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As filed with the Securities and Exchange Commission on January 31, 2000
Registration No. 333-____
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
THE ASHTON TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-6650372
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1900 Market Street, Suite 701
Philadelphia, Pennsylvania 19103
(Address of Principal Executive Offices) (Zip Code)
The Ashton Technology Group, Inc.
1998 Stock Incentive Plan
(Full title of the plan)
Fredric W. Rittereiser
Chairman and Chief Executive Officer
The Ashton Technology Group, Inc.
1900 Market Street, Suite 701
Philadelphia, Pennsylvania 19103
(Name and address of agent for service)
(215) 751-1900
Telephone number, including area code, of agent for service
Copies to:
Justin P. Klein, Esquire
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103
(215) 665-8500
<PAGE>
Calculation of Registration Fee
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Titles of securities Amount to be registered maximum offering maximum aggregate Amount of
to be registered price per share offering price registration fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01
par value per share 774,009 shares (1) (2) $1,451,267 (2) $383.14
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 416(a) under the Securities Act of 1933, this Registration
Statement shall be deemed to cover an indeterminate number of additional
shares of Common Stock issuable in the event the number of outstanding
shares of the Registrant is increased by stock split, reclassification,
stock dividend and similar transactions.
(2) In accordance with Rule 457(h)(1), the proposed maximum aggregate offering
price per share is based upon 774,009 shares offered pursuant to options
outstanding exercisable at $1.875 per share.
PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information required to be included in Part I
of this Registration Statement will be sent or given to all persons who were
granted options to purchase shares of Common Stock of The Ashton Technology
Group, Inc. (the "Company") pursuant to The Ashton Technology Group, Inc. 1998
Stock Incentive Plan (the "Plan").
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by the Company with the Commission are
incorporated by reference herein:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended March 31, 1999;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999;
(c) The Company's Current Report on Form 8-K dated August 18, 1999;
and
(d) The description of the Company's Common Stock contained in Item 1
of the Company's Registration Statement on Form 8-A dated May 21, 1996.
Each document filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act, subsequent to the date hereof and prior to the
filing of a post-effective amendment to this Registration Statement which
indicates that all securities offered hereby have been sold or which deregisters
all securities then remaining unsold, shall be deemed
2
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to be incorporated by reference herein and to be a part hereof from the date of
filing of such document. Any statement contained in a document incorporated by
reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein (or in any subsequently
filed document that also is incorporated by reference herein) modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed to constitute a part hereof except as so modified or superseded.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law
(the "DGCL"), the Company has adopted the provisions set forth below which
eliminate or limit the personal liability of a director to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director
under certain circumstances. Furthermore, under Section 145 of the DGCL, the
Company has the power to indemnify each of its directors and officers against
expenses (including reasonable costs, disbursements and counsel fees) in
connection with any proceeding involving such person by reason of having been an
officer or director of the Company. In addition, the Company has obtained
Directors' and Officers' Liability Insurance that insures its directors and
officers against certain liabilities such persons may incur in their capacities
as directors or officers of the Company.
Article SEVENTH of the Company's Certificate of Incorporation, as
amended, provides as follows:
SEVENTH. Directors of the corporation shall not be liable to either
the corporation or its stockholders for monetary damages for a breach of
fiduciary duties unless the breach involves: (1) a director's duty of loyalty to
the corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
Item 7. Exemption from Registration Claimed
Not applicable.
3
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Item 8. Exhibits
4 Specimen Common Stock Certificate (incorporated by reference to
the Company's Registration Statement No. 33-1182 on Form SB-2).
5 Opinion of Ballard Spahr Andrews & Ingersoll, LLP.
23.1 Consent of Goldstein Golub Kessler LLP.
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in
Exhibit 5).
24 Power of Attorney (included on signature page).
99 The Ashton Technology Group, Inc. 1998 Stock Incentive Plan.
Item 9. Undertakings
(a) Rule 415 Offering
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in the volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
4
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Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
-------- -------
do not apply if the registration statement is on Form S-3 or Form S-8,
and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the Registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents By
Reference
The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Incorporated Annual and Quarterly Reports
The undersigned registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(d) Request for Acceleration of Effective Date or Filing of
Registration Statement on Form S-8
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to
5
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the foregoing provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
6
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, Commonwealth of Pennsylvania, on
January 31, 2000.
The Ashton Technology Group, Inc.
By: /s/ Arthur J. Bacci
--------------------
Arthur J. Bacci
President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Each person whose signature appears below in so signing also makes,
constitutes and appoints Fredric W. Rittereiser and Arthur J. Bacci, and each of
them, his true and lawful attorney-in-fact, with full power of substitution, for
him in any and all capacities, to execute and cause to be filed with the
Securities and Exchange Commission any and all amendments and post-effective
amendments to this registration statement, with exhibits thereto and other
documents in connection therewith, and hereby ratifies and confirms all that
said attorney-in-fact or his substitute or substitutes may do or cause to be
done by virtue hereof.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Fredric W. Rittereiser Director and Chief Executive January 31, 2000
- -----------------------------
Fredric W. Rittereiser Officer (Principal Executive Officer)
/s/ Arthur J. Bacci Director, President and Chief Financial January 31, 2000
- -----------------------------
Arthur J. Bacci Officer (Principal Financial Officer)
/s/ Fred Weingard Director and Executive Vice President January 31, 2000
- -----------------------------
Fred Weingard
/s/ William Uchimoto Director and Executive Vice President January 31, 2000
- -----------------------------
William Uchimoto
/s/ K. Ivan F. Gothner Director January 31, 2000
- -----------------------------
K. Ivan F. Gothner
</TABLE>
7
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<TABLE>
<S> <C> <C>
/s/ Richard Butler Director January 31, 2000
- -----------------------------
Richard Butler
/s/ Thomas G. Brown Director January 31, 2000
- -----------------------------
Thomas G. Brown
</TABLE>
8
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4 Specimen Common Stock certificate (incorporated by reference to
the Company's Registration Statement No. 33-1182 on Form SB-2).
5 Opinion of Ballard Spahr Andrews & Ingersoll, LLP.
23.1 Consent of Goldstein Golub Kessler LLP.
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in
Exhibit 5).
24 Power of Attorney (included on signature page).
99 The Ashton Technology Group, Inc. 1998 Stock Incentive Plan.
9
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EXHIBIT 5
January 31, 2000
The Ashton Technology Group, Inc.
1900 Market Street Suite 701
Philadelphia, PA 19103
Re: The Ashton Technology Group, Inc.
Registration Statement on Form S-8
----------------------------------
Gentlemen:
We have acted as counsel to The Ashton Technology Group, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, of 774,009 shares of common stock of the
Company, par value $.01 per share (the "Shares"), issuable upon the exercise of
options (the "Options") granted under The Ashton Technology Group, Inc. 1998
Stock Incentive Plan (the "Plan").
In rendering our opinion, we have reviewed the Plan and such certificates,
documents, corporate records and other instruments and matters of law as in our
judgment are necessary or appropriate to enable us to render the opinion
expressed below. In giving this opinion, we are assuming the authenticity of
all instruments presented to us as originals, the conformity with the originals
of all instruments presented to us as copies and the genuineness of all
signatures.
Based upon the foregoing, we are of the opinion that the Shares, when
issued upon exercise of the Options granted under the Plan and upon payment of
the option exercise price, in accordance with the terms of the Plan, will be
legally issued, fully paid and non-assessable.
This opinion is limited to the matters expressly stated herein. No implied
opinion may be inferred to extend this opinion beyond the matters expressly
stated herein. We do not undertake to advise you or anyone else of any changes
in the opinions expressed herein resulting from changes in law, changes in facts
or any other matters that hereafter might occur or be brought to our attention.
We consent to the filing of this opinion as Exhibit 5 to the Registration
Statement on Form S-8 being filed with respect to the offering of the Shares.
Very truly yours,
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
10
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EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement of
The Ashton Technology Group, Inc. on Form S-8 pertaining to The Ashton
Technology Group, Inc. 1998 Stock Incentive Plan of our report dated May 7,
1999, except for paragraph two of Note 14, as to which the date is June 4, 1999,
with respect to the consolidated financial statements of The Ashton Technology
Group, Inc. and Subsidiaries included in the Annual Report on Form 10-KSB of The
Ashton Technology Group, Inc. for the year ended March 31, 1999, filed with the
Securities and Exchange Commission.
/s/ GOLDSTEIN GOLUB KESSLER LLP
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
January 31, 2000
11
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EXHIBIT 99
TECHNOLOGY GROUP, INC.
1998 STOCK INCENTIVE PLAN
(Amended and Restated, Effective December 30, 1999)
1. Purpose. The Ashton Technology Group, Inc. (the "Company") adopted a
stock incentive plan (the "1998 Plan") in July, 1998. The 1998 Plan is intended
to recognize the contributions made to the Company by all employees (including
employees who are members of the Board of Directors) of the Company or any
Affiliate (as defined below), and certain consultants or advisors to the Company
or an Affiliate, to provide such persons with additional incentive to devote
themselves to the future success of the Company or an Affiliate, and to improve
the ability of the Company or an Affiliate to attract, retain, and motivate
individuals upon whom the Company's sustained growth and financial success
depend, by providing such persons with an opportunity to acquire or increase
their proprietary interest in the Company through receipt of rights to acquire
shares of the Company's common stock, par value $0.01 per share (the "Common
Stock"). In addition, the 1998 Plan is intended as an additional incentive to
certain directors of the Company who are not employees of the Company or an
Affiliate to serve on the Board of Directors and to devote themselves to the
future success of the Company by providing them with an opportunity to acquire
or increase their proprietary interest in the Company through the receipt of
rights to acquire Common Stock.
The 1998 Plan was initially comprised of a number of stock option
agreements entered into with certain key executives, outside directors and
consultants. These currently outstanding agreements (the "Pre-1999 Agreements")
are listed on Schedule I attached at the end hereof. This amended and restated
plan document is not intended to, and does not, amend the Pre-1999 Agreements
and if there is any inconsistency between any provisions of this amended and
restated plan document and one or more of the Pre-1999 Agreements, the latter
shall control. However, those Pre-1999 Agreements continue to be a part of this
amended and restated plan document.
2. Definitions. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:
<PAGE>
(a) "Affiliate" means a corporation which is a parent corporation or a
subsidiary corporation with respect to the Company within the meaning of section
424(e) or (f) of the Code.
(b) "Board of Directors" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended. Each
reference to a particular section of the Code shall include any successor to
that section.
(d) "Committee" shall have the meaning set forth in Section 3 hereof.
(e) "Company" means The Ashton Technology Group, Inc., a Delaware
corporation.
(f) "Disability" shall have the meaning set forth in section 22(e)(3) of
the Code.
(g) "Fair Market Value" shall have the meaning set forth in Subsection
8(b) hereof.
(h) "Non-Employee Director" means a member of the Board of Directors who
is not an employee of the Company or an Affiliate.
(i) "Option" means a non-qualified stock option granted under this Plan
which is not intended to qualify, or otherwise does not qualify, as an
"incentive stock option" within the meaning of section 422(b) of the Code.
(j) "Optionee" means a person to whom an Option has been granted, which
Option has not been exercised and has not expired or terminated for any reason.
(k) "Option Document" means the document described in Section 8 hereof
which sets forth the terms and conditions of each grant of Options.
(l) "Option Price" means the price at which Shares may be purchased upon
exercise of an Option, as calculated pursuant to Subsection 8(b) hereof.
<PAGE>
(m) "Plan" means the Company's amended and restated 1998 Stock Incentive
Plan set forth herein.
(n) "Rule 16b-3" means Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, (the "Exchange Act").
(o) "Section 16 Officer" means any person who is an "officer" within the
meaning of Rule 16a-1(f) promulgated under the Exchange Act or any successor
rule.
(p) "Shares" mean the shares of Common Stock of the Company which are or
can be the subject of Options.
(q) "Unrelated Director" shall mean a member of the Board of Directors
who is both a "non-employee director" within the meaning of Rule 16b- 3, and an
"outside director" within the meaning of Treasury Regulation section
1.162-27(e)(3).
3. Administration of the Plan. The Plan shall be administered by the Board;
provided, however, that the Board of Directors may designate a committee of the
Board of Directors composed of two or more Unrelated Directors to administer the
Plan with respect to the Section 16 Officers, directors, and/or key employees.
Alternatively, the Board of Directors may designate two committees to operate
and administer the Plan in its stead, one committee composed of two or more
Unrelated Directors to operate and administer the Plan with respect to the
Company's Section 16 Officers and the directors, and another committee composed
of two or more directors (which may include directors who are not Unrelated
Directors) to operate and administer the Plan with respect to persons other than
Section 16 Officers or directors. Any of such committees designated by the Board
of Directors, and the Board of Directors itself in its administrative capacity
with respect to the Plan, is herein referred to as the "Committee."
(a) Meetings. The Committee shall hold meetings at such times and places
as it may determine, shall keep minutes of its meetings, and shall adopt, amend
and revoke
<PAGE>
such rules or procedures as it may deem proper; provided, however, that it may
take action only upon the agreement of a majority of the whole Committee. Any
action which the Committee shall take through a written instrument signed by a
majority of its members shall be as effective as though it had been taken at a
meeting duly called and held. The Committee shall report all actions taken by it
to the Board of Directors.
(b) Grants. The Committee shall from time to time, and subject to the
provisions of the Plan and to such other terms and conditions as the Committee
may prescribe, direct the Company to grant Options pursuant to the terms of the
Plan. The date an Option is granted (the "Grant Date") shall be the date
selected by the Committee on which the Committee allots a specific number of
Shares to an Optionee pursuant to the Plan. The Committee shall have plenary
authority to (i) determine the persons to whom, the times at which, and the
price at which Options shall be granted, (ii) determine the number of Shares
subject thereto, (iii) determine that Options granted to Non-Employee Directors
shall be granted only upon unanimous vote of the Committee or of directors not
receiving any such Options; and (iv) approve the form and terms and conditions
of the Option Documents; all subject, however, to the express provisions of the
Plan. Notwithstanding the foregoing, no person may be granted Options to acquire
more than Five Hundred Thousand (500,000) Shares in any calendar year, subject
to adjustment as provided in Section 9 hereof. In making such determinations,
the Committee may take into account the nature of the Optionee's services and
responsibilities, the Optionee's present and potential contribution to the
Company's success and such other factors as it may deem relevant. The
interpretation and construction by the Committee of any provisions of the Plan
or of any Option granted under it shall be final, binding and conclusive.
(c) Exculpation. No member of the Board of Directors shall be personally
liable for monetary damages for any action taken or any failure to take any
action in
<PAGE>
connection with the administration of the Plan or the granting of Options under
the Plan, provided that this Subsection 3(c) shall not apply to (i) any breach
of such member's duty of loyalty to the Company, or an Affiliate, or the
Company's stockholders, (ii) acts or omissions not in good faith or involving
intentional misconduct or a knowing violation of law, (iii) acts or omissions
that would result in liability under applicable law, and (iv) any transaction
from which the member derived an improper personal benefit.
(d) Indemnification. Service on the Committee shall constitute service
as a member of the Board of Directors. Each member of the Committee shall be
entitled, without further action on his or her part, to indemnity from the
Company and limitation of liability to the fullest extent provided by applicable
law and by the Company's Certificate of Incorporation and/or By-laws in
connection with or arising out of any action, suit or proceeding with respect to
the administration of the Plan or the granting of Options thereunder in which he
or she may be involved by reason of his or her being or having been a member of
the Committee, whether or not he or she continues to be such member of the
Committee at the time of the action, suit or proceeding.
4. Options under the Plan. All Options under the Plan shall be in the form
of non-qualified stock options.
5. Eligibility. All employees of the Company or an Affiliate, consultants
and advisors to the Company or an Affiliate, and members of the Board of
Directors shall be eligible to receive Options hereunder.
6. Shares Subject to Plan. The aggregate maximum number of Shares for which
Options may be granted pursuant to the Plan is Six Million Four Hundred Fifty
(6,450,000) Shares, subject to adjustment as provided in Section 9 hereof. The
Shares shall be issued from authorized and unissued Common Stock or Common Stock
held in or hereafter acquired for the treasury of the Company. If an Option
terminates or expires without having been fully
<PAGE>
exercised for any reason, the Shares may again be the subject of one or more
Options granted pursuant to the Plan.
7. Term of the Plan. The Plan was effective as of July 13, 1998. No Option
may be granted under the Plan after July 12, 2003.
8. Option Documents and Terms. Options granted pursuant to the Plan shall
be evidenced by the Option Documents in such form as the Committee shall from
time to time approve, which Option Documents shall comply with and be subject to
the following terms and conditions and such other terms and conditions as the
Committee shall from time to time require which are not inconsistent with the
terms of the Plan.
(a) Number of Option Shares. Each Option Document shall state the number
of Shares to which it pertains.
(b) Option Price. Each Option Document shall state the Option Price
which shall be more than, equal to or less than the Fair Market Value of the
Shares on the date the Option is granted, as shall be determined by the
Committee, in its sole discretion and in accordance with this Subsection 8(b).
If the Common Stock is traded in a public market, then the Fair Market Value per
share shall be the average of the high and low reported sales prices thereof on
the date of grant on the principal exchange on which the Common Stock is traded
(or, if there is no such trading on the applicable date, the last preceding date
on which there was such trading). If the Common Stock is not traded in a public
market, the Committee shall adopt such other method of determining Fair Market
Value as shall be authorized by the Code and the rules and regulations
thereunder.
(c) Exercise. Each Option shall be granted for a term of no more than 10
years and shall first be exercisable or shall become exercisable according to
the vesting schedule as is determined by the Committee and provided in the
Option Document. The exercisable portion of an Option may be exercised in whole
or part at any time prior to the
<PAGE>
event or date when the Option or a portion thereof becomes unexercisable, as
provided in the Option Document, except that any partial exercise shall be for
whole Shares only. No Option shall be deemed to have been exercised prior to the
receipt by the Company of written notice of such exercise and of payment in full
of the Option Price for the Shares to be purchased. Each such notice shall
specify the number of Shares to be purchased and shall (unless the Shares are
covered by a then current registration statement or a Notification under
Regulation A under the Securities Act of 1933, as amended (the "Act")), contain
the Optionee's acknowledgment in form and substance satisfactory to the Company
that (a) such Shares are being purchased for investment and not for distribution
or resale (other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (b) the Optionee has been advised and understands that
(i) the Shares may not have been registered under the Act and therefore may be
"restricted securities" within the meaning of Rule 144 under the Act and are
subject to restrictions on transfer and (ii) the Company is under no obligation
to register the Shares under the Act or to take any action which would make
available to the Optionee any exemption from such registration, (c) such Shares
may not be transferred without compliance with all applicable federal and state
securities laws, and (d) an appropriate legend referring to the foregoing
restrictions on transfer and any other restrictions imposed under the Option
Documents may be endorsed on the certificates. Notwithstanding the foregoing, if
the Company determines that the issuance of Shares should be delayed pending (A)
registration under federal or state securities laws, (B) the receipt of an
opinion of counsel satisfactory to the Company that an appropriate exemption
from such registration is available, (C) the listing or inclusion of the Shares
on any securities exchange or an automated quotation system or (D) the consent
or approval of any governmental regulatory body whose consent or approval is
<PAGE>
necessary in connection with the issuance of such Shares, the Company may defer
exercise of any Option granted hereunder until any of the events described in
this sentence has occurred.
(d) Medium of Payment. An Optionee shall pay for Shares (i) in cash,
(ii) by certified or cashier's check payable to the order of the Company, or
(iii) by such other mode of payment as the Committee may approve, including
payment through a broker in accordance with procedures permitted by Regulation T
of the Federal Reserve Board. Furthermore, the Committee may provide in an
Option Document that payment may be made in whole or in part in shares of the
Company's Common Stock held by the Optionee. If payment is made in whole or in
part in shares of the Company's Common Stock, then the Optionee shall deliver to
the Company certificates registered in the name of such Optionee representing
the shares owned by such Optionee, free of all liens, claims and encumbrances of
every kind and having an aggregate Fair Market Value on the date of delivery
that is at least as great as the Option Price of the Shares (or relevant portion
thereof) with respect to which such Option is to be exercised by the payment in
shares of Common Stock, endorsed in blank or accompanied by stock powers duly
endorsed in blank by the Optionee. In the event that certificates for shares of
the Company's Common Stock delivered to the Company represent a number of shares
of Common Stock in excess of the number of shares of Common Stock required to
make payment for the Option Price of the Shares (or relevant portion thereof)
with respect to which such Option is to be exercised by payment in shares of
Common Stock, the stock certificate issued to the Optionee shall represent (i)
the Shares in respect of which payment is made, and (ii) such excess number of
shares of Common Stock. Notwithstanding the foregoing, the Committee may impose
from time to time such limitations and prohibitions on the use of shares of
Common Stock to exercise an Option as it deems appropriate, including, without
limitation, any limitation or prohibition designed to avoid certain accounting
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consequences that may result from the use of shares of Common Stock as payment
of the Option Price upon exercise of an Option and in satisfaction of any
withholding obligation.
(e) Termination of Options.
(i) No Option shall be exercisable after the first to occur of the
following:
(A) Expiration of the Option term specified in the Option
Document;
(B) Except to the extent otherwise provided in the Option
Document, expiration of thirty days from the date the Optionee's employment or
service with the Company or an Affiliate terminates for any reason other than
Disability, retirement or death or as otherwise specified in Subsection (D) or
(G), below;
(C) Except to the extent otherwise provided in the Option
Document, expiration of one year from the date the Optionee's employment or
service with the Company or an Affiliate terminates due to the Optionee's
Disability, retirement or death;
(D) Except to the extent otherwise provided in the Option
Document, a finding by the Committee, after full consideration of the facts
presented on behalf of both the Company and the Optionee, that the Optionee has
breached his or her employment or service contract with the Company or an
Affiliate, or has been engaged in disloyalty to the Company or an Affiliate,
including, without limitation, fraud, embezzlement, theft, commission of a
felony or proven dishonesty in the course of his or her employment or service,
or has disclosed trade secrets or confidential information of the Company or an
Affiliate. In such event, in addition to immediate termination of the Option,
the Optionee shall automatically forfeit all Shares for which the Company has
not yet delivered the share certificates upon refund by the Company of the
Option Price. Notwithstanding anything herein
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to the contrary, the Company may withhold delivery of share certificates pending
the resolution of any inquiry that could lead to a finding resulting in a
forfeiture;
(E) The date, if any, set by the Board of Directors as an
accelerated expiration date in the event of the liquidation or dissolution of
the Company; or
(F) The occurrence of such other event or events as may be set
forth in the Option Document as causing an accelerated expiration of the Option.
(G) The date, if any, set by the Committee as an accelerated
expiration date in the event of a change in the required financial accounting
treatment for stock options from that in effect on the effective date of this
Plan that adversely affects or may adversely affect the Company in the
foreseeable future.
(ii) Notwithstanding the foregoing, the Committee may extend the
period during which all or any portion of an Option may be exercised to a date
no later than the Option term specified in the Option Document pursuant to
Subsection 8(e)(i)(A) hereof. The terms of an executive severance agreement or
other agreement between the Company and an Optionee, approved by the Committee,
whether entered into prior or subsequent to the grant of an Option, which
provide for Option exercise dates later than those set forth in Subsection
8(e)(i), but permitted by this Subsection 8(e)(ii), shall be deemed to be an
Option term approved by the Committee and consented to by the Optionee.
(f) Cash Payment in Lieu of Stock. Notwithstanding anything to the
contrary contained herein, if at the time any Option or any exercisable portion
thereof is delivered for exercise to the Company, or at any time prior to the
issuance of a certificate of stock in respect of such Option or portion thereof,
the Common Stock has ceased to be listed on any national securities exchange or
otherwise publicly traded (whether or not listed on any stock exchange), the
Committee, in its sole discretion, shall have the choice of delivering (i)
shares of Common Stock or (ii) a cash payment in lieu of shares of Common Stock
equal to
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the difference between the Fair Market Value of the Common Stock and the Option
Price, multiplied by the number of Shares that would have been issued upon such
exercise.
(g) Transfers. No Option granted under the Plan may be transferred,
unless such transfer is to a "Permitted Transferee." For purposes of this Plan,
"Permitted Transferee" means either of the following: (i) a person that receives
the Option by will or by the laws of descent and distribution, or (ii) a person
that receives the Option after the Committee, in the manner established by the
Committee, has issued or amended an Option Document the terms of which permit
all or a portion of the Option to be irrevocably transferred by the Optionee by
bona fide gift, with no consideration for the transfer, to any of the Optionee's
parents, spouse, children or any other person who is a beneficiary under any
insurance policy for which the premiums are paid by the Company, or a trust for
the benefit of any of the foregoing, and the Optionee has made such transfer, so
notified the Company, identified the Option transferred, the identity of the
transferee and the category of Permitted Transferee to which the transferee
belongs.
Such transferred Option, once transferred, may not again be transferred
except by will or by the laws of descent and distribution and will remain
subject to the same terms and conditions of the Option Document in effect
immediately before the transfer and any such transferred Option may be exercised
only by such transferee during the transferee's lifetime (if the transferee is
not a trust).
(h) Other Provisions. Subject to the provisions of the Plan, the Option
Document shall contain such other provisions including, without limitation,
provisions authorizing the Committee to accelerate the exercisability of all or
any portion of an Option granted pursuant to the Plan, additional restrictions
upon the exercise of the Option or additional limitations upon the term of the
Option, as the Committee shall deem advisable.
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(i) Amendment. Subject to the provisions of the Plan, the Committee
shall have the right to amend the Option Document issued to an Optionee, subject
to the Optionee's consent if such amendment is not favorable to the Optionee,
except that the consent of the Optionee shall not be required for any amendment
made pursuant to Subsection 8(e)(i)(G) hereof.
9. Adjustments on Changes in Capitalization.
(a) In the event that the outstanding shares of Common Stock are changed
by reason of a reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination or exchange of shares and the like
(not including the issuance of Common Stock on the conversion of other
securities of the Company which are outstanding on the Grant Date and which are
convertible into Common Stock) or dividends payable in shares of Common Stock
(collectively, a "Change in Capital Structure"), an equitable adjustment shall
be made by the Committee in the aggregate number of Shares available under the
Plan and in the number of Shares and price per Share subject to outstanding
Options. Unless the Committee makes other provisions for the equitable
settlement of outstanding Options, if the Company shall be reorganized,
consolidated, or merged with another corporation, or if all or substantially all
of the assets of the Company shall be sold or exchanged, an Optionee shall at
the time of such corporate event, if the Options held by such Optionee have not
previously terminated, be entitled to receive upon the exercise of his or her
Option the same number and kind of shares of stock or the same amount of
property, cash or securities as he or she would have been entitled to receive
upon the occurrence of any such corporate event as if he or she had been,
immediately prior to such event, the holder of the number of Shares covered by
his or her Option.
(b) Any adjustment under this Section 9 in the number of Shares subject
to Options shall apply proportionately to only the unexercised portion of any
Option granted
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hereunder. If fractions of a Share would result from any such adjustment, the
adjustment shall be revised to the next lower whole number of Shares.
(c) The Committee shall have authority to determine the adjustments to
be made under this Section, and any such determination by the Committee shall be
final, binding and conclusive.
10. Amendment of the Plan. The Board of Directors may amend the Plan from
time to time in such manner as it may deem advisable. However, no amendment to
the Plan shall adversely affect any outstanding Option without the consent of
the Optionee.
11. No Commitment to Retain. The grant of an Option Plan shall not be
construed to imply or to constitute evidence of any agreement, express or
implied, on the part of the Company or any Affiliate to retain the Optionee in
the employ of the Company or an Affiliate and/or as a member of the Board of
Directors or in any other capacity or to entitle the Optionee to receive any
remuneration or payments from the Company.
12. Withholding of Taxes. Whenever the Company proposes or is required to
deliver or transfer Shares in connection with the exercise of an Option, the
Company shall have the right to (a) require the recipient to remit or otherwise
make available to the Company an amount sufficient to satisfy any federal, state
and/or local withholding tax requirements prior to the delivery or transfer of
any certificate or certificates for such Shares or (b) take whatever other
action it deems necessary to protect its interests with respect to tax
liabilities. The Company's obligation to make any delivery or transfer of Shares
shall be conditioned on the Grantee's compliance, to the Company's satisfaction,
with any withholding requirement.
13. Interpretation. The Plan is intended to enable transactions under the
Plan with respect to directors and officers (within the meaning of Section 16(a)
under the Exchange Act) to satisfy the conditions of Rule 16b-3; to the extent
that any provision of the Plan would cause a conflict with such conditions or
would cause the administration of the Plan as provided in
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Section 3 to fail to satisfy the conditions of Rule 16b-3 or of section 162(m)
of the Code, such provision shall be deemed null and void to the extent
permitted by applicable law. This section shall not be applicable if no class of
the Company's equity securities is then registered pursuant to Section 12 of the
Exchange Act.
14. Merger or Consolidation, Recapitalization, Etc. In its absolute
discretion, and on such terms and conditions as it may deem appropriate, the
Committee may at any time provide that the Options cannot be exercised after the
merger or consolidation of the Company with or into another corporation, the
sale or other disposition of all or substantially all of the assets of the
Company (including the exchange of such assets for the securities of another
corporation), the acquisition by another person of 80% or more of the Company's
then outstanding shares of voting stock or the recapitalization,
reclassification, liquidation or dissolution of the Company, and if the
Committee so provides, a resolution of its Board of Directors adopted prior to
the occurrence of such merger, consolidation, disposition, acquisition,
recapitalization, reclassification, liquidation, may provide that, for some
period of time prior to such event, the Option shall be exercisable as to all
Shares subject thereto, and/or that the Optionee shall receive cash, in lieu of
exercising the Option, in the amount by which the Fair Market Value, as of the
date of such event, of the number of Shares to which the Option relates exceeds
the Option Price for the Shares, and that upon the occurrence of such event, the
Option shall terminate and be of no further force or effect; provided, however,
that the Committee may provide, in its absolute discretion, that the Option
shall remain exercisable after any such event in the manner described in
Subsection 9(a) hereof.
15. Jurisdiction. Any suit, action or proceeding against the Optionee with
respect to this Agreement, or any judgment entered by any court in respect of
any thereof, may be brought in any court of competent jurisdiction in the
Commonwealth of Pennsylvania, as the Company may elect in its sole discretion,
and the Optionee agrees to submit to the
<PAGE>
nonexclusive jurisdiction of such courts for the purpose of any such suit,
action, proceeding or judgment. By the execution and delivery of this Agreement,
the Optionee appoints the Secretary of the Company, as the Optionee's agent upon
whom process may be served in any such suit, action or proceeding. Service of
process upon such agent, together with notice of such service given to the
Optionee, shall be deemed in every respect effective service of process upon him
or her in any suit, action or proceeding. Nothing herein shall in any way be
deemed to limit the ability of the Company to serve any such writs, process or
summonses in any other matter permitted by applicable law or to obtain
jurisdiction over the Optionee, in such other jurisdictions, and in any such
manner, as may be permitted by applicable law. No suit, action or proceeding
against the Company with respect to this Agreement may be brought other than in
a court of competent jurisdiction in the Commonwealth of Pennsylvania, and the
Optionee hereby waives any right which he or she may otherwise have had to bring
such an action in any court.
16. Substituted Options. If the Committee cancels, with the consent of an
Optionee, any Option and a new option is substituted therefor, then the
Committee may, in its discretion, provide that the Grant Date of the canceled
Option shall be the date used to determine the earliest date or dates for
exercising or disposing of the new substituted option so that the Optionee may
exercise or dispose of the substituted option at the same time as if the
Optionee had held the substituted option since the Grant Date of the canceled
Option; provided, however, that no Optionee who for purposes of Section 16 of
the Exchange Act is treated as an officer, director or 10% stockholder of the
Company may dispose of a substituted stock option, prior to the end of the
required holding period following the Grant Date (calculated without reference
to this Section 16).
17. Non-Uniform Determinations. The determinations under the Plan need not
be uniform and may be made by the Committee or the Board of Directors
selectively among
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persons who receive, or who are eligible to receive, Options under the Plan
(whether or not such persons are similarly situated). Without limiting the
generality of the foregoing, the Committee shall be entitled, among other
things, to make non-uniform and selective determinations and to enter into
non-uniform and selective Option Documents as to (a) the persons to receive
Options under the Plan and (b) the terms and provisions of the Options.
