
fiscal year by Named Executive Officers of the Company:
Aggregated Options Exercised and Option Values in Fiscal Year 1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN THE MONEY OPTIONS AT
SHARES ACQUIRED VALUE OPTIONS AT YEAR-END (#) YEAR-END ($)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------ ----------------- ------------ --------------------------- -------------------------
<S> <C> <C> <C> <C>
Gary B. Wood -0- -0- -0- -0-
</TABLE>
COMPENSATION COMMITTEE REPORT
This report is provided by the Compensation Committee of the Board of
Directors (the "Committee") to assist stockholders in understanding the
Committee's objectives and procedures in establishing the compensation of
Positron's Chief Executive Officer, when employed, the President, and other
executive officers. The Committee, made up of non-employee Directors, is
responsible for establishing and administering the Company's executive
compensation program. None of the members of the Committee is eligible to
receive awards under the Company's incentive compensation programs.
Positron's executive compensation program is designed to motivate, reward,
and retain the management talent needed to achieve its business objectives and
maintain its competitiveness in the medical imaging industry. It does this by
utilizing competitive base salaries that recognize a philosophy of career
continuity and by rewarding exceptional performance and accomplishments that
contribute to the Company's success.
COMPENSATION PHILOSOPHY AND OBJECTIVE
The philosophical basis of the compensation program is to pay for
performance and the level of responsibility of an individual's position. The
Committee finds greatest value in executives who possess the ability to
implement the Company's business plans as well as to react to unanticipated
external factors that can have a significant impact on corporate performance.
Compensation decisions for all executives, including the named executive
officers, are based on the same criteria. These include quantitative factors
that directly improve the Company's short-term financial performance, as well as
qualitative factors that strengthen the Company over the long term, such as
demonstrated leadership skills and the ability to deal quickly and effectively
with difficulties which sometimes arise.
The Committee believes that compensation of Positron's key executives
should:
o Link rewards to business results and stockholder returns;
o Encourage creation of stockholder value and achievement of
strategic objectives;
o Maintain an appropriate balance between base salary and short-
and long-term incentive opportunity;
o Attract and retain, on a long-term basis, highly qualified
executive personnel; and
o Provide total compensation opportunity that is competitive with
that provided by competitors in the medical imaging industry,
taking into account relative company size and performance as
well as individual responsibilities and performance.
KEY ELEMENTS OF EXECUTIVE COMPENSATION
Positron's executive compensation program consists of three elements: Base
Salary, Short-Term Incentives and Long-Term Incentives. Payout of short-term
incentives depends on corporate performance measured against annual objectives
and overall performance. Payout of the long-term incentives depends on
performance of Positron stock, both in absolute and relative terms.
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<PAGE>
BASE SALARY
A competitive base salary is crucial to support the philosophy of
management development and career orientation of executives. Salaries are
targeted to pay levels of the Company's competitors and companies having similar
capitalization and revenues, among other attributes. Executive salaries are
reviewed annually.
SHORT-TERM INCENTIVE
Short-term awards to executives are made in cash and in stock to recognize
contributions to the Company's business during the past year. The bonus an
executive receives is dependent on individual performance and level of
responsibility. Assessment of an individual's relative performance is made
annually based on a number of factors which include initiative, business
judgment, technical expertise, and management skills.
CASH BONUS PROGRAM. From time to time, the Committee adopts an Executive
Officer Cash Bonus Program, pursuant to which executive officers are eligible to
receive a bonus from a pool consisting of a set percentage of net profits from
that particular fiscal year. The Committee allocates to each executive officer a
percentage of the bonus pool. For the year 1998 the Committee did not adopt a
Cash Bonus Program, and no cash bonus awards were made to any executive officer
during 1998.
STOCK BONUS INCENTIVE PLAN. In 1999 the Board adopted, and we are
requesting the shareholders to approve the adoption of the 1999 Stock Bonus
Incentive Plan. (SEE PROPOSAL FOUR OF THIS STATEMENT). Under the terms of the
Stock Bonus Plan the Committee may award shares of the Company's Common Stock to
employees, including executive officers.
LONG-TERM INCENTIVE
Long-term incentive awards are designed to develop and maintain strong
management through share ownership and incentive awards. We are seeking
shareholder approval of the 1999 Stock Option Plan and the 1999 Employee Stock
Purchase Plan.
STOCK OPTION PLAN. The 1999 Stock Option Plan replaces the 1994 Stock
Option Plan and, if approved by the shareholders, will authorize issuance of up
to 4,000,000 common shares under this Plan. (SEE PROPOSAL TWO OF THIS
STATEMENT). At the sole discretion of the Stock Option Committee, eligible
officers and employees periodically receive options to purchase shares of the
Company's Common Stock pursuant to the Option Plan. The value of the options
depends entirely on appreciation of Positron stock. Grant of options depends
upon quarterly and annual Company performance, as determined by review of
qualitative and quantitative factors.
EMPLOYEE STOCK PURCHASE PLAN. In October 1999 the directors approved the
adoption of the 1999 Employee Stock Purchase Plan. If approved by the
shareholders (SEE PROPOSAL FIVE OF THIS STATEMENT) all employees, including
executive officers, may purchase shares of the Company's Common Stock at a
discount of 15% from the market price of the shares.
1998 COMPENSATION FOR CHIEF EXECUTIVE OFFICER AND NAMED EXECUTIVE OFFICERS.
During 1998, Gary B. Wood served as the Company's Chief Executive Officer
pursuant to the terms of an existing Consulting Agreement between Dr. Wood and
the Company. The terms of the Consulting Agreement, including its compensation
and payment terms, were negotiated at the time the Agreement was originally
entered into. (See TRANSACTIONS WITH MANAGEMENT AND OTHERS of this Statement.)
No additional amounts beyond those called for pursuant to the Consulting
Agreement were paid to Dr. Wood for his service as the Company's Chief Executive
Officer.
Based on the Company's performance, the Board awarded no cash or stock
bonuses nor stock options during the year to the Chief Executive Officer nor to
any other Named Executive Officer.
Members of the Compensation Committee
S. Lewis Meyer
Gary B. Wood, Ph.D.
15
<PAGE>
- --------------------------------------------------------------------------------
SHARE INVESTMENT PERFORMANCE
The following graph compares the total return performance of the Company
for the periods indicated with the performance of the Russell 2000 Index
(presented on a dividends reinvested basis) and the performance of the Hambrecht
& Quist Medical Products Index. The Company's shares are traded on the
over-the-counter securities market, and quoted on the NASDAQ Bulletin Board
under the symbol "POSC". The Russell 2000 Index measures the performance of the
1,000 smallest companies in the Russell 3000 Index, representing approximately
10% of the total market capitalization of that Index with an average market
capitalization currently of $467.3 million. The H&Q Medical Products Index is
comprised of 20 companies in the medical products and related industries. The
total return indices reflect reinvested dividends and are weighted on a market
capitalization basis at the time of each reported data point.
PERFORMANCE GRAPH
Graph omitted
Year 1993 1994 1995 1996 1997 1998
- ---------------------------- ----- ----- ----- ----- ----- ----
Positron Corporation 100 81 26 25 4 2
Russell 2000 100 98 138 170 208 294
H&Q Medical Products Index 100 100 100 100 119 175
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<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
Gary H. Brooks became President of the Company on January 22, 1999,
initially on a part-time basis and on a full-time basis as of September 1, 1999.
In connection with such employment the Company entered into an Employment
Agreement with Mr. Brooks providing for an initial term ending June 15, 2000 and
continuing for rolling six month periods thereafter. Pursuant to the Agreement,
in the event of his termination without cause, Mr. Brooks is entitled to receive
the greater of his base salary for the remainder of the term or six months at
the annual salary rate then in effect.
REPORT ON REPRICING OF OPTIONS/SARS.
The Company did not reprice any options or stock appreciation rights
during 1998.
Compensation Committee
S. Lewis Meyer
Gary B. Wood, Ph.D.
FILINGS BY DIRECTORS, EXECUTIVE OFFICERS AND TEN PERCENT HOLDERS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Executive officers, directors, and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting person timely filed, the Company
believes all such forms were timely filed.
PROPOSAL TWO
TO APPROVE THE 1999 STOCK OPTION PLAN AND AUTHORIZATION OF 4,000,000
COMMON SHARES ISSUABLE PURSUANT TO THE PLAN
The following is a summary of the material features of the 1999 Stock
Option Plan for which shareholder approval is being requested ("Stock Option
Plan").
PROPOSAL
On October 6, 1999 the Board of Directors terminated the 1994 Stock Option
Plan (which provided for options grants to employees, consultants, and
non-employee directors) and ratified the adoption, effective June 15, 1999, of
the 1999 Stock Option Plan for employees and non-employee consultants. If
approved by the shareholders, the Stock Option Plan also authorizes up to
4,000,000 shares of common stock to be issued to employees and consultants
pursuant to that Plan. At the annual meeting the shareholders are being
requested to consider and approve the adoption of the Stock Option Plan as well
as the authorization of 4,000,000 common shares issuable pursuant to the Plan.
The affirmative vote of the holders of a majority of the shares represented and
voting at the meeting is required for approval.
17
<PAGE>
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL TWO
A Summary of the essential features of the 1999 Stock Option Plan are
outlined below. A complete text of the Stock Option Plan is set forth as Exhibit
1 to this Statement.
PURPOSE
The purposes of the 1999 Stock Option Plan are to induce persons of
outstanding ability and potential to join and remain with the Company, to
provide incentive for such employees and non-employee consultants to expand and
improve the profits and prosperity of the Company, and to attract and retain key
personnel. The Stock Option Plan provides for the granting of both incentive
stock options and nonqualified stock options.
ELIGIBILITY
Options may be granted under the Stock Option Plan to any regular,
full-time employee, including officers and directors, and to non-employee
consultants of the Company; provided however that incentive stock options may be
granted only to employees. Directors who are not employees of the Company are
not eligible to participate in the Stock Option Plan.
ADMINISTRATION
Administration of the Stock Option Plan is by a Stock Option Plan
Committee comprised of at least two non-employee members of the Board. The
Committee has the power to: grant options; determine the option price and term
of each option, determine the persons to whom and the time or times at which
options shall be granted, and determine the number of shares to be subject to
each option; interpret the Stock Option Plan; prescribe rules and regulations
relating to the Stock Option Plan; and make all other determinations deemed
necessary or advisable for the administration of the Stock Option Plan. The
Committee also has the authority to offer participants the opportunity to
replace outstanding higher priced options with new lower priced options. The
Company has reduced the exercise price of options in the past granted under the
1994 Plan. Members of the Committee will receive no compensation for their
services in connection with the administration of the Stock Option Plan.
OPTION TERMS
The maximum term of each option is ten years except that, in the case of a
participant who owns stock possessing more than ten percent of the voting rights
of the Company's outstanding capital stock (a "10% Holder"), the maximum term of
an incentive stock option is five years. Options granted under the Plan must
vest at a rate no less than 20% each year over five years from the grant date,
although the vesting schedule may be more rapid. Options granted under the Plan
are not transferable other than by will or the laws of descent and distribution,
and during an optionee's life are exercisable only by the optionee. Options
granted under the Plan generally terminate three months after the optionee
ceases to be employed by the Company, a parent or subsidiary, except if
termination is due to the employee's permanent and total disability, in which
event the option may be exercised within a year of termination. In the event of
the employee's death, the employee's estate has 18 months to exercise the
option.
EXERCISE PRICE
The exercise price of all nonstatutory stock options granted under the
Plan must be at least equal to 85% of the fair market value of the underlying
stock on the grant date, or 110% of fair
18
<PAGE>
market value in the case of a 10% Holder. The exercise price of all incentive
stock options granted under the Plan must be at least equal to the fair market
value of the underlying stock on the grant date, or 110% of fair market value in
the case of a 10% Holder. With respect to incentive stock options, the aggregate
fair market value (determined at the time of grant) of stock which becomes
exercisable for the first time in any year cannot exceed $100,000. The Plan
permits the exercise of options for cash or stock, other consideration
acceptable to the Committee, or pursuant to a deferred payment arrangement.
CHANGES IN STOCK AND EFFECT OF CERTAIN CORPORATE EVENTS
If there is any change in the Common Stock subject to the Stock Option
Plan or subject to any option granted under the Plan, whether through merger,
consolidation, reorganization, recapitalization, dividend or otherwise, the Plan
provides that an appropriate adjustment be made by the Committee to the
aggregate number of shares subject to the Plan and the number of shares and the
price per share of stock subject to outstanding options.
In the event of dissolution, liquidation or specified types of merger of
the Company, the options granted under the Plan accelerate and become
exercisable immediately prior to such merger or consolidation, unless the
surviving entity assumes the outstanding options or substitutes similar options.
AMENDMENT AND TERMINATION
The Board of Directors may amend or terminate the Stock Option Plan at any
time, except that any amendment which would (i) increase the aggregate number of
shares of common stock issued under the Plan, or (ii) materially increase the
benefits accruing to participants, or (iii) materially modify the eligibility
requirements will only be effective if approved by the Company's shareholders
within 12 months before or after adoption. Unless terminated earlier, the Plan
will terminate on June 15, 2009.
FEDERAL INCOME TAX CONSEQUENCES
Incentive stock options granted under the Stock Option Plan are intended
to be eligible for the favorable income tax treatment accorded incentive stock
options under Section 422 of the Internal Revenue Code. Nonqualified stock
options granted under the Stock Option Plan are subject to federal income tax
treatment pursuant to rules governing options that are not incentive stock
options.
INCENTIVE STOCK OPTIONS. There are generally no federal income tax
consequences to the optionee by reason of the grant or exercise of an incentive
stock option. The exercise of an incentive stock option may increase the
optionee's alternative minimum tax liability however, if any.
If an optionee holds stock acquired through exercise of an incentive stock
option for more than two years from the date on which the option is granted and
more than one year from the date on which the shares are transferred to the
optionee upon exercise of the option, any gain or loss on a disposition of such
stock will be capital gain or loss. Any capital gain or loss realized by an
optionee on a qualifying or disqualifying (see below) disposition of stock
acquired through exercise of an incentive stock option will be long-term or
short-term depending on whether the stock was held for more than one year.
Generally, if the optionee disposes of the stock before the expiration of either
of the holding periods described above (a "disqualifying disposition"), at the
time of disposition the optionee will realize taxable ordinary income equal to
the lesser of (i) the excess of the stock's fair market value on the date of
exercise over the optionee's adjusted basis in the stock, or (ii) the optionee's
actual gain, if any, on the purchase and sale. Any additional gain or any loss
upon the disqualifying disposition will be capital gain or loss. Slightly
different rules may apply to optionees who acquire stock subject to certain
repurchase options or who are subject to Section 16(b) of the Exchange Act.
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There are no federal income tax consequences to the Company by reason of
the grant or exercise of an incentive stock option. To the extent the optionee
recognizes ordinary income by reason of a disqualifying disposition, the Company
will be entitled (subject to the requirement of reasonableness and, perhaps, in
the future, the satisfaction of its withholding obligation) to a corresponding
business expense deduction in the tax year in which the disposition occurs.
NONQUALIFIED STOCK OPTIONS. There are normally no tax consequences to the
optionee or the Company by reason of the grant of a nonqualified stock option.
Upon exercise of a nonqualified stock option, the optionee normally recognizes
ordinary income in an amount by which the fair market value of the stock on the
date of exercise exceeds the exercise price. Generally with respect to
employees, the Company is required to withhold from wages an amount based on the
ordinary income realized by the exercise. Subject to the reasonableness
requirement and the satisfaction of its withholding obligation, the Company will
be entitled to a business expense deduction in the amount of the taxable
ordinary income recognized by the optionee.
Upon disposition of the stock, the optionee will recognize a capital gain
or loss equal to the difference between the selling price and the sum of the
amount paid for such shares plus any amount recognized as ordinary income upon
exercise of the option. Such gain or loss will be long or short-term depending
on whether the stock was held for more than one year. Slightly different rules
apply to optionees who acquire stock subject to certain repurchase options or
who are subject to Section 16(b) of the Exchange Act.
There are no tax consequences to the Company by reason of the disposition
of stock acquired upon exercise of a nonqualified option.
USE OF PROCEEDS
All proceeds from the sale of shares pursuant to options granted under the
1999 Stock Option Plan constitute general funds of the Company
INDEMNIFICATION OF COMMITTEE
Under the terms of the Stock Option Plan, members of the Committee are
entitled to be indemnified by the Company against costs and expenses reasonably
incurred in connection with any action or proceeding brought by reason of their
action or failure to act under or in connection with the Stock Option Plan or
any rights granted thereunder.
PROPOSAL THREE
TO APPROVE THE 1999 NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN AND AUTHORIZATION OF 500,000
COMMON SHARES ISSUABLE PURSUANT TO THE PLAN
On October 6, 1999 the Board of Directors adopted the 1999 Non-Employee
Directors' Stock Option Plan. The following is a summary of the material
features of the 1999 Non-Employee Directors' Stock Option Plan ("Directors'
Plan") for which shareholder approval is being sought. The complete text of the
Directors' Plan is set forth as Exhibit 2 to this Statement.
PROPOSAL
On October 6, 1999 the Board of Directors terminated the 1994 Stock Option
Plan (which provided for options grants to employees, consultants, and
non-employee directors) and adopted the 1999 Non-Employee Directors' Stock
Option Plan providing for automatic grants to non-employee directors upon their
initial election and annually thereafter during their service. The Directors'
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Plan also authorizes up to 500,000 shares of common stock to be issued to
non-employee directors pursuant to that Plan. At the annual meeting the
shareholders are being requested to consider and approve the adoption of the
Plan as well as the authorization of 500,000 common shares issuable pursuant to
the Plan. The affirmative vote of the holders of a majority of the shares
represented and voting at the meeting is required for approval.
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL THREE
PURPOSE
The purpose of the 1999 Non-Employee Directors' Stock Option Plan is to
provide a means by which each non-employee director of the Company is given an
opportunity to purchase stock, in turn assisting the Company in securing and
retaining the services of persons capable of serving in such capacity, and to
provide incentive to such persons to exert maximum efforts for the success of
the Company.
ADMINISTRATION
The Directors' Plan is administered by the Company's Board of Directors.
The Board is authorized to delegate administration of the Directors' Plan to a
committee composed of at least two members of the Board.
SHARES SUBJECT TO THE DIRECTORS' PLAN
Subject to the provisions of the Directors' Plan relating to adjustments
upon changes in stock, the stock that may be purchased pursuant to options
granted under the Plan cannot exceed an aggregate of 500,000 shares of the
Company's common stock. If any option granted under the Plan expires for any
reason or otherwise terminates without having been exercised in full, the stock
not purchased under such option again becomes available for the Directors' Plan.
ELIGIBILITY
Options under the Directors' Plan may be granted only to directors of the
Company who are not employees of the Company or any affiliate of the Company.
AUTOMATIC GRANTS
The 1999 Non-Employee Directors' Stock Option Plan provides for the
automatic grant of options to purchase shares of common stock of the Company to
Non-Employee directors. The Plan provides that each person who not an employee
and who is elected for the first time to be a director after the date of
approval of the Plan by the shareholders of the Company (and who has not
previously been an employee of the Company) shall, upon the date of his or her
initial election, automatically be granted an option to purchase 25,000 shares
of our common stock. In addition, every person who remains a director and who is
not an employee on each succeeding January 1st will be granted an additional
option to purchase 25,000 shares, provided there are still shares available in
the Plan to be granted, and provided further that such director has served
continuously as such for at least the immediately preceding thirty (30) days.
TERMS OF OPTIONS
TERM. Options under the Directors' Plan have a ten year term; however,
each option will terminate on the last day of the three-month period commencing
on the date the Eligible Director ceases
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to be a member of the Board for any reason other than death or total disability,
in which case the option may be exercised within 18 months following termination
of such directorship.
EXERCISE PRICE; PAYMENT. The exercise price of each option under the
Directors' Plan must be equal to 85% of the fair market value of the stock on
the grant date. The optionee may elect to pay the option price in cash,
certified check, bank draft or express money order.
VESTING; OPTION EXERCISE. An option granted under the Directors' Plan
vests pursuant to one of two schedules, determined by the Board at the time of
grant: (i) in full on the date of grant; or (ii) in four equal annual
installments commencing on the date one year after the grant date. Options
vesting in full on the grant date are subject to the Company's right to
repurchase at the original per share purchase price, which repurchase right
lapses at the rate of 25% per year starting with the first anniversary of the
Grant. Positron also has a repurchase right with respect to options granted
pursuant to either schedule if the service of a Non-Employee Director is
terminated for any reason other than death or total disability, which repurchase
right continues for 90 days after termination of service. If the Non-Employee
Director exercise his/her option after termination of services for any reason
other than death or total disability, the Company's repurchase right continues
for 90 days after the exercise.
RESTRICTIONS ON TRANSFER
An option under the Directors' Plan is not transferable except by will or
by the laws of descent and distribution, and may be exercised during the
grantee's lifetime only by the grantee or by his/her guardian or legal
representative.
DURATION, AMENDMENT AND TERMINATION
The Board may amend, modify, revise or terminate the Directors' Plan at
any time. Unless sooner terminated, the Directors' Plan will terminate ten years
from the date the plan is approved by the shareholders of the Company.
The Board may amend the Directors' Plan from time to time. However, any
amendment must be approved by the vote of the shareholders of the Company within
twelve months before or after the adoption of the amendment, where the amendment
would modify the Directors' Plan in any way if such modification requires
shareholder approval in order for the Directors' Plan to comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act or to prevent
disqualification of the Directors' Plan from being "disinterested persons"
within the meaning of Rule 16b-3. Rights and obligations under any option
granted before amendment of the Directors' Plan may not be altered or impaired
by any amendment of the Directors' Plan, except with the consent of the person
to whom the option was granted.
ADJUSTMENT PROVISIONS
If there is any change in the stock subject to the Directors' Plan or
subject to any option granted under the Directors' Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, or other
changes in the Company's capital structure or its business) the Directors' Plan
and options outstanding thereunder will be appropriately adjusted as to the
class and the maximum number of shares subject to such plan and the class,
number of shares and price per share of stock subject to such outstanding
options. There is no provision for accelerated vesting in the event of a
dissolution, liquidation, merger or other capital reorganization of the Company.
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FEDERAL INCOME TAX INFORMATION
Options granted under the Directors' Plan will be nonqualified stock
options. There are normally no tax consequences to the optionee or the Company
by reason of the grant of a nonqualified stock option. Upon exercise of such
option, the optionee normally recognizes ordinary income in an amount by which
the fair market value of the stock on the date of exercise exceeds the exercise
price. Upon disposition of the stock, the optionee will recognize a capital gain
or loss equal to the difference between the selling price and the sum of the
amount paid for such shares plus any amount recognized as ordinary income on
exercise of the option. There are no tax consequences to the Company by reason
of the disposition of stock acquired upon exercise of a nonqualified option.
INDEMNIFICATION OF COMMITTEE
Under the terms of the Directors' Plan, members of the Committee are
entitled to be indemnified by the Company against costs and expenses reasonably
incurred in connection with any action or proceeding brought by reason of their
action or failure to act under or in connection with the Directors' Plan or any
rights granted thereunder.
PROPOSAL FOUR
TO APPROVE THE 1999 STOCK BONUS INCENTIVE PLAN
AND THE AUTHORIZATION OF 1,000,0000 COMMON SHARES
ISSUABLE PURSUANT TO THE PLAN
The following is a summary of the material features of the 1999 Stock
Bonus Incentive Plan ("Stock Bonus Plan"). A complete copy of the text of the
Plan is set forth as Exhibit 3 to this Statement.
Proposal
On October 6, 1999 the Board of Directors adopted the Stock Bonus Plan and
authorized the issuance of up to 1,000,000 shares of common stock pursuant to
the Stock Bonus Plan, with no more than 200,000 shares available for issuance in
any single calendar year. The purpose is to provide selected employees and
outside consultants with bonus awards of stock to reward them for past service
and to encourage them to remain in the Company's service. At the annual meeting
the shareholders are being requested to consider and approve the adoption of the
Stock Bonus Plan and the authorization of up to 1,000,000 common shares issuable
pursuant to the Plan. The affirmative vote of the holders of a majority of the
shares represented and voting at the meeting is required for approval.
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL FOUR
PURPOSE
The purpose of the Stock Bonus Plan is to enable the company to reward
past services of selected employees and consultants with bonuses consisting of
common stock and to encourage them to remain in the Company's service, as well
as providing the Company with a valuable tool for recruiting and retaining
employees and outside consultants of outstanding ability.
ADMINISTRATION
The Plan is administered by the Stock Option Committee of the Board of
Directors, which determines the meaning and application of the Plan's
provisions, selects employees, including officers, and consultants who
participate; determines each participant's stock bonus award; waives or changes
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any of the Plan's conditions; adopts or amends rules and guidelines relating to
the Plan; and takes other actions deemed necessary to administer the Plan.
ELIGIBILITY
Any consultant or employee currently providing services is eligible to
receive a bonus. The Committee selects participants whom it believes are in a
position to contribute materially to the attainment of the Company's goals and
objectives. Actual awards are made to reward participants for helping the
Company meet annual business plan goals through a high level of goal oriented
performance which exceeds that normally expected for which the participant is
regularly paid a salary.
BONUS AWARDS
Participants who are employees are eligible to receive up to a maximum
bonus of 40% of their salary or, if outside consultants, whatever bonus the
Committee deems appropriate. The Committee determines any participant's actual
stock bonus award (if any). Participants receiving stock valued at less than
$3,000 are issued stock as soon as practicable following the award. Bonuses of
stock valued at greater than $3,000 are issued within 60 days thereafter.
Distributions of bonus shares are made from authorized but unissued shares.
Participants must be currently employed or currently providing consulting
service to the Company at the time of the bonus award.
SHARES SUBJECT TO THE PLAN
The total number of shares of the Company's common stock which may be
issued under the Plan may not exceed 1,000,000 shares, subject to stock split,
recapitalization or similar change in corporate structure. In no event may the
Company make more than 200,000 shares per year available for issuance pursuant
to bonus awards in any fiscal year.
PROPOSAL FIVE
TO APPROVE THE ADOPTION OF THE 1999 EMPLOYEE
STOCK PURCHASE PLAN AND THE AUTHORIZATION OF
500,000 SHARES OF COMMON STOCK PURSUANT TO THE PLAN
On October 6, 1999 the Board of Directors adopted the 1999 Employee Stock
Purchase Plan ("Stock Purchase Plan.") The following is a summary of the
material provisions of the Stock Purchase Plan for which shareholder approval is
being sought. A complete text of the Stock Purchase Plan is contained as Exhibit
4 to this Statement.
PROPOSAL
On October 6, 1999 the Board of Directors approved the 1999 Employee Stock
Purchase Plan to provide eligible employees with an opportunity to purchase
common stock of the Company through regular payroll deductions, in order to
provide employees with a manageable way by which to increase their proprietary
interest and investment in the Company. The Board also authorized the issuance
of up to 500,000 shares of the Company's common stock pursuant to the Plan.
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MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL FIVE
PURPOSE
The purpose of the Stock Purchase Plan is to provide eligible employees
with an opportunity through regular payroll deductions to purchase common stock
of the Company in order to increase their proprietary interest in the Company.
ELIGIBILITY
All employees who are regular employees of the Company, whose date of hire
is at least six months prior to the beginning of the Offering Period or Interim
Offering Period, and who are customarily employed for at least 20 hours per week
and more than five months in any calendar year are eligible to participate in
the Plan. If approved by the shareholders, the first Offering Period will run
from January 1, 2000 through December 31, 2001, the second from January 1 2002
through March 31, 2004 and the next period from April 1, 2004 through June 30,
2006. Each Interim Offering Period is a calendar quarter.
Eligible employees are offered the opportunity to purchase Common Stock by
means of payroll deductions of 2%, 4%, 6%, 8% or 10% of compensation. The
specific percentage selected is at the employee's option, up to a yearly maximum
of $10,000 of the fair market value of the Stock ` determined on the Offering
Date, and so long as the participant would not own 5% or more of the voting
power of the Company's stock following the purchase. Each participant may begin
participation in the Plan at the beginning of the Offering Period or any Interim
Offering Period, may decrease but not increase participation during the Offering
Period, and may terminate participation in the Plan before the end of any
Interim Offering Period, all subject to certain notice and filing requirements.
ADMINISTRATION
Administration of the Plan is by the Company's Board, or Compensation
Committee by delegation. The Committee is comprised of at least two members of
the Company's Board, each of whom must be disinterested as defined in Securities
and Exchange Commission regulations. The Committee has the powers of the Board
pursuant to the Plan, including the power to determine questions of policy and
expediency that may arise in the administration of the Plan, all subject to the
provisions of the Plan. Members of the Committee receive no compensation for
their services in connection with the administration of the Plan.
PURCHASE PRICE
The price for the shares purchased pursuant to the Plan is equal to 85% of
the fair market value of the shares on either the Offering Date (or date of
entry for new or re-enrolling employees) or the last day of each Interim
Offering Period, whichever is less. The funds contributed by the participant
earn no interest while they are being held by the Company.
PROCEDURES
To participate in the Plan, employees must submit the appropriate
documentation authorizing deductions from payroll in specified amounts to the
Company prior to the Offering Period or Interim Offering Period. Funds deducted
during the quarter are used to purchase shares of the Company's
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Common Stock, the number of which is determined (in whole shares) on the final
day of that quarter by dividing the amount in the participant's Plan Account by
the purchase price of the stock as determined above. Participants receive
certificates annually for all shares purchased during that year. They may retain
the certificated shares or sell them in the open market or otherwise, subject to
securities and tax law restrictions. Upon termination of employment,
participants will receive certificates evidencing previously purchased shares
and a return of any balance remaining in the participant's account on the date
of termination.
PLAN AMENDMENT AND TERMINATION
The Board reserves the right to amend or discontinue the Plan, provided
that no participant's' existing rights are adversely affected, and provided
further that without Shareholder approval, no amendment will be effective: (1)
increasing the aggregate number of shares authorized for purchase under the Plan
or to be purchased by any participant; (2) materially changing the requirements
for eligibility to participate, or reducing the purchase price formula in the
Plan, or materially increasing the benefits accruing to participants under the
Plan; (3) extending the term of the Plan; or (4) otherwise modifying the Plan if
the modification requires shareholder approval to satisfy applicable statutes or
Internal Revenue Service and/or Securities and Exchange Commission regulations.
PROPOSAL SIX
TO RATIFY THE APPOINTMENT OF HAM, LANGSTON & BREZINA
AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS
On April 7, 1998 Coopers & Lybrand L.L.P. ("Former Accountants") informed
the Company that it had resigned as our independent auditors. The reason, as
stated in its resignation letter, was the Company's then financial condition.
The decision to resign was made by the former accountants, and was neither
approved nor disapproved by the Board of Directors. There was no adverse opinion
or disclaimer of opinion, or qualification or modification as to uncertainty,
audit scope, or accounting principles for either of the Company's prior two
fiscal years and from December 31, 1997 through the date of its resignation,
which disagreements, if not resolved to the satisfaction of the Former
Accountants, would have caused it to make reference thereto in its report and
there were no reportable events as defined in paragraph 304(a)(1)(v) of
Regulation S-K promulgated under the Securities Act of 1933.
On June 26, 1998, we engaged Ham, Langston & Brezina, L.L.P. as our new
independent accountants ("Current Accountants") as successor to the Former
Accountants. The shareholders ratified that appointment for the fiscal year 1997
at the shareholders' meeting held on December 18, 1998. We are requesting
shareholder ratification for appointment of Ham, Langston & Brezina, L.L.P. as
our independent accounts for the fiscal year ending December 31, 1998. Our
Current Accountants have indicated that they will have a representative in
attendance if they desire to do so, and will be available to respond to
appropriate questions.
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL SIX
ANNUAL REPORT ON FORM 10-KSB
A copy of the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998, along with a copy of the Report on Form 10-QSB for the
quarter ended September 30, 1999, both as filed with the Securities and Exchange
Commission, is enclosed herewith as part of the enclosed Annual Report to
Shareholders. An additional copy of the Annual Report on Form 10-KSB will be
sent to any shareholder without charge upon written request made to us at 1304
Langham Creek Drive, Suite 300, Houston, Texas 77084: Attention: Corporate
Communications
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OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the annual meeting. If other matters are properly brought
before the meeting, however, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
By Order of the Board of Directors,
/s/ Gary H. Brooks
Gary H. Brooks
Secretary
Houston, Texas
November 29, 1999
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EXHIBIT 1
POSITRON CORPORATION ~1999 STOCK OPTION PLAN
Date of Board Approval: June 15, 1999
Date of Shareholder Approval:______________
1. PURPOSE AND SCOPE. The purposes of this Plan are to induce persons of
outstanding ability and potential to join and remain with Positron Corporation
(the "Company"), to provide an incentive for such employees as well as for
non-employee consultants to expand and improve the profits and prosperity of the
Company by enabling such persons to acquire proprietary interests in the
Company, and to attract and retain key personnel through the grant of Options to
purchase shares of the Company's common stock. As used herein, the term "Option"
includes both Incentive Stock Options and Non-Qualified Stock Options. This 1999
Stock Option Plan is intended to amend and restate any other stock option plan
of the Company currently in effect.
2. DEFINITIONS. Each term set forth in this Section 2 shall have the
meaning set forth opposite such term for purposes of this Plan unless the
context otherwise requires, and for the purposes of such definitions, the
singular shall include the plural and the plural shall include the singular:
(a) "Affiliate" shall mean any parent corporation or subsidiary
corporation of the Company as those terms are defined in Sections 424(e) and (f)
respectively of the Internal Revenue Code of 1986, as amended.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Committee" shall have the meaning set forth in Section 3
hereof.
(d) "Company" shall mean Positron Corporation, a Texas corporation.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Fair Market Value" for a share of Stock means the price that
the Board or the Committee acting in good faith determines, through any
reasonable valuation method (including but not limited to reference to prices
existing in any established market in which the Stock is traded), to be the
price at which a share of Stock might change hands between a willing buyer and a
willing seller, neither being under any compulsion to buy or to sell and both
having reasonable knowledge of the relevant facts.
(g) "Option" shall mean a right to purchase Stock granted pursuant
to the Plan.
(h) "Exercise Price" shall mean the purchase price for Stock under
an Option, as determined in Sections 7 - "Incentive Stock Options" - and 8 -
"Non-Incentive Stock Options" - below.
(i) "Participant" shall mean an employee or non-employee consultant
to the Company to whom an Option is granted under the Plan.
(j) "Plan" shall mean this Positron Corporation 1999 Stock Option
Plan.
(k) "Stock" shall mean the $0.01 par value common stock of the
Company.
(l) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
3. ADMINISTRATION. The Plan shall be administered (i) with respect to
individuals who receive options under the Plan and who are or become subject to
the reporting requirements and short-swing liability provisions of Section 16 of
the Securities Exchange Act of 1934, as amended (the "1934 Act") ("Reporting
Persons") by a committee consisting of at least two members of the
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Board of Directors of the Company (the "Board"), each of whom is a non-employee
director (as such term is defined under Rule 16b-3 of the 1934 Act) (the
"Reporting Persons Committee") and (ii) with respect to all individuals who
receive Options under the Plan and are who are not Reporting Persons, by a
committee which consists of at least two members of the Board (the "Stock Option
Committee"). For purposes of this Plan, references to the "Committee" shall mean
the Reporting Persons Committee, the Stock Option Committee, or both, as the
context may require.
The Committee shall have full authority in its discretion, subject to and
not inconsistent with the express provisions of the Plan, to grant Options, to
determine the Exercise Price and term of each Option, and to select the persons
to whom, and the time or times at which, Options shall be granted and the number
of shares of Stock to be covered by each Option; to interpret the Plan; to
prescribe, amend, and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the option agreements (which need not be
identical) entered into in connection with the grant of Options under the Plan;
and to make all other determinations deemed necessary or advisable for the
administration of the Plan. The Board may delegate to one or more of their
members, or to one or more agents, such administrative duties as it may deem
advisable, and the Board or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Board or such person may have under the Plan. The Board may
employ attorneys, consultants, accountants, or other persons, and the Board
shall be entitled to rely upon the advice, opinions, or valuations of such
persons. All actions taken and all interpretations and determinations made by
the Board in good faith shall be final and binding upon all Participants, the
Company, and all other interested persons. No member of the Board shall be
personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan; and all members of the Board shall be fully
protected by the Company in respect of any such action, determination, or
interpretation.
4. SHARES SUBJECT TO THE PLAN. Subject to adjustment under the provisions
of Section 14 - "Effect of Change in Stock Subject to Plan" - of the Plan, the
maximum number of shares of Stock that may be optioned or sold under the Plan is
Four Million (4,000,000). Such shares may be authorized but unissued shares of
Stock of the Company, or issued shares of Stock reacquired by the Company, or
shares purchased in the open market expressly for use under the Plan. If for any
reason any shares of Stock as to which an Option has been granted cease to be
subject to purchase thereunder, then (unless the Plan shall have been
terminated) such shares shall become available for subsequent awards under this
Plan in the discretion of the Board. The Company shall, at all times while the
Plan is in force, reserve such number of common shares as will be sufficient to
satisfy the requirements of all outstanding Options granted under the Plan.
5. ELIGIBILITY; FACTORS TO BE CONSIDERED IN GRANTING OPTIONS.
(a) Options may be granted to: (i) any regular full-time employee
(including officers and directors) of either the Company or any affiliate of the
Company; and (ii) any non-employee consultant of the Company.
(b) In determining to whom options shall be granted and the number
of shares of Stock to be covered by each Option, the Board shall take into
account the nature the participants' duties, their present and potential
contributions to the success of the Company, and such other factors as it shall
deem relevant in connection with accomplishing the purposes of the Plan. The
Board shall also determine the time(s) of grant, the type and term of Option
granted, and the time(s) of exercise, in whole or part. A Participant who has
been granted an Option under the Plan may be granted new Options, which may be
in addition to prior Options granted under the Plan or may be in exchange for
the surrender and cancellation of prior Options having a higher or lower
Exercise Price and containing such other terms as the Board may deem
appropriate.
6. TERMS AND CONDITIONS OF OPTIONS.
(a) General. Options granted pursuant to the Plan shall be
authorized by the Board and shall be evidenced by agreements ("Option
Agreements") in such form as the Board from time to time shall approve. Such
Option Agreements shall comply with and be subject to the following gen-
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eral terms and conditions, and shall also comply with and be subject to the
provisions of Section 7 relating to Incentive Stock Options or Section 8
relating to Non-Qualified Stock Options, as applicable, as well as such other
terms and conditions as set forth in this Plan and as the Board may deem
desirable, not inconsistent with the Plan.
(b) Employment Agreement. The Committee may, in its discretion,
include in any Option granted under the Plan a condition that the Participant
shall agree to remain in the employ of, and/or to render services to, the
Company for a period of time (specified in the Option Agreement) following the
date the Option is granted. No such Option Agreement shall impose upon the
Company any obligation to employ and/or retain the Participant for any period of
time.
(c) Manner of Exercise. A Participant may exercise an Option by
giving written notice of such exercise to the Company at its principal office,
attention to the Secretary, and paying the Exercise Price either (i) in cash in
full at the time of exercise, or (ii) in the discretion of the Board:
(d) by delivery of other previously outstanding common stock of the
Company,
(i) by an approved deferred payment schedule or other
arrangement, which arrangement shall be contained in writing in the Option
Agreement, in which event an interest rate will be stated which is not less than
the rate then specified which will prevent any imputation of higher interest
under Section 483 of the Code,
(ii) by retention by the Company of some of the Stock as to
which the Option is then being exercised, in which case the Optionee's notice of
exercise shall include a statement (1) directing the Company to retain so many
shares that would otherwise have been delivered by the Company upon exercise of
this Option as equals the number of shares that would have been surrendered to
the Company if the purchase price had been paid with previously outstanding
stock of the Company, and (2) confirming the aggregate number of shares as to
which this Option is being thus exercised and therefore surrendered, or
(iii) in any other form of legal consideration acceptable to
the Committee at the time of grant or exercise.
(e) Time of Exercise. Promptly after the exercise of an Option and
the payment of the Exercise Price, either in full or pursuant to the approved
payment schedule, the Participant shall be entitled to the issuance of a stock
certificate evidencing ownership of the appropriate number of shares of Stock. A
Participant shall have none of the rights of a shareholder until shares are
issued to him/her, and no adjustment will be made for dividends or other rights
for which the record date has occurred prior to the date such stock certificate
is issued.
(f) Number of Shares. Each Option shall state the total number of
shares of Stock to which it pertains.
(g) Option Period and Limitations on Exercise. The Board may, in its
discretion, provide that an Option may not be exercised in whole or part for any
period(s) of time specified in the Option Agreement, except that the right to
exercise must be at the rate of at least 20% per year over five years from the
date the Option is granted, subject to the further conditions of the Plan and
the Option Agreement such as continued employment. However, in the case of an
Option granted to officers, directors, or non-employee consultants of the
Company or any of its affiliates, the Option may become fully exercisable,
subject to the further conditions of the Plan and the Option Agreement, at any
time or during any period established by the Company or its affiliates. The
exercise period shall be stated in the Option Agreement. No Option may be
exercised after the expiration of ten years from the Grant Date. No Option may
be exercised as to less than one hundred (100) shares at any one time, or the
remaining shares covered by the Option if less than one hundred (100).
7. INCENTIVE STOCK OPTIONS. The Board may grant Incentive Stock Options
("ISOs") which meet the requirements of Section 422 of the Code, as amended
from time to time.
(a) ISOs may be granted only to employees of the Company or its
affiliates.
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(b) Each ISO granted under the Plan must be granted within 10 years
from the date the Plan is adopted or is approved by the shareholders of the
Company, whichever is earlier.
(c) The purchase price shall not be less than the Fair Market Value
of the common shares at the time of grant, except that the purchase price shall
be 110% of the Fair Market Value in the case of any person who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or its affiliates at the time of grant.
(d) No ISO granted under the Plan shall be exercisable more than 10
years from the date of grant, except that in the case of any person who owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or its affiliates at the time of grant, no ISO shall be
exercisable more than five years from the date of grant.
(e) To the extent that the aggregate Fair Market Value of stock
(determined at the time of grant) with respect to which ISOs are exercisable for
the first time by any individual during any calendar year under all plans of the
Company and its subsidiaries exceeds $100,000, such options shall be treated as
Non-Qualified stock options, but only to the extent of such excess. Should it be
determined that an entire option or any portion thereof does not qualify for
treatment as an ISO by reason of exceeding such maximum, or for any other
reason, such option or portion shall be considered a Non-Qualified stock option.
8. NON-QUALIFIED STOCK OPTIONS. The Board may grant Non-Qualified Stock
Options ("NSOs") under the Plan in addition to or in lieu of Incentive Stock
Options. NSOs are not intended to meet the requirements of Section 422 of the
Code, and shall be subject to the following terms and conditions:
(a) NSOs may be granted to any eligible Participant.
(b) The purchase price of the shares shall be determined by the
Board in its absolute discretion, but in no event shall such purchase price be
less than 85% of the Fair Market Value of the shares at the time of grant. In
the case of any person who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or its affiliates
at the time of grant, the price shall be 110% of the Fair Market Value.
(c) NSOs shall not be exercisable more than ten years from the date
of grant.
9. TRANSFERABILITY. Options granted under this Plan shall not be
transferable other than by will or by the laws of descent and distribution, and
during a Participant's life shall be exercisable only by such Participant.
Options granted under this Plan shall not be subject to execution, attachment or
other process.
10. TERMINATION OF EMPLOYMENT. Options held by employees, including
directors, shall terminate three months after termination of employment with the
Company or affiliate, unless:
(a) If employment is terminated for cause, as such term is defined
pursuant to the optionee's contract of employment or the Option Agreement or
otherwise by Texas law, the Option shall immediately terminate.
(b) If termination is due to the employee's permanent and total
disability within the meaning of Section 22(e)(3) of the Code, the Option may be
exercised at any time within one year following termination.
(c) The Option Agreement by its terms specifies whether it shall
terminate later than three (3) months after termination of employment. If the
Option may be exercised later than three months following termination, any
portion exercised beyond three months shall be a non-qualified stock option.
This paragraph shall not be construed to extend the term of any Option nor to
permit anyone to exercise the Option after expiration of its term.
(d) Options granted under this Plan shall not be affected by any
change of duties or position of the Participant so long as Participant continues
to be a regular, full-time employee of the Company. Any Option, or any rules and
regulations relating to the Plan, may contain such provi-
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sions as the Board shall approve with reference to the determination of the date
employment terminates. Nothing in the Plan or in any Option granted pursuant to
the Plan shall confer upon any Participant any right to continue in the employ
of the Company or shall interfere in any way with the right of the Company to
terminate such employment at its will at any time.
11. RIGHTS IN THE EVENT OF DEATH. If an employee dies during the term of
this Option, his/her legal representative or representatives, or the person or
persons entitled to do so under the employee's last will and testament or under
applicable intestate laws, shall have the right to exercise this Option, but
only for the number of shares as to which the employee was entitled to exercise
this Option on the date of his death, and such right shall expire and this
Option shall terminate six (6) months after the date of Grantee's death or on
the expiration date of this Option, whichever date is sooner. In all other
respects, this option shall terminate upon such death.
12. LEAVES OF ABSENCE. For purposes of the Plan, an employee on approved
leave of absence from the Company shall be considered as currently employed for
90 days following beginning the leave or for so long as his/her right to
reemployment is guaranteed by statute or contract, whichever is longer.
13. EFFECT OF CHANGE IN STOCK SUBJECT TO PLAN.
(a) In the event that outstanding common shares are hereafter
changed by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split, combination of shares, stock dividends and the
like, the Board shall make adjustments as it deems appropriate in the aggregate
number of shares advisable under the Plan and the number and price subject to
outstanding option. Any adjustment shall apply proportionately and only to the
unexercised portion of options granted.
(b) In the event the Company dissolves or liquidates or another
entity succeeds to its assets, or in the event of a merger or consolidation in
which the Company is not the surviving entity, or in the event of a reverse
merger in which the Company survives but its common stock immediately preceding
the merger is converted into other property by virtue of the merger, then the
surviving entity shall assume the outstanding Options or substitute similar
Options for those outstanding.
14. AGREEMENT AND REPRESENTATION OF EMPLOYEES.
(a) Acquiring stock for investment purposes. As a condition to the
exercise of any Option, the Company may require the person exercising such
Option to represent and warrant at the time of such exercise that any shares of
Stock acquired at exercise are being acquired only for investment and without
any present intention to sell or distribute such shares if, in the opinion of
Company's counsel, such representation is required or desirable under the
Securities Act of 1933 or any other applicable law, regulation, or rule of any
governmental agency.
(b) Withholding. With respect to the exercise of any Option granted
under this Plan, each Participant shall fully and completely consent to whatever
the Board directs to satisfy the federal and state tax withholding requirements,
if any, which the Board in its discretion deems applicable to such exercise.
(c) Delivery. The Company is not obligated to deliver any common
shares until there has been qualification under or compliance with all state or
federal laws, rules and regulations deemed appropriate by the Company. The
Company will use all reasonable efforts to obtain such qualification and
compliance.
15. AMENDMENT AND TERMINATION OF PLAN. The Board, by resolution, may
terminate, amend, or revise the Plan with respect to any shares as to which
Options have not been granted; provided however, that any amendment that would:
(a) increase the aggregate number of shares of common stock that may be issued
under the Plan, (b) materially increase the benefits accruing to Participants,
or (c) materially modify the requirements as to eligibility for participation in
the Plan, shall be subject to shareholder approval within 12 months before or
after adoption. It is expressly contemplated that the Board may amend the Plan
in any respect necessary to provide employees
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with the maximum benefits available under and/or to satisfy the requirements of
or amendments to Section 422 of the Code.
No termination, modification or amendment of the Plan may however, alter
or impair the rights conferred by an Option previously granted without the
consent of the individual to whom the Option was previously granted.
Unless sooner terminated, the Plan shall remain in effect for a period of
ten years from the date of the Plan's adoption by the Board. Termination of the
Plan shall not affect any Option previously granted.
16. USE OF PROCEEDS. The proceeds from the sale of shares pursuant to
Options granted under the Plan shall constitute general funds of the Company.
17. EFFECTIVE DATE OF PLAN. The Effective Date of this Plan is June 15,
1999, the effective date it was adopted by the Board, provided the shareholders
of the Company approve this Plan within twelve (12) months after such effective
date. Any Options granted under this Plan prior to the date of shareholder
approval shall be deemed to be granted subject to such approval. Should
shareholder approval not be obtained within twelve (12) months, any Options
granted pursuant to the Plan shall be null and void.
18. INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have and subject to limitations of applicable law,
the members of the Committee shall be indemnified by the Company against all
costs and expenses reasonably incurred by them in connection with any action,
suit or proceeding 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
rights granted thereunder and against all amounts paid by them in settlement
thereof or paid by them in satisfaction of a judgment of any such action, suit
or proceeding, the Board or Committee member or members shall notify the Company
in writing, giving the Company an opportunity at its own cost to defend the same
before such Committee member or members undertake to defend the same on their
own behalf.
19. INFORMATION REQUIREMENTS. The Company shall provide each participant
with annual financial statements.
20. GOVERNING LAW. The Plan shall be governed by, and all questions
arising hereunder, shall be determined in accordance with the laws of State of
Texas as such laws are applied to agreements between Texas residents entered
into and to be performed entirely within Texas.
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EXHIBIT 2
POSITRON CORPORATION
1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
Date of Board Approval: October 6, 1999
Date of Shareholder Approval:_______________
1. PURPOSE AND SCOPE. This 1999 Non-Employee Directors' Stock Option Plan
(the "Plan") is adopted for the benefit of the directors of Positron
Corporation, a Texas corporation (the "Company") who, at the time of their
service, are not employees of the Company or any of its subsidiaries (the
"Non-Employee Directors"). It is intended to advance the interests of the
Company by providing the Non-Employee Directors with additional incentive to
serve the Company by increasing their proprietary interest in the success of the
Company.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board"). The Board may delegate administration of the Plan to a
committee ("Committee") comprised of not less than two (2) members of the Board.
If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers possessed by the
Board, subject to such resolutions, not inconsistent with the provisions of the
Plan, as may be adopted from time to time by the Board. The Board may abolish
the committee at any time and revest in the Board the administration of the
Plan.
(b) The Board shall have the authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the Plan as it
shall, from time to time, deem advisable; to interpret the terms and provisions
of the Plan and any Option granted under the Plan (and any agreements relating
thereto); and to otherwise supervise the administration of the plan, and to
exercise such powers and perform such acts as the Board deems necessary or
expedient to promote the best interests of the Company. The Board may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or in
any Option in the manner and to the extent it shall deem necessary to carry the
Plan into effect.
(c) All actions taken and all interpretations and determinations
made by the Board in good faith shall be final and binding upon all Non-Employee
Directors, the Company, and all other interested persons.
(d) No member of the Board shall be personally liable for any
action, determination, or interpretation made in good faith with respect to the
Plan; and all members of the Board shall be fully protected by the Company in
respect of any such action, determination, or interpretation.
3. STOCK SUBJECT TO AND RESERVED FOR THE PLAN.
(a) The total number of shares of the Company's Common Stock, no par
value (the "Common Stock"), with respect to which Options may be granted under
the Plan, shall not exceed the aggregate of 500,000 shares; provided, however,
that the class and aggregate number of shares which may be subject to the
Options granted hereunder shall be subject to adjustment in accordance with the
provisions of Section 14 of this Plan. Such shares may be treasury shares,
reacquired shares or authorized but unissued shares.
(b) The Company shall reserve for issuance pursuant to this Plan
such number of shares of Common Stock as may from time to time be subject to
Options granted hereunder. If any Option expires or is canceled prior to its
exercise in full, the shares theretofore subject to such Option may again be
made subject to an Option under the Plan.
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(c) All Options granted under the Plan will constitute non-qualified
options (the "Option").
4. ELIGIBILITY. Options shall be granted only to Non-Employee Directors of
the Company.
5. NON-DISCRETIONARY GRANT OF OPTIONS.
(a) Non-Employee Directors elected after the effective date of the
Plan. Initial Grant. For so long as this Plan is in effect and shares are
available for the grant of Options hereunder, each person who is elected as a
Non-Employee Director of the Company for the first time after the effective date
of the Plan, and who is not and has not been an employee of the Company or any
of the Company's subsidiaries (as defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code") (a "New Director") shall be
granted a one-time Option ("Initial Option") to purchase 25,000 shares of Common
Stock at a per share exercise price equal to 85% of the Fair Market Value
(defined below) of a share of Common Stock on such date (subject to the
adjustments provided in Section 14 hereof). This Section 5(a) shall only apply
to New Director the first time he or she is elected a director of the Company
after the effective date of this Plan.
(b) Annual Options Grant to Non-Employee Directors. Annual Option.
In addition, for so long as (i) this Plan is in effect, and (ii) there are
shares available for the grant of Options hereunder, each person serving as an
elected Non-Employee Director as of the effective date of this Plan and each New
Director (together "Eligible Director") shall be granted automatically, on
January 1st of each year (or the next day on which the Company's common stock is
traded should the Company's common stock not trade on such date, commencing as
of January 1, 2000 and subject to the adjustments provided in Section 14
hereof), an Option to purchase 25,000 shares of Common Stock at a per share
exercise price equal to 85% of the Fair Market Value (defined below) of a share
of Common Stock. The foregoing notwithstanding, such Eligible Director must have
served as a Non-Employee Director continuously for at least thirty (30) days
immediately preceding the first day of January of any given year, in order to be
eligible for grant of an Annual Option as of January 1st of that year.
Both Initial Options and Annual Options shall be Non-Statutory Options.
(c) Option Price. For the purposes of this Section 5, the "Fair
Market Value" as of any particular date shall mean (i) the closing sales price
on the immediately preceding business day of a share of Common Stock as reported
on the principal securities exchange on which shares of Common Stock are then
listed or admitted to trading or (ii) if not so reported, the average of the
closing bid and asked prices for a share of Common Stock on the immediately
preceding business day as quoted on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or (iii) if not quoted on NASDAQ,
the average of the closing bid and asked prices for a share of Common Stock as
quoted by the National Quotation Bureau's "Pink Sheets" or the National
Association of Securities Dealers' OTC Bulletin Board System. If the price of a
share of Common Stock shall not be so reported, the Fair Market Value of a share
of Common Stock shall be determined by the Board in its absolute discretion.
6. OPTION AGREEMENT. Each Option granted under the Plan shall be evidenced
by an agreement, in a form approved by the Board, which shall be subject to the
terms and conditions of the Plan. Any agreement may contain such other terms,
provisions and conditions as may be determined by the Board and that are not
inconsistent with the Plan.
7. VESTING AND TERM OF OPTIONS.
(a) Each Option granted under this Plan shall be subject to vesting
pursuant to one of two schedules: (i) vesting in full on the date of grant; or
(ii) vesting in four (4) equal installments commencing on the first anniversary
of the date of grant; provided, however, that each such Option, regardless of
the manner of vesting, shall be subject to termination as provided in Section 9
hereof. The schedule of vesting, whether vesting in full or in installments,
shall be determined by the Board as part of and at the time of the grant;
provided however, that any Option granted under this Plan which vests in full on
the date of grant as set forth in subsection (i) above, shall be subject, as a
condition of such Option grant, to the Company's right to repurchase as provided
in Section 16 hereof.
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(b) Each Option agreement shall also provide that the Option shall
expire ten years from the date of grant, unless sooner terminated pursuant to
Section 9 hereof.
8. EXERCISE OF OPTIONS. Options shall be exercisable at any time after
their appropriate vesting date, subject to termination as provided in Section 9
hereof and to the Company's right to repurchase as provided in Section 16
hereof. Options shall be exercised by written notice to the Company setting
forth the number of shares with respect to which the Option is being exercised
and specifying the address to which the certificates representing such shares
are to be mailed. Such notice shall be accompanied by cash or certified check,
bank draft, or postal or express money order payable to the order of the
Company, for an amount equal to the product obtained by multiplying the exercise
price of the Option by the number of shares of Common Stock with respect to
which the Option is then being exercised. As promptly as practicable after
receipt of such written notification and payment, the Company shall deliver to
the Eligible Director a certificate or certificates representing the number of
shares of Common Stock with respect to which such Option has been so exercised,
issued in the Eligible Director's name, provided, however, that such delivery
shall be deemed effected for all purposes when the Company's transfer agent
shall have deposited such certificates in the United States mail, addressed to
the Eligible Director, at the address specified pursuant to this Section 8.
9. TERMINATION OF OPTIONS. Except as may be otherwise expressly provided
in this Plan or otherwise determined by the Board, each Option, to the extent it
shall not have been exercised previously, shall terminate on the earliest of the
following: (i) on the last day of the three-month period commencing on the date
on which the Eligible Director ceases to be a member of the Board for any reason
other than the death or total disability (within the meaning of Section 22(e)(3)
of the Internal Revenue Code) of the Eligible Director, in which case the option
may be exercised at any time within eighteen (18) months following termination
of such directorship or service, during which period the Eligible Director shall
be entitled to exercise all Options held by the Eligible Director on the date on
which the Eligible Director ceased to be a member of the Board that could have
been exercised on such date; or (ii) ten years after the date of grant of such
Option.
10. TRANSFERABILITY OF OPTIONS. During the term of an Option, the Option
shall not be assignable or otherwise transferable except by will or by the laws
of descent and distribution. Each Option shall be exercised during the Eligible
Director's lifetime only by the Eligible Director.
11. NO RIGHTS AS STOCKHOLDER. No Eligible Director shall have any rights
as a stockholder with respect to shares covered by an Option until the date of
issuance of a stock certificate or certificates representing such shares. Except
as provided in Section 14 hereof, no adjustment for dividends or otherwise shall
be made if the record date therefore is prior to the date of issuance of
certificates representing shares of Common Stock purchased pursuant to exercise
of this Option.
12. INVESTMENT REPRESENTATIONS. Whether or not the Options and shares
covered by the Plan have been registered under the Securities Act of 1933, as
amended, each person exercising an option under the Plan may be required by the
Company to give a representation in writing that such person is acquiring such
shares for investment and not with a view to, or for sale in connection with,
the distribution of any part thereof. The Company will endorse any necessary
legend referring to the foregoing restriction upon the certificate or
certificates representing any shares issued or transferred to the Eligible
Director upon the exercise of any Option granted under the Plan.
13. AMENDMENT OR TERMINATION. The Board may amend, modify, revise or
terminate this Plan at any time and from time to time. All Options granted under
this Plan shall be subject to the terms and provisions of this Plan and any
amendment, modification or revision of this Plan shall be deemed to amend,
modify or revise all Options outstanding under this Plan at the time of such
amendment, modification or revision. If this Plan is terminated by action of the
Board, all outstanding Options may be terminated.
14. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make
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or authorize the dissolution or liquidation of the Company, any sale or transfer
of all or any part of the Company's assets or business, any reorganization or
other corporate act or proceeding, whether of a similar character or otherwise,
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, any merger or consolidation of
the Company, or any issuance of bonds, debentures, preferred or prior preference
stock senior to or affecting the Common Stock or the rights thereof; provided,
however, that if (i) the outstanding shares of Common Stock of the Company shall
be subdivided into a greater number of shares or (ii) the outstanding shares of
Common Stock shall be combined into a smaller number of shares thereof, then (a)
the number of shares of Common Stock available for the grant of Options under
the Plan shall be proportionally adjusted to equal the product obtained by
multiplying such number of available shares remaining by a fraction, the
numerator of which is the number of outstanding shares of Common Stock after
giving effect to such combination or subdivision and the denominator of which is
that number of outstanding shares of Common Stock prior to such combination or
subdivision, (b) the exercise price of any Option then outstanding under the
Plan shall be proportionately adjusted to equal the product obtained by
multiplying such exercise price by a fraction, the numerator of which is the
number of outstanding shares of Common Stock prior to such combination or
subdivision and the denominator of which is that number of outstanding shares of
Common Stock after giving effect to such combination or subdivision, and (c) the
number of shares of Common Stock issuable on the exercise of any Option then
outstanding under the Plan or thereafter granted under the Plan shall be
proportionately adjusted to equal the product obtained by multiplying such
number of shares of Common Stock by a fraction, the numerator of which is the
number of outstanding shares of Common Stock after giving effect to such
combination or subdivision and the denominator of which is that number of
outstanding shares of Common Stock prior to such combination or subdivision.
15. COMPLIANCE WITH OTHER LAWS AND REGULATIONS.
(a) The Plan, the grant and exercise of Options thereunder, and the
obligation of the Company to sell and deliver shares acquirable on exercise of
such Options, shall be subject to all applicable federal and state laws, rules
and regulations and to such approvals by any governmental or regulatory agency
or national securities exchange as may be required. The Company shall not be
required to sell or issue any shares on exercise of any Option if the issuance
of such shares shall constitute a violation by the Non-Employee Director or the
Company of any provisions of any law or regulation of any governmental
authority.
(b) Each Option granted under this Plan shall be subject to the
requirement that, if at any time the Board shall determine that (i) the listing,
registration or qualification of the shares subject thereto on any securities
exchange or under any state or federal law of the United States or of any other
country or governmental subdivision thereof, (ii) the consent or approval of any
governmental regulatory body, or (iii) the making of investment or other
representations, are necessary or desirable in connection with the issue or
purchase of shares subject thereto, no such Option may be exercised in whole or
in part unless such listing, registration, qualification, consent, approval or
representation shall have been effected or obtained, free of any conditions not
acceptable to the Board.
(c) These provisions do not obligate the Company to register either
the Plan, any option granted under the Plan, or any stock issued or issuable
pursuant to any such Option, under any state or federal law of the United States
or of any other country or governmental subdivision thereof. (d) Any
determination by the Board in connection with any of the above determinations
shall be final, binding and conclusive.
16. REPURCHASE RIGHT OF THE COMPANY.
(a) General. Shares of stock issued or issuable upon exercise of an
option grant with immediate vesting, as set forth in Section 7(a)(i), are
subject to a right of repurchase by the Company. If the service of a
Non-Employee Director to the Company or a subsidiary of the Company is
terminated for any reason other than by death or total disability, except as
otherwise described in Section 16(d), the Company (or any subsidiary designated
by it) shall have the option for 90 days
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after the termination of service by the Non-Employee Director to repurchase all
or any part of his stock issued or issuable upon exercise of the option, as
provided in this Section 16.
(b) Notice. Within 30 days of receiving notice from a Non-Employee
Director or his representative of the termination of the director's service to
the Company or a subsidiary of the Company, the Company must give notice to the
director of the Company's decision whether or not to exercise its repurchase
right.
(c) Repurchase Price. The repurchase price per share repurchased in
accordance with this Section 16 shall be the original per share purchase price
set forth in the accompanying Notice of Stock Option Grant. The Company's
repurchase right at this price lapses at the rate of 25% per year, starting with
the first anniversary of the Option Grant, and continues over 4 years, without
reference to the date the Option was exercised or became exercisable.
(d) Shares Acquired Through Exercise of Option After Termination of
Services. If the Non-Employee Director exercises in whole or in part his option
after termination of his services to the Company for any reason other than death
or total disability, the Company shall have, for 90 days after the exercise, the
right to repurchase the shares so acquired upon written notice to the
Non-Employee Director. The purchase price and terms of payment will be governed
by Sections 16(c) and (e) of this Plan.
(e) Payment of the Purchase Price. The Company's right to repurchase
must be exercised for cash or cancellation of purchase money indebtedness for
the shares within 90 days of termination of service by the Non-Employee Director
(or in the case of securities issued upon exercise of Options after the date of
termination, within 90 days after the date of exercise).
(f) Death Or Total Disability. There shall be no right of repurchase
by the Company upon the Non-Employee's death or total disability. The foregoing
notwithstanding, the provisions of this Section 16(g) do not extend or otherwise
affect the termination of any Option which shall not have been exercised, as
otherwise set forth in Section 9 herein.
(g) Repurchase Right as to Other Shares. The repurchase right of the
Company shall apply as well to all shares or other securities issued in
connection with any stock split, reverse stock split, stock dividend,
recapitalization, reclassification, spin-off, split-off, merger, consolidation
or reorganization ("Other Shares") but such right shall expire on the occurrence
of any event or transaction upon which the Option terminates.
17. INDEMNIFICATION OF BOARD OF DIRECTORS. The Company shall, to the
fullest extent permitted by law, indemnify, defend and hold harmless any person
who at any time is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) in any way relating to or arising out
of this Plan or any Options granted hereunder by reason of the fact that such
person is or was at any time a director of the Company against judgments, fines,
penalties, settlements and reasonable expenses (including attorneys' fees)
actually incurred by such person in connection with such action, suit or
proceeding. This right of indemnification shall inure to the benefit of the
heirs, executors and administrators of each such person and is in addition to
all other rights to which such person may be entitled by virtue of the bylaws of
the Company or as a matter of law, contract or otherwise.
18. ADDITIONAL PROVISIONS. (a) Nothing in the Plan, or in any instrument
executed pursuant thereto, shall confer upon any Non-Employee Director either
the right or the obligation to continue acting as a director of (or to
employment by) the Company, nor shall any Plan provision or instrument executed
pursuant thereto affect any right of the Company, its Board and/or its
shareholders to terminate the directorship (or employment) of any Non-Employee
Director with or without cause. (b) In connection with each option granted
pursuant to the Plan, each Non-Employee Director shall make arrangements
satisfactory to the Company to insure that the amount of any federal or other
withholding tax required to be withheld with respect to such sale or transfer is
made available to the Company for timely payment of such tax.
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19. EFFECTIVE DATE OF THE PLAN. This Plan shall become effective, subject
to stockholder approval, on October 6, 1999. No Option shall be granted pursuant
to this Plan on or after December 31, 2009.
20. GOVERNING LAW. The Plan shall be governed by, and all questions
arising hereunder, shall be determined in accordance with the laws of the State
of Texas as such laws are applied to agreements between Texas residents entered
into and to be performed entirely within Texas.
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EXHIBIT 3
POSITRON CORPORATION
1999 STOCK BONUS INCENTIVE PLAN~
Date of Board Approval: October 6, 1999
Date of Shareholder Approval: _____________
1. PURPOSE AND SCOPE. Positron Corporation ("Company") adopted the
Positron Stock Bonus Incentive Plan (the "Plan") on October 6, 1999. It is
effective as of November 1, 1999 for the 1999 Plan year. The purpose of the Plan
is to provide selected employees and outside consultants with stock bonus awards
("Bonus Shares") to reward them for past services and to encourage them to
remain in the Company's service as well as providing the Company with a valuable
tool to recruit and retain managers, employees and outside consultants of
outstanding ability.
2. DEFINITIONS.
(a) "Bonus Shares" means the shares of the Company's Common Stock
issuable or issued under the Plan.
(b) "Committee" means the Stock Option Committee appointed by the
Company's Board of Directors.
(c) "Company" means Positron Corporation, a Texas Corporation.
(d) "Disability" means that the Participant is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted, or can be expected to last, for a continuous period of not less than
12 months.
(e) "Participant" means an employee who has been selected for
participation in the Plan pursuant to Article 4.
(f) "Retirement" means that the Participant has retired under a
qualified plan, if any, of the Company or is otherwise deemed to have retired by
the Committee.
3. ADMINISTRATION. The Plan shall be administered by the Stock Option
Committee of the Board of Directors (the "Committee"), which has been authorized
to act on behalf of the Company. The Committee shall determine the meaning and
application of the provisions of the Plan. Subject to the terms of the Plan, the
Committee shall have the exclusive authority to act on the following matters:
(a) Select the employees, including officers, who are to become
Participants;
(b) Determine each Participant's stock bonus award;
(c) Waive or change the Plan's condition as it deems appropriate;
(d) Adopt, amend or rescind rules, guidelines and forms relating to
the Plan; and
(e) Take any other actions the Committee deems necessary or
advisable for the administration of the Plan.
All decisions, interpretations and other actions of the Committee shall be
final and binding on all Participants and all persons deriving their rights from
a Participant. No member of the Committee shall be liable for any action he or
she has taken, or has failed to take, in good faith with respect to the Plan or
any bonus award. The Committee may delegate such ministerial actions as it deems
necessary or proper.
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4. ELIGIBILITY. The Participants shall be selected from time to time by
the Committee from those employees (including officers or directors) and those
outside consultants who, in the opinion of the Committee, are in a position to
contribute materially to the attainment of the Company's financial objectives
and managerial goals. Participation may be based on the recommendations of the
Company's officers, subject to the Committee's approval. Such recommendations
shall include a recommendation as to the number of Bonus Shares that should be
awarded to each such individual. In selecting eligible participants and in
determining the number of Bonus Shares it wishes to award, the Committee shall
consider the position and responsibility of the eligible participants, the value
of their service to the Company and its subsidiary and such other factors as the
Committee deems pertinent.
5. BONUS AWARDS.
(a) GENERAL. After an employee or outside consultant has been
selected as a Participant, the Committee will notify the Participant of his or
her selection by letter (the "Award Letter"). The Award Letter will advise the
Participant of the number of Bonus Shares awarded. A Participant will be
entitled to receive a maximum bonus representing 40% of his or her salary, in
the case of an employee. The intention of the Plan is to reward the Participant
for helping the Company meet its annual business plan goals through a high level
of goal oriented performance that substantially exceeds the day-to-day
responsibilities expected of the Participant and for which (s)he is regularly
paid a salary or consulting fee.
(b) PAYMENT. The Committee shall determine the Participant's actual
stock bonus award (if any) and such bonus shall be awarded from time to time
within the Committee's discretion. To minimize the market impact of the issuance
of bonus stock, shares to be issued to a Participant which are valued at less
than $3,000 will be issued as soon as practicable following the award, and
shares to be issued to a Participant which are valued at $3,000 or more will be
issued within 60 days thereafter. Distributions of Bonus Shares may be made from
authorized but unissued shares. All authorized and unissued shares issued as
Bonus Shares shall be fully paid and nonassessable shares and free from
preemptive rights.
(c) TERMINATION OF SERVICES. No Participant is eligible to receive a
bonus award unless such Participant is employed by or actively providing
services to the Company at the time the Bonus Award is granted.
(d) DEATH, DISABILITY OR RETIREMENT. In the event that a Participant
ceases to be an employee or service provider by reason of death, disability or
retirement the Committee, in its sole discretion, may award a partial bonus to
the Participant who otherwise would be eligible (or, in the event of the
Participant's death, to his or her Beneficiary). Payment shall be made to the
Participant (or his or her Beneficiary as the case may be) according to Article
4(2).
(e) WITHHOLDING TAXES. Participants shall be obligated to satisfy
all federal and state tax withholding obligations arising from the award of
Bonus Shares.
(f) NONTRANSFERABILITY OF RIGHTS. Any right to a stock bonus payment
under the Plan shall be nontransferable, except that such right may be
transferred to a Beneficiary upon a Participant's death, as provided in Section
4.4. Any attempted alienation, assignment, pledge, hypothecation, attachment,
execution or similar process, whether voluntary or involuntary, with respect to
any such right shall be void and, at the Committee's option, shall cause such
right to be forfeited.
6. STOCK SUBJECT TO THE PLAN. The total number of shares of the Company's
Common Stock ("Common Stock") which may be issued under the Plan shall not
exceed 1,000,000 shares. Provided in no event may the Company make more than
200,000 shares per year available for issuance pursuant to bonus awards in any
single fiscal year of the Company. The Company shall, at all times while the
Plan is in force, reserve such number of Common shares as will be sufficient to
satisfy the requirements of the number of shares available for issuance under
the Plan.
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In the event the outstanding shares of Common Stock are increased or
decreased as a result of any stock split, stock dividend, recapitalization or
other similar change in corporate structure effected without the receipt of
consideration, or if the Common Stock is converted into other shares or
securities of the Company or any other corporation as a result of a merger,
reorganization, or other similar transaction, then appropriate adjustments shall
be made by the Committee to the class and/or number of shares which are
available for issuance under the Plan in order that there shall be no dilution
or enlargement of benefits hereunder.
7. BENEFICIARY DESIGNATIONS. Upon commencement of participation, each
Participant will name beneficiaries under the plan. If no beneficiaries are
named specifically for this purpose, the Company will deem any beneficiaries
named for Life Insurance purposes under the Company's Life Insurance Plan, if
any, to be beneficiaries named under this Plan. If the participant has not named
a beneficiary or if none of the named beneficiaries is living when any payment
is to be made, then (a) the spouse of the deceased Participant shall be the
beneficiary, or (b) if the Participant has no spouse living at the time of such
payment, the then living children of the deceased Participant shall be the
beneficiaries in equal shares, or (c) if the Participant has neither spouse nor
children living at the time of such payment, the estate of the Participant shall
be the beneficiary. The Participant may change the designation of a beneficiary
from time to time in accordance with procedures established by the Committee.
Any designation of a beneficiary (or an amendment or revocation thereof) will be
effective only if it is made in writing on the prescribed form and is received
by the Company or the Committee prior to the Participant's death.
8. SHAREHOLDER RIGHTS. No Participant shall have any rights as a
shareholder until such time as any Bonus Shares are actually issued to such
Participant.
9. NO EMPLOYMENT RIGHTS. No provision of the Plan, nor any bonus
opportunity established under the Plan, will be construed to give any person any
right to remain in the Company's service. The Company reserves the right to
terminate any person's service at any time, with or without cause.
10. AMENDMENTS OR TERMINATIONS. The Company may amend, suspend or
terminate the Plan at any time and for any reason. Neither an amendment of the
Plan nor the termination thereof shall affect any Bonus Shares previously
issued.
11. CHOICE OF LAW. The plan shall be construed in accordance with and
governed by the laws of the state of texas.
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EXHIBIT 4
POSITRON CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
Date of Board Approval: October 6, 1999
Date of Shareholder Approval: ______________
1. PURPOSE AND SCOPE. This Employee Stock Purchase Plan (the "Plan") is
established to provide Eligible Employees with an opportunity through regular
payroll deductions to purchase Common Stock of Positron Corporation (the
"Company") so that they may increase their proprietary interest in the Company.
The Plan is intended to qualify as an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Board of Directors" means the Committee if one has been
appointed, or the Board of Directors of the Company if no Committee has been
appointed.
(b) "Code" means the Internal Revenue Code of 1986.
(c) "Committee" means the committee appointed by the Board of
Directors to administer the Plan in accordance with Section 3 below -
"Administration" - if one is appointed.
(d) "Company" means Positron Corporation and such present or future
Subsidiaries, as defined in Section 425 of the Code, of the Company as the Board
of Directors shall from time to time designate.
(e) "Compensation" means the annual base rate of pay of a
Participant as of the first day of an Offering Period, determined in accordance
with nondiscriminatory rules adopted by the Board of Directors, including
commissions, but excluding income with respect to stock options or other stock
purchases or moving expense reimbursements.
(f) "Eligible Employee" means any regular employee of the Company
whose date of hire was at least six months prior to the commencement of an
Offering Period or an Interim Offering Period and who is customarily employed
for at least twenty (20) hours per week and more than five (5) months in any
calendar year.
(g) "Exchange Act" means the Securities and Exchange Act of 1934.
(h) "Fair Market Value" of share of Stock means if the shares listed
on any national or regional securities exchange, then the last reported sale
price on the composite tape of that exchange on the last Business day before the
applicable date. If the shares of Stock of the same class are not listed on any
national or regional securities exchange and if the sales prices for shares of
stock of the same class in the over-the-counter market are reported by the
National Association of Securities Dealers, IncAutomatic Quotations, Inc.
(NASDAQ) National Market (or such other system in use) at the date of
determining Fair Market Value, then Fair Market Value means the last reported
sales price so reported or, if not so reported, then the average of the high bid
and low asked prices on the last Business Day before the date in question.
(i) "Interim Offering Period" means each three-month period during
and within an Offering Period.
(j) "Option" means the rights of a Participant to purchase Stock
during the applicable Offering Period.
(k) "Offering Date" means the first day of each offering Period.
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(l) "Offering Period" means, in the absence of a specific
determination to the contrary by the Board of Director or the Committee, a
27-month period during which contributions may be made toward the purchase of
Stock under the Plan. The Board of Directors or the Committee may establish from
time to time Option Periods which may be up to twenty-seven (27) months.
(m) "Participant" means an Eligible Employee who elects to
participate in the Plan.
(n) "Plan Account" means the account established for each
Participant pursuant to the Plan.
(o) "Purchase Price" means the price at which Participants may
purchase Stock as determined pursuant to the Plan.
(p) "Stock" means the Common Stock of the Company.
(q) "Subsidiary" means a corporation a majority of whose voting
shares are owned by the Company.
3. ADMINISTRATION. The Plan shall be administered by the Board of
Directors and/or by a duly appointed Committee. Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan. The Board of Directors may from time to time remove members from, or add
members to, the Committee. Vacancies on the Committee, howsoever caused, shall
be filled by the Board of Directors. The Committee shall select one of its
members as Chairman, and shall hold meetings at such times and places as it may
determine. The interpretation and construction by the Board of Directors or the
Committee of any provision of the Plan or of any right to purchase Stock shall
be conclusive and binding on all persons.
(a) DELEGATION TO COMMITTEE. The Board may delegate administration
of the Plan to the Committee composed of not fewer than two (2) members of the
Board. All of the members of such Committee shall be disinterested persons as
defined by the provisions of subparagraph 3(b) - "Disinterested Person." If
administration is delegated to the Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan; as may be adopted from time to time by the Board. The
Board shall otherwise comply with the requirements of Rule 16b-3 promulgated
under the Exchange Act, as from time to time in effect, The Board may abolish
the Committee at any time and revest in the Board the administration of the
Plan. Two members of the Committee shall constitute a quorum for the transaction
of business.
(b) DISINTERESTED PERSON. The term "Disinterested Person," as used
in this Plan, shall mean an administrator of the Plan, whether a member of the
Board or of any Committee to which responsibility for administration of the Plan
has been delegated pursuant to subparagraph 3 (a), - "Delegation to Committee" -
who is not during the one year prior to service as an administrator of the plan,
or during such service, granted or awarded equity securities pursuant to the
plan or any other plan of the Company or any of its affiliates, except that: (A)
participation in a formula plan meeting the conditions of Rule 16b-3(c)(2)(ii)
pursuant to the Securities Exchange Act shall not disqualify a director from
being a disinterested person; (B) participation in an ongoing securities
acquisition plan meeting the conditions in Rule 16b-3(d)(2)(i) shall not
disqualify a director from being a disinterested person; (C) an election to
receive an annual retainer fee in either cash or an equivalent amount of
securities, or partly in cash and partly in securities, shall not disqualify a
director from being a disinterested person; and (D) participation in a plan
shall not disqualify a director from being a disinterested person for the
purpose of administering another plan that does not permit participation by
directors. Any such person shall otherwise comply with the requirements of Rule
16b-3 promulgated under the Exchange Act, as from time to time in effect.
(c) NUMBER OF SHARES TO BE OFFERED. The maximum aggregate number of
shares which shall be offered under the Plan shall be Five Hundred Thousand
(500,000) shares of Stock, subject to adjustment as provided in Section 8 -
"Recapitalization, Etc." - hereof In the event that any Option granted under the
Plan expires or is terminated for any reason, such shares allocable
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to the unexercised portion of such Option shall again be subject to an Option
under the Plan. The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. ELIGIBILITY AND PARTICIPATION.
(a) INITIAL PARTICIPATION. An Eligible Employee shall become a
Participant on an Offering Date after satisfying the eligibility requirements by
delivering to the Company's payroll office an enrollment form authorizing
payroll deductions not less than ten (10) business days prior to such Offering
Date. An Eligible Employee who did not enroll in the Plan prior to the Offering
Date, or a person who becomes an Eligible Employee after an Offering Date, may
enroll in the Plan for the remainder of the Offering Period as of the beginning
of the next Interim Offering Period by completing and filing an enrollment form
prior to the commencement date of such Interim Offering Period.
(b) CONTINUED PARTICIPATION. A Participant shall automatically
participate in each successive Offering Period (including Interim Offering
Periods) until such time as such Participant withdraws from the Plan as set
forth below. A Participant is not required to file any additional enrollment
forms for subsequent Offering Periods or Interim Offering Periods in order to
continue participation in the Plan.
(c) PAYROLL DEDUCTION RATE. The Participant shall designate on the
enrollment form the percentage of Compensation which s/he elects to have
withheld for the purchase of Stock, which may be 2%, 4%, 6%, 8% or 10% of the
Participant's Compensation. A Participant may reduce (but not increase) the rate
of payroll withholding during an Offering Period by filing an amended enrollment
form with the payroll office at any time prior to the first day of any Interim
Offering Period (for which such change is to be effective), but not more than
three (3) changes may be made in any Offering Period (or such other number of
changes as may be approved by the Board or the Committee). A Participant may
increase or decrease the rate of payroll deduction for any subsequent Offering
Period by filing with the Company a new enrollment form for payroll deductions
not less than ten (10) days prior to the Offering Date for such subsequent
Offering Period.
(d) MAXIMUM ELECTION. By enrolling in the Plan, a Participant shall
be deemed to have elected to purchase the maximum number of whole shares of
Stock which can be purchased with the amount of the Participant's Compensation
which is withheld during the Offering Period; provided, however, that no
Participant may purchase shares of Stock in excess of the amount permitted under
Section 9 - "Limitation on Stock Ownership."
(e) OFFERING PERIOD. Any Options granted pursuant to the Plan shall
be subject to the Company obtaining all necessary governmental approvals and/or
qualifications of the sale and/or issuance of Options and/or Stock.
(f) PURCHASE PRICE. The Purchase Price for each share of Stock to be
purchased under the Plan shall be eighty-five percent (85)% of the Fair Market
Value of such share on either (i) the Offering Date (or the date of entry for
new or re-enrolling employees) or (ii) the last day of each Interim Offering
Period, whichever is less.
(g) CONTRIBUTIONS. The Purchase Price of the Stock shall be
accumulated by payroll deductions throughout the Offering Period, which shall be
applied automatically to purchase Stock at the end of each Interim Offering
Period. In the absence of a contrary determination prior to the commencement of
an Offering Period, each Interim Offering Period shall have a three-month
duration. At the end of each Interim Offering Period, accrued payroll deductions
will be automatically applied to the purchase of Stock at the Purchase Price.
Payroll deductions shall commence on the first payday following the Offering
Date (or, in the case of a new or re-enrolling employee, on the first payday
following the commencement of the applicable Interim Offering Period) and shall
continue unless altered or terminated as provided in the Plan.
(h) EFFECT OF LEAVE OF ABSENCE. During a leave of absence approved
by the Company, a Participant may, for such period as the Committee shall deem
reasonable, continue con-
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tributions to the Plan by making cash payments to the Company on his or her
normal paydays in an amount equal to the difference between the amount of his or
her regular payroll deductions taken while such employee was participating under
the Plan and the amount of his payroll deductions taken while on such leave of
absence. Failure to pay any installment within ten (10) days after the payday on
which it is due shall be treated as a withdrawal from the Plan.
(i) PURCHASE OF STOCK. The Company will maintain a Plan Account on
its books in the name of each Participant, On each payday the amount deducted
from the Participant's Compensation will be credited to the Participant's Plan
Account. No interest shall accrue on any such payroll deductions As of the last
day of each Interim Offering Period the amount then in the Participant's Plan
Account will be divided by the Purchase Price and the amount in the
Participant's Plan Account shall be used to purchase the number of whole shares
of Stock which result. Share certificates representing the number of shares of
Stock so purchased shall be issued and delivered to the Participant as soon as
reasonably practicable after the close of each Interim Offering Period. Any
balance remaining in a Participant's Plan Account at the end of an Interim
Offering Period after deducting the amount of the Purchase Price for the number
of whole shares issued to the Participant shall become the beginning balance in
the Participant's Plan Account for the next following Interim Offering Period.
Any balance remaining in the Participant's Plan Account at the end of an
Offering Period after deducting the amount of the Purchase Price for the number
of whole shares issued to the Participant shall become the beginning balance in
the Participant's Plan Account for the next following Offering Period unless the
Participant elects to withdraw from participation. If the Participant withdraws
from participation, the balance in the Participant's Plan Account will be
refunded to the Participant, without interest.
(j) WITHDRAWAL. A Participant may elect to withdraw from
participation in the Plan at any time before the last day of an Interim Offering
Period by filing the prescribed form with the payroll office. At the time of
withdrawal the amount credited to the Participant's Plan Account will be
refunded in cash, without interest. Upon withdrawal from the Plan accumulated
payroll deductions, if any, shall be returned to the withdrawn Participant and
the withdrawn Participant's interest in the Plan shall terminate. In the event a
Participant voluntarily elects to withdraw from the Plan, such Participant may
not resume participation in the Plan until after the expiration of one complete
Interim Offering Period; re-enrollment shall be made in the same manner as set
forth above for initial participation in the Plan.
5. PRO RATA ALLOCATION. In the event that the aggregate number of shares
which all Participants elect to purchase during an Interim Offering Period shall
exceed the number of shares remaining available for issuance under the Plan, the
number of shares to which each Participant shall become entitled shall be
determined by multiplying the number of shares available for issuance by a
fraction, the numerator of which is the sum of the number of shares the
Participant has elected to purchase and the denominator of which is the sum of
the number of shares which all Participants have elected to purchase.
6. EFFECT OF TERMINATION OF EMPLOYMENT. Termination of a Participant's
employment for any reason, including retirement or death, or the failure of a
Participant to remain an Eligible Employee shall be treated as a withdrawal
under the Plan. In the event of the Participant's death, the refund of the
Participant's Plan Account shall be paid, without interest, to the
representative of the Participant's estate. A transfer by a Participant from the
Company to a Subsidiary, from one Subsidiary to another, or from a Subsidiary to
the Company shall not be treated as a termination of employment.
7. RIGHTS NOT TRANSFERABLE. The rights or interests of any Participant in
the Plan, in any Option granted under the Plan, or in any Stock or moneys to
which he or she may be entitled under the Plan, shall not be, transferable by
voluntary or involuntary assignment or by operation of law, or by any other
manner otherwise than by will or the applicable laws of descent and
distribution. If the Participant shall in any manner attempt to transfer, assign
or otherwise encumber his or her rights or interests under the Plan, other than
by will, such act shall be treated as a withdrawal from the Plan.
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8. RECAPITALIZATION, ETC. Subject to any required action by the
shareholders of the Company, the number of shares of Stock covered by each
Option under the Plan which has not yet been exercised and the number of shares
of Stock which have been authorized for issuance under the Plan but have not yet
been placed under an Option (collectively the "Reserves"), as well as the price
per share of Stock covered by each Option under the Plan which has not yet been
exercised, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of Stock, or any other
increase or decrease in the number of shares of Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company of the shares of
Stock of any class shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of shares of Stock subject to an
Option.
In the event of the proposed dissolution or liquidation of the Company,
the Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. In the event of a
proposed sale of all or substantially all of the assets of the Company, of the
merger of the Company with or into another corporation, each option under the
Plan shall be assumed or an equivalent option shall be substituted by such
successor corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, that the Participant
shall have the right to exercise the Option as to all of the opined Stock,
including shares as to which the Option would not otherwise be exercisable. If
the Board makes an Option fully exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify
the Participant that the Option shall be fully exercisable for a period of
thirty (30) days from the date of such notice, and the Option will terminate
upon the expiration of such period.
The Board may also, if it so determines in the exercise of its sole
discretion, make provision for adjusting the Reserves, as well as the price per
share of Stock covered by each outstanding Option, in the event that the Company
effects one or more reorganizations, recapitalizations, rights offerings or
other increases or reductions of shares of its outstanding Stock, and in the
event of the Company being consolidated with or merged into any other
corporation.
9. LIMITATION ON STOCK OWNERSHIP. Notwithstanding any provision herein to
the contrary, no Participant shall be granted a right to purchase Stock pursuant
to Section 4 - "Eligibility and Participation" - if (i) such Participant,
immediately after electing to purchase such Stock, would own Stock possessing
five (5) percent or more of the total combined voting power or value of all
classes of stock of the Company or any parent or Subsidiary of the Company, or
(ii) under the terms of the Plan the rights of the employee to purchase Stock
under this and all other qualified employee stock purchase plans of the Company
or its Subsidiaries would accrue at a rate that exceeds $20,000 of fair market
value of such Stock (determined on the Offering Date) for each calendar year for
which such right is outstanding at any time. For purposes of this Section 9,
ownership of Stock shall be determined by the attribution rules of Section
424(d) of the Code and Participants shall be considered to own any Stock which
they have a right or option to purchase under this or any other stock purchase
plan.
10. LIMITATIONS ON OFFICERS AND DIRECTORS. Participants subject to the
provisions of Section 16 of the Exchange Act (Company officers and directors)
must comply with the following requirements:
(a) Shares of Stock purchased pursuant to the Plan must be held and
may not be transferred for a period of six (6) months from the date of purchase,
provided, however, that distributions in connection with death, retirement,
disability, termination of employment, or a qualified domestic relations order
as defined by the Code, or the rules thereunder, are not subject to the
requirement set forth in this subparagraph 10(a).
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(b) Officer and director Participants who cease participation in the
Plan may not participate again for a period of at least six (6) months.
(c) Shares of Stock purchased pursuant to the Plan must be held for
at least six (6) months from the date the Purchase Price is fixed.
11. RIGHTS AS AN EMPLOYEE. Nothing in the Plan shall be construed to give
any Participant the right to remain in the employ of the Company or a Subsidiary
or to affect the right of the Company and its Subsidiaries or the Participant to
terminate such employment at any time with or without cause.
12. RIGHTS AS A SHAREHOLDER. A Participant shall have no rights as a
shareholder with respect to any shares of Stock he or she may have a right to
purchase under the Plan until the date of issuance of a stock certificate to
such Participant for shares issued pursuant to the Plan.
13. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the
Company shall keep available at all times the number of shares of stock required
to satisfy such rights.
(b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of Stock upon exercise of the rights granted under the
Plan. If the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell stock upon exercise of such
rights unless and until such authority is obtained.
14. USE OF PROCEEDS FROM STOCK. Proceeds from the sale of stock pursuant
to rights granted under the Plan shall constitute general funds of the Company.
15. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors shall
have the right to amend, modify or terminate the Plan at any time without
notice, provided that no Participant's existing rights are adversely affected
thereby, and provided further that no amendment of the Plan shall be effective
until such amendment is approved by a vote of the holders of at least a majority
of the outstanding shares of Common Stock of the Company within twelve months
before or after the date upon which such action is taken by the Board of
Directors, if such amendment would:
(a) Increase the aggregate number of shares of Stock to be issued
under the Plan (except as provided in Section 8 "Recapitalization, Etc." -
hereof);
(b) Materially modify the requirements for eligibility to
participate in the Plan;
(c) Increase the maximum number of shares of Stock which a
Participant may purchase in any Offering Period;
(d) Extend the term of the Plan;
(e) Alter the Purchase Price formula so as to reduce the price for
shares of Stock to be purchased under the Plan;
(f) Otherwise materially increase the benefits accruing to
Participants under the Plan; or
(g) Cause the Plan to fail to meet the requirements of an "employee
stock purchase plan" under Section 423 of the Code.
16. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board or approved by the stockholders of the Company,
whichever is earlier. No rights may be granted under the Plan while the Plan is
suspended or after it is terminated.
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<PAGE>
(b) Rights and obligations under any rights granted while the Plan
is in effect shall not be altered or impaired by suspension or termination of
the Plan, except with the consent of the person to whom such rights were
granted.
17. EFFECTIVE DATE OF PLAN. The plan shall become effective upon adoption
by the Board or the shareholders, whichever is earlier. Rights granted under the
Plan shall be subject to revocation unless and until the Plan has been approved
by the shareholders of the Company.
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<PAGE>
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<PAGE>
POSITRON CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN ENROLLMENT FORM
For the Offering Period beginning: _____________, _____________
For the Interim (Three Month)
Offering Period beginning: _____________, _____________
_______ Application to begin participation
_______ Change in Payroll Deduction Rate~
_______ Change of Beneficiary(ies)
1. _________________hereby elects to participate in the 1999 Positron
Corporation Employee Stock Purchase Plan (the "Stock Purchase Plan") and
subscribes to purchase shares of the Company's Common Stock in accordance with
this Enrollment Form and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of 2%, 4%, 6%, 8% or 10% (please circle one) of my Compensation during the
Offering Period in accordance with the Stock Purchase Plan.
3. I understand that said deductions shall be accumulated for the purchase
of shares of Common Stock at the applicable Purchase Price determined in
accordance with the Stock Purchase Plan. I understand that if I do not withdraw
from an Offering Period, any accumulated payroll deductions will be used to
automatically purchase shares. I understand that no interest shall accrue on any
funds deducted under the terms of the Plan.
4. I have received a copy of the complete "1999 Positron Corporation
Employee Stock Purchase Plan." I understand that my participation in the Stock
Purchase Plan is in all respects subject to the terms of the Plan. I understand
that participation in the Stock Purchase Plan under this Enrollment Form is
subject to obtaining shareholder approval of the Stock Purchase Plan.
5. Shares purchased for me under the Stock Purchase Plan should be issued
in the name(s) of (employee and/or spouse only).
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the applicable Offering Date (the first day of the
Offering Period during which I purchased such shares) or within I year after the
final day of the applicable Interim Offering Period (the date I purchased such
shares), I will be treated for federal income tax purposes as having received
ordinary income at the time of such disposition in an amount equal to the excess
of the fair market value of the shares at the time such shares were delivered to
me over the price which I paid for the shares. I HEREBY AGREE TO NOTIFY THE
COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY DISPOSITION OF MY SHARES
AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL, STATE OR OTHER TAX WITHHOLDING
OBLIGATIONS, IF ANY, WHICH ARISE UPON THE DISPOSITION OF THE COMMON STOCK. The
Company may, but will not be obligated to, withhold from my compensation the
amount necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by me. If I
dispose of such shares at any time after the expiration of the holding period
described above, I understand that I will be treated for federal income tax
purposes as having received income only at the time of such disposition, and
that such income will be taxed as ordinary income only to the extent of an
amount equal to the lesser of (1) the excess of the fair market value of the
shares at the time of such disposition over the purchase price which I paid for
the shares or (2) 15% of the fair market value of the shares on the first day of
the applica-
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<PAGE>
ble Offering Period. The remainder of the gain, if any, recognized. on such
disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Stock Purchase Plan. The
effectiveness of this Enrollment Form is dependent upon my eligibility to
participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the Stock
Purchase Plan:
NAME: (Please print) _________________________________________________
(First) (Middle) (Last)
Relationship _________________________________________________
Relationship
_________________________________________________
(Address)
NAME: (Please print) _________________________________________________
(First) (Middle) (Last)
Relationship _________________________________________________
Relationship
_________________________________________________
(Address)
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<PAGE>
POSITRON CORPORATION~1999 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the 1999 Positron
Corporation Employee Stock Purchase Plan which began on 19 (please insert date)
hereby notifies the Company that he or she hereby withdraws from the Offering
Period. S/He hereby directs the Company to pay to the undersigned as promptly as
practicable all the payroll deductions credited to his or her account with
respect to such Offering Period. The undersigned understands and agrees that his
or her option for such Offering Period will be automatically terminated. The
undersigned understands further that no further payroll deductions will be made
for the purchase of shares in the current Offering Period and the undersigned
shall be eligible to participate in succeeding Offering Periods only by
delivering to the Company a new Enrollment Form. The undersigned understands
that upon withdrawal from a particular Offering Period, he or she is precluded
from subsequent participation for a period of time specified in the Plan.
Name and Address of Participant
_______________________________
_______________________________
_______________________________
Signature
_______________________________
Dated:_________________________
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<PAGE>
THE UNDERSIGNED HEREBY ACKNOWLEDGE RECEIPT OF (A) NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD DECEMBER 17, 1999, (B) THE ACCOMPANYING PROXY
STATEMENT, AND (C) THE ANNUAL REPORT OF THE COMPANY ON FORM 10-KSB FOR THE YEAR
ENDED DECEMBER 31, 1998 AND THE QUARTERLY REPORT OF THE COMPANY ON FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 1999. THIS PROXY WILL BE VOTED AS DIRECTED
BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS
ABOVE.
Date:____________________________, 1999
_______________________________________
_______________________________________
(Signature of Stockholder)
Please sign exactly as signature
appears at left. Executors,
administrators, traders, guardians,
attorneys-in-fact, etc. should give
their full titles. If signer is a
corporation, please give full corporate
name and have a duly authorized officer
sign, stating title. If a partnership,
please sign in partnership name by
authorized person. If stock is
registered in two names, both should
sign.
<PAGE>
POSITRON CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS - DECEMBER 17, 1999
S. Lewis Meyer or Gary H. Brooks, or either of them, each with the power of
substitution and revocation, are hereby authorized to represent the undersigned
with all powers which the undersigned would possess if personally present, to
vote the securities of the undersigned at the annual meeting of shareholders of
POSITRON CORPORATION to be held at the Company's headquarters offices located at
1304 Langham Creek Drive, Suite 300, Houston, Texas 77084 at 10:00 a.m. local
time on Friday, December 17, 1999, and at any postponements or adjournments of
that meeting as set forth below, and in their discretion to act upon any other
business that may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS AN AFFIRMATIVE VOTE FOR THE NOMINEES FOR
DIRECTOR LISTED BELOW:
1. To elect directors to hold office until the 2000 annual meeting of
shareholders or until their successors are elected.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked below) to vote for all nominees listed below
Nominees: S. Lewis Meyer, Gary H. Brooks, Gary B. Wood, Antonio P. Falcao
To withhold authority to vote for any nominee, write that nominee's name below:
- --------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS AN AFFIRMATIVE VOTE FOR PROPOSAL TWO BELOW:
2. To approve the 1999 Stock Option Plan and the authorization of 4,000,000
common shares issuable pursuant to that Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS AN AFFIRMATIVE VOTE FOR PROPOSAL THREE BELOW:
3. To approve the 1999 Non-Employee Directors' Stock Option Plan and the
authorization of 500,000 common shares issuable pursuant to that Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS AN AFFIRMATIVE VOTE FOR PROPOSAL FOUR BELOW:
4. To approve the 1999 Stock Bonus Incentive Plan and authorization of 1,000,000
common shares issuable pursuant to that Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS AN AFFIRMATIVE VOTE FOR PROPOSAL FIVE BELOW:
5. To approve the 1999 Employee Stock Purchase Plan and the authorization of
500,000 common shares issuable pursuant to that Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. To ratify the appointment of Ham, Langston & Brezina as the Company's
independent auditors for the fiscal year ended December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
