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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES AND EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
PNV INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
PNV INC.
11711 N.W. 39TH STREET
CORAL SPRINGS, FLORIDA 33065
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 15, 2000
---------------------
To the Stockholders of PNV Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of PNV Inc. (the "Company") will be held on November 15, 2000, at 3:00
p.m. at the Radisson Resort Coral Springs, 11775 Heron Bay Boulevard, Coral
Springs, Florida for the following purposes, as more fully described in the
accompanying Proxy Statement:
1. To elect six directors of the Company to serve until the 2001
Annual Meeting of Stockholders of the Company or until their respective
successors are duly elected and qualified;
2. To approve and adopt the Company's 2000 Equity Compensation Plan,
which provides for the issuance of a maximum of 2,100,000 shares of Common
Stock pursuant to awards thereunder;
3. To approve and adopt the Company's Employee Stock Purchase Plan,
which provides for the issuance of a maximum 250,000 shares of Common Stock
pursuant thereto;
4. To ratify the selection of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending June 30, 2001; and
5. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The foregoing items of business are more thoroughly described in the Proxy
Statement accompanying this notice. Only stockholders of record at the close of
business on October 6, 2000 are entitled to notice of and to vote at the Annual
Meeting.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you plan to attend, please sign and return the enclosed proxy as
promptly as possible in the envelope enclosed for your convenience. You may
revoke your proxy at any time prior to the Annual Meeting. If you attend the
Annual Meeting and vote by ballot, your proxy will be revoked automatically and
only your vote at the Annual Meeting will be counted.
By order of the Board of Directors
IAN WILLIAMS
Chairman of the Board
Coral Springs, Florida
October 16, 2000
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
<PAGE> 3
PNV INC.
11711 N.W. 39TH STREET
CORAL SPRINGS, FLORIDA 33065
---------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 15, 2000
---------------------
PROXY SOLICITATION AND GENERAL INFORMATION
This Proxy Statement is furnished to stockholders of PNV Inc., a Delaware
corporation (the "Company"), as of October 6, 2000 in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board of
Directors" or the "Board") for use at the Company's Annual Meeting of
Stockholders to be held on November 15, 2000 at 3:00 p.m. (Eastern Standard
Time) (the "Annual Meeting"). The Annual Meeting will be held at Radisson Resort
Coral Springs, 11775 Heron Bay Boulevard, Coral Springs, Florida. The Company
expects to mail this Proxy Statement and the enclosed proxy card to the
stockholders on or about October 16, 2000.
The close of business on October 6, 2000 has been fixed as the record date
(the "Record Date") for determining the stockholders, entitled to notice of and
to vote at the Annual Meeting. As of the close of business on the Record Date,
the Company had 15,997,356 shares of the common stock of the Company, $.001 par
value (the "Common Stock" or the "Stock") issued and outstanding. The presence
of a majority of such shares is required, in person or by proxy, to constitute a
quorum for the transaction of business at the Annual Meeting. No shares of the
Company's preferred stock $.01 par value, were outstanding. Each share of Common
Stock outstanding on the Record Date will be entitled to one vote on all matters
to be presented for action at the Annual Meeting. Stockholders may not cumulate
votes in the election of directors.
Votes withheld from any nominee for election as director, abstentions and
broker "non-votes" are counted as present or represented for purposes
determining the presence or absence of a quorum for the Annual Meeting. A broker
"non-vote" occurs when a nominee holding shares for a beneficial owner votes on
one proposal, but does not vote on another proposal because, in respect of such
other proposal, the nominee does not have discretionary voting power and has not
received instructions from the beneficial owner. The election of directors by
the stockholders shall be determined by a plurality of the votes cast by
stockholders entitled to vote, and votes withheld will not be counted toward the
achievement of a plurality. On all other matters being submitted to
stockholders, an affirmative vote of a majority of the shares present or
represented and voting on each such matter is required for approval. The vote on
each matter submitted to stockholders is tabulated separately. Abstentions are
included in the number of shares present or represented and voting on each
matter. Broker "non-votes" are not considered voted for the particular matter
and have the practical effect of reducing the number of affirmative votes
required to achieve a majority for such matter by reducing the total number of
shares from which the majority is calculated.
If the proxy does not specify how the shares represented thereby are to be
voted, the person acting under the proxies will vote the shares represented
thereby: (1) FOR the election of the directors nominated and named in this Proxy
Statement; (2) FOR the approval and adoption of the PNV Inc. 2000 Equity
Compensation Plan (the "Equity Compensation Plan"), which provides for the
issuance of up to 2,100,000 shares of Common Stock pursuant to awards
thereunder; (3) FOR the approval and adoption of the PNV Inc. Employee Stock
Purchase Plan (the "Stock Purchase Plan"), which provides for the issuance of up
to 250,000 shares of Common Stock pursuant thereto; (4) FOR the ratification of
the selection of Deloitte & Touche LLP as independent auditors of the Company
for the fiscal year ending June 30, 2001; and (5) in their discretion, on such
other business as may come before the Annual Meeting or any adjournment(s)
thereof. With respect to the election of a Board of Directors, any stockholder
that has submitted a proxy has a right to withhold authority to vote for any
individual nominee or group of nominees to the Board of Directors by writing the
name of such individual or group in the space provided on the proxy. The Company
does not know
<PAGE> 4
of any other business to be brought before the Annual Meeting, but it is
intended that as to any such other business the proxies will be voted in
accordance with the judgment of the person or persons acting thereunder.
Proxies in the accompanying form, duly executed and returned to the
management of the Company, and not revoked, will be voted at the Annual Meeting
in accordance with the instructions specified thereon. Any proxy given pursuant
to this solicitation may be revoked by the shareholder at any time prior to the
voting of the proxy by delivery of a subsequently dated proxy, by written
notification to the Secretary of the Company or by personally withdrawing the
proxy at the Annual Meeting and voting in person.
A copy of the Company's 2000 Annual Report to Stockholders is being
furnished herewith to each Stockholder of record as of the close of business on
the Record Date. Copies of the Company's Annual Report on Form 10-K for the year
ended June 30, 2000 will be provided free of charge upon written request to:
PNV Inc.
11711 N.W. 39th Street
Coral Springs, Florida 33065
Attn: Chief Financial Officer
PROPOSAL 1:
ELECTION OF DIRECTORS
GENERAL
The Company's by-laws provide that the number of members of the Board of
Directors will consist of between one and nine and that the Board has the power
to determine the number of directors and to fill vacancies on the Board.
Currently, the Company has six directors. Directors are elected at the Annual
Meeting and serve until their successors are elected and qualified. Each of the
six nominees named below is currently serving as a director of the Company and
has indicated that he will serve as a director of the Company if elected, but if
the situation should arise that any nominee is no longer able or willing to
serve, the proxy may be voted for the election of such other person as may be
designated by the Board of Directors. Executive officers are appointed by the
Board of Directors on an annual basis and serve until their successors have been
duly elected and qualified.
The following information with respect to the principal occupation or
employment, other affiliations and business experience of the nominees for
director have been furnished to the Company by such nominees.
Robert P. May, 51, has served as the Company's Chief Executive Officer
since March 1999, as the Company's President since April 2000, and as a director
of the Company since March 1999. Prior to joining PNV, from March 1998 to
February 1999, Mr. May was a private investor. From October 1996 to February
1998, Mr. May served as Chief Operating Officer of Cablevision Systems
Corporation. In this position he oversaw several key transactions including the
successful integration of the New York-area cable systems of
Tele-Communications, Inc. From April 1995 to September 1996, Mr. May served as
Chief Operating Officer of Towne Air Freight, a regional airfreight trucking
company. From 1993 to October 1995, Mr. May also served as a Chief Executive
Officer of Intelligent Electronics' Intelogistics Division, a distributor of
desktop hardware and related outsourcing services. From 1973 to 1993, Mr. May
was employed by Federal Express Corporation where he served in a variety of
senior management positions. Mr. May attended Curry College and Boston College.
Ian Williams, 51, a founder of PNV, has served as the Company's Chairman of
the Board since August 1998 and as a director of the Company since its
incorporation in September 1995. From September 1995 to March 1999, Mr. Williams
served as the Company's Chief Executive Officer. From September 1995 to July
1998, Mr. Williams served as the Company's President. From March 1993 to
September 1995, Mr. Williams served as President of Park 'N View, Ltd., the
predecessor of PNV. Prior to joining Park 'N View, Ltd., from 1991 to March
1993, Mr. Williams served as President of Arden Technologies, Inc., a
manufacturer and distributor of wireless cable transmitters. Mr. Williams'
responsibilities at Arden, as well as other previous employers, included the
design of numerous satellite master antenna television systems, multi-channel
low-
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power television systems, FM rebroadcast and distribution systems and wireless
television broadcast systems and the installation of low-power television and
cable systems throughout Canada, the Arctic, and over 30 other countries
throughout the world. Mr. Williams holds a diploma from West Gloucestershire
College of Education in the United Kingdom.
Robert M. Chefitz, 41, has served as a director of the Company since
November 1995. Mr. Chefitz has served as a Managing Director of Patricof & Co.
Ventures, Inc., a venture capital firm, since 1991. Mr. Chefitz joined Patricof
in 1987 and served as Vice President until 1991. From 1981 to 1987, Mr. Chefitz
served in various management positions with Golder, Thoma & Cressey Co. of
Chicago, Illinois. Mr. Chefitz's experience includes investing with management
teams to consolidate fragmented industries, including communications, security
and specialty retailing. Mr. Chefitz serves as a director of Air Net
Communications Corp. and several privately held companies in which the limited
partnerships managed by Patricof are investors. Mr. Chefitz holds a B.A. in
History from Northwestern University and an M.B.A. from Columbia University.
Daniel K. O'Connell, 71, has served as a director of the Company since
November 1995. Mr. O'Connell has been a private investor since April 1991. From
1964 to April 1991, Mr. O'Connell worked for Ryder System, Inc., an
international transportation services company and served in various capacities
including Executive Vice President from 1974 to 1991, Financial Vice President
from 1970 to 1974, General Counsel from 1968 to 1970 and attorney from 1964 to
1968. He is a director of American Retirement Corporation in Nashville,
Tennessee, which develops, owns and manages assisted living, continuing care and
congregate living retirement communities throughout the United States, and of
Fortress-FAE Corporation in Boston, Massachusetts, which transports and stores
art objects and other high-value personal property. Mr. O'Connell holds a B.A.
from Southern Illinois University and a J.D. from Georgetown University Law
Center. Mr. O'Connell's son is a partner in the law firm of Kilpatrick Stockton
LLP, which provides legal services to the Company.
William J. Razzouk, 52, has served as a director of the Company since
October 1999. Mr. Razzouk served as Chief Executive Officer of PlanetRx.com,
Inc. from September 1998 until August 2000 and as Chairman of PlanetRx.com, Inc.
from September 1998 until August 2000. From August 1997 to May 1998, Mr. Razzouk
served as President and Chief Operating Officer of Storage USA, a real estate
investment trust. Mr. Razzouk was a consultant to Advanta Corporation from
October 1996 to April 1997. From February 1996 to June 1996, Mr. Razzouk served
as President and Chief Operating Officer of America Online, Inc. From August
1983 to February 1996, Mr. Razzouk was employed by FedEx Corporation and most
recently served as Executive Vice President of Worldwide Customer Operations.
Mr. Razzouk serves as a director of Fritz Companies, Inc. and Waste Connections,
Inc. Mr. Razzouk holds a B.A. in Journalism and Marketing from the University of
Georgia.
Raymond B. Greer, 37, has served as a director of the Company since March
2000. Mr. Greer joined Esurg.com as Chief Executive Officer in May 2000. From
May 1994 to May 2000, Mr. Greer has served in several capacities at Ryder
Systems, Inc. including President, Ryder Integrated Logistics and Executive Vice
President of Ryder Systems, Inc. Mr. Greer holds a B.S. in Mathematics from the
University of Utah in Salt Lake City and a Masters from both Embry-Riddle
Aeronautical University in Daytona Beach, Florida and Christian Brothers
University in Memphis, Tennessee.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
THE NOMINEES NAMED ABOVE.
BOARD MEETINGS AND COMMITTEES
The Board of Directors is responsible for the overall affairs of the
Company. To assist it in carrying out its duties, the Board has established an
Audit Committee and a Compensation Committee and delegated to these committees
certain authority.
The Board of Directors held eight meetings during the year ended June 30,
2000. Each Director attended at least seventy-five percent (75%) of the meetings
held by the Board of Directors and the committees on
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<PAGE> 6
which he served during the year. The Company has no standing nominating
committee or other committee performing similar functions.
The members of the Company's Audit Committee are Mr. O'Connell, Mr. Chefitz
and Mr. Greer. The Audit Committee met one time during the year ended June 30,
2000. The Audit Committee reviews, acts on reports to the Board of Directors
with respect to various auditing and accounting matters, including the
recommendation of the Company's auditors, the scope of annual audits, fees to be
paid to auditors, the performance of the Company's independent auditors and the
Company's accounting practices.
The members of the Company's Compensation Committee are Mr. Chefitz, Mr.
Razzouk and Mr. Williams. The Compensation Committee met three times during the
year ended June 30, 2000. The Compensation Committee reviews the performance of
all executive officers, determines the salaries and benefits of all executive
officers and administers the Company's Stock plans.
DIRECTOR COMPENSATION
In connection with appointments to the Board of Directors of Mr. Razzouk in
October 1999 and Mr. Greer in April 2000, the Company granted to Mr. Razzouk an
option to purchase 25,000 shares of Common Stock, having an exercise price of
$10.50 per share, and to Mr. Greer an option to purchase 25,000 shares of Common
Stock, having an exercise price of $2.65. These options become exercisable in
full on the dates of grant and may be exercised at any time during its 10-year
term. The Company also agreed to pay each of these directors $1,500 for each
Board or committee meeting that he attends. Other than reimbursing directors for
customary and reasonable expenses of attending Board of Directors or committee
meetings, the Company does not currently compensate Directors for serving in
this capacity.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee made decisions concerning the compensation of
executive officers for the years ended June 30, 1998, 1999 and 2000, during
which time Mr. Williams, the Chairman of the Board, has been a member of the
Committee. No interlocking relationship exists between any member of the
Company's Board of Directors or Compensation Committee and any member of the
Board of Directors or Compensation Committee of any other company, and no such
interlocking relationship has existed in the past.
PROPOSAL 2:
APPROVAL OF EQUITY COMPENSATION PLAN
GENERAL
On October 11, 2000, the Board adopted, subject to stockholder approval,
the PNV Inc. 2000 Equity Compensation Plan. The Board is proposing that the
Company's stockholders approve the Equity Compensation Plan for a number of
reasons, including compliance with Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"). See "Compliance with Section 162(m) of the
Internal Revenue Code" below. The Equity Compensation Plan, if approved by the
stockholders, will be effective on the date of such approval.
The following is a summary of the Equity Compensation Plan, which is
incorporated by reference into this summary description. This summary is
qualified entirely by reference to the Equity Compensation Plan, a copy of which
is attached to this Proxy Statement as Exhibit A. Any capitalized terms used in
this summary description that are not defined herein have the meanings assigned
to them in the Equity Compensation Plan.
PURPOSE
The ability to offer stock through options or other equity-based
compensation awards has been and will continue to be a necessary and beneficial
method by which the Company can retain the services of employees and attract
competent personnel.
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The Board previously adopted the Park 'N View, Inc. Stock Option Plan, as
amended (the "Option Plan"). As of June 30, 2000, options for 1,961,915 shares
were outstanding under the Option Plan, and an additional 122,735 shares were
available for issuance purchase to options granted under the Option Plan in the
future. The Board believes the approval and adoption of the Equity Compensation
Plan is in the Company's best interest so that the Company can assure itself
that a sufficient reserve of shares of Common Stock remain available for
issuance under an equity-based plan. The Board believes that the Company must be
able to continue to utilize equity incentives to attract and retain the services
of key individuals essential to the Company's operations. Equity incentives play
a significant role in the Company's efforts to remain competitive in the market
for talented individuals, and the Company relies on such incentives as a means
to attract and retain highly qualified individuals in the positions vital to the
Company.
DESCRIPTION OF PLAN
In General
The Equity Compensation Plan is not generally subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The
Equity Compensation Plan is not a qualified retirement plan under Section 401 of
the Code.
The Equity Compensation Plan provides for the grant of several different
types of equity-based compensation awards under one plan. Awards under the
Equity Compensation Plan may be made to participants in the form of incentive
stock options, nonqualified stock options, stock appreciation rights, restricted
stock, performance shares, and other forms of equity-based compensation as may
be provided and are permissible under the Equity Compensation Plan.
Administration
The Equity Compensation Plan will be administered by the Compensation
Committee of the Board (the "Committee"). The Committee has the exclusive right
to interpret, construe, and administer the Equity Compensation Plan and to
select the persons eligible to receive awards. The Committee will determine the
number of stock options, stock appreciation rights, stock awards or performance
shares subject to an award and the form, terms, conditions, and duration of each
award. All acts, determinations and decisions of the Committee will be
conclusive, final and binding upon all parties.
The fair market value of the Stock for any day in question will be the
closing sale price reported for the Stock for such date on the exchange on which
the Stock is traded, if the Stock is traded on an exchange, provided at least
100 shares of Stock were sold on such date. If there was not a sale of at least
100 shares of Stock that day, then the fair market value will be the closing
sale price reported for the Stock on such exchange on the last day on which
there was a sale of at least 100 shares of Stock. If the Stock is admitted for
quotation on the National Association of Securities Dealers Automated Quotation
System or other comparable quotation system, the fair market value of the Stock
for any day in question will be the last sale price reported for the Stock for
such date on such system, provided at least 100 shares of Stock were sold on
such date. If there was not a sale of at least 100 shares of Stock that day,
then the fair market value shall be the average of the high bid and low asked
prices reported for the Stock on such system on such date (or, if no shares were
sold on such date, the last sale price reported for the Stock on such system on
the last date on which at least 100 shares of Stock were sold). The Committee is
also authorized to establish an alternate method of determining fair market
value of the Stock.
Securities to be Offered
The Board has designated an aggregate of 2,100,000 shares of Stock for
issuance pursuant to awards granted under the Equity Compensation Plan. Such
shares of Stock shall be made available from shares authorized and unissued or
currently held or subsequently reacquired by the Company as treasury shares,
including shares purchased in the open market or in private transactions. The
last sale price of the Stock of the Company on October 6, 2000, as reported on
The Nasdaq Stock Market, was $1.03 per share.
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To the extent any shares of Stock awarded or subject to purchase under the
Equity Compensation Plan are not delivered or purchased, or are reacquired by
the Company, such shares will not be charged against the aggregate number of
shares available for awards under the Equity Compensation Plan and may again be
awarded under the plan. This would occur, for example, upon a forfeiture of
restricted stock or termination, expiration, or cancellation of a stock option,
stock appreciation right, or performance share under the Equity Compensation
Plan, or any other termination of an award without payment being made in the
form of Stock.
Proportionate and equitable adjustments will be made by the Committee upon
the occurrence of certain events that result in changes in the outstanding
shares of Stock or that result in exchanges of shares of Stock for a different
number or class of Stock or other securities of the Company or another
corporation. These events include without limitation a reorganization or
recapitalization of the Company or reclassification of its shares, stock split,
stock dividend, or consolidation of shares of Stock, merger, consolidation, or
separation, including spin-off, or sale of assets of the Company, or any
distribution to stockholders other than a cash dividend that results in the
outstanding shares of Stock (or any securities exchanged therefore or received
in their place) being exchanged for a different number or class of shares of
stock or other securities. Under such circumstances, adjustments may be made by
the Committee in the limitation on the aggregate number of shares of Stock that
may be awarded under the Equity Compensation Plan, the number and class of
shares that may be subject to an award, the purchase price for shares of Stock
under outstanding stock options, and the number of shares to be transferred in
settlement of outstanding stock appreciation rights, and the terms, conditions,
or restrictions of any award or award agreement, including the price payable for
the acquisition of Stock.
The Committee is also authorized to make adjustments in performance-based
criteria or in the terms and conditions of other awards under the Equity
Compensation Plan in recognition of unusual or nonrecurring events affecting the
Company or its financial statements or changes in applicable laws, regulations,
or accounting principles. The Committee may also correct any defects or
omissions or reconcile any inconsistencies in the Equity Compensation Plan or
any agreement evidencing an award under the Equity Compensation Plan in the
manner and to the extent it shall deem desirable to carry it into effect.
Moreover, the Committee may, in its discretion, make such adjustments in the
terms of awards under the Equity Compensation Plan as it deems appropriate if
the Company assumes any outstanding employee benefit plans or awards or the
right or obligation to make future awards in connection with the acquisition of
any other entity.
Eligible Participants
The class of persons eligible to receive awards under the Equity
Compensation Plan are employees of the Company and other natural persons,
including non-employee members of the Board and consultants and advisors who
provide bona fide services to the Company not in connection with the offer or
sale of securities in a capital-raising transaction. The Committee shall select
from this class of eligible individuals the individuals who shall receive awards
under the Equity Compensation Plan. As of September 30, 2000, the Company had
approximately 360 employees and 4 non-employee directors.
Types of Awards
Each award granted will be evidenced by a written agreement setting forth
the terms and conditions of the award. Each such agreement will also be subject
to and incorporate the applicable terms and conditions of the Equity
Compensation Plan and any other terms and conditions, not inconsistent with the
Equity Compensation Plan, required by the Committee. The various forms of awards
that may be made to participants under the Equity Compensation Plan are
described below.
Incentive Stock Options
The Committee may grant incentive stock options ("ISOs") that may be
entitled to favorable tax treatment under Section 422 of the Code. See "-- Tax
Effects of Equity Compensation Plan Participation" below. ISOs may be granted to
eligible employees under the Equity Compensation Plan at such time or times as
determined by the Committee until ten years following the date the Board adopted
the Equity
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Compensation Plan, subject to certain conditions described below. The exercise
price of an ISO under the Equity Compensation Plan may not be less than 100% of
the fair market value of the Stock at the date of grant of the ISO (110% for 10%
owners of the Company).
An ISO and any related stock appreciation right, if any, granted under the
Equity Compensation Plan must be exercised in whole or in part from time to time
within 10 years from the date of grant of the ISO (5 years for 10% owners of the
Company), or such shorter period specified by the Committee corresponding in the
award agreement. Upon a termination of employment of the optionee with the
Company, as determined by the Committee in its discretion, the ISO, and any
related stock appreciation right, will lapse and cease to be exercisable upon,
or within such period following, the termination of employment, as determined by
the Committee and provided in the award agreement. In no event, however, can the
period of time during which an ISO or related stock appreciation right remains
exercisable following a termination of employment exceed three months, unless
employment is terminated because of death or disability of the optionee.
Following death or disability, the period of time during which an ISO or related
stock appreciation right may be exercised cannot exceed one year after the date
of death or disability. In no event can the period of time following a
termination of employment during which an ISO or related stock appreciation
right may be exercised extend beyond the original exercise period of the ISO or
related stock appreciation right.
The amount of ISOs that are first exercisable by any one participant in any
year that may receive favorable tax treatment as ISOs is limited. To the extent
that the aggregate fair market value of the shares of Stock with respect to
which ISOs are first exercisable during any calendar year by an eligible
participant exceeds $100,000, such options shall be treated as NQSOs. Similar
treatment applies in the event the exercise of an ISO is accelerated by reason
of change of control. See "Effects of Change in Control" below. The aggregate
fair market value of the Stock for these purposes is determined as of the date
the ISO is granted.
Subject to the limitation on the maximum number of shares of Stock that may
be issuable pursuant to the Equity Compensation Plan, as discussed under
"Securities to be Offered" above, the maximum number of shares of Stock may be
subject to ISO awards under the Equity Compensation Plan. An ISO granted under
the Equity Compensation Plan will also be subject to such other terms and
conditions which the Committee deems necessary to impose in order to qualify the
ISO under Section 422 of the Code, as well as any other terms and conditions not
inconsistent with the ISO provisions of the Equity Compensation Plan as
determined by the Committee.
Nonqualified Stock Options
The Committee may also grant nonqualified stock options ("NQSOs") to
eligible participants to purchase shares of Stock at such time or times as
determined by the Committee. These stock options will not be eligible for the
favorable tax treatment available to ISOs under Section 422 of the Code.
The exercise price of an NQSO under the Equity Compensation Plan will be as
established by the Committee in the agreement evidencing the award. Such
exercise price may be more than, equal to or less than 100% of the fair market
value at the time of grant. Thus, discounted stock options (options with
exercise prices less than the fair market value of the Stock at the date of the
awards) may be granted as NQSOs under the Equity Compensation Plan.
An NQSO under the Equity Compensation Plan, and its related stock
appreciation right, if any, will be exercisable in full or in part from time to
time as specified by the Committee or in the corresponding award agreement. Upon
termination of employment of the optionee, the NQSO and any related stock
appreciation right will lapse and cease to be exercisable upon, or within such
period following, such termination of employment, as determined by the Committee
and specified in the award agreement.
An NQSO may also be subject to such other terms and conditions, not
inconsistent with the Equity Compensation Plan, as determined by the Committee
and specified in the award agreement for the NQSO.
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Stock Appreciation Rights
The Committee is empowered under the Equity Compensation Plan to grant a
stock appreciation right ("SAR") to an eligible participant in connection with
an ISO or an NQSO. SARs may also be granted independent of any related stock
option.
A SAR is a right granted under the Equity Compensation Plan that provides
for an amount payable in shares of Stock and/or cash, as determined by the
Committee, equal to the excess of the fair market value of a share of Stock on
the date the stock appreciation right is exercised over the exercise price of
the SAR or the exercise price of a related stock option to purchase a share of
Stock. Thus, a SAR granted in conjunction with a stock option will entitle the
participant, within the period specified for the exercise of the stock option,
to surrender the unexercised stock option, or a portion thereof, and receive in
lieu thereof a payment in cash or shares of Stock having an aggregate value
equal to the amount by which the fair market value of each share of Stock
exceeds the exercise price per share of Stock under the stock option, times the
number of shares of Stock under the stock option, or portion thereof, that is
surrendered.
Any SAR granted under the Equity Compensation Plan in conjunction with a
stock option will be subject to the same terms and conditions as the related
stock option, including limits on transferability, and will be exercisable only
to the extent the stock option is exercisable. If the related stock option
terminates or lapses, the SAR will also terminate or lapse. Upon exercise of a
SAR, the number of shares subject to exercise under any related stock option
will be reduced automatically by the number of shares of stock represented by
the related stock option (or portion thereof) that is surrendered. The grant of
SARs related to ISOs under the Equity Compensation Plan must be concurrent with
the grant of the related ISOs. For NQSOs, the grant of a related SAR may either
be made concurrently with the grant of the NQSO or may be made in connection
with NQSOs previously granted that are unexercised and have not terminated or
lapsed.
Incidents of Stock Options and Stock Appreciation Rights
Each stock option (ISO or NQSO) and SAR granted under the Equity
Compensation Plan will be subject to such terms and conditions, not inconsistent
with the Equity Compensation Plan, as may be determined by the Committee. Such
provisions, for example, may require the continued employment of a participant
as consideration for the grant or exercise of a stock option or SAR.
A stock option or SAR under the Equity Compensation Plan will not be
transferable by the participant other than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order, as defined by
the Code and ERISA, and will be exercisable during the lifetime of the
participant only by the participant or his or her guardian or legal
representative. In addition, the Committee may, in its discretion, permit the
transfer of a NQSO or SAR by a participant to the extent determined by the
Committee to be consistent with applicable laws and Company policy.
The purchase price for shares of Stock under a stock option or SAR shall be
paid at the time of exercise (or in the case of a cashless exercise described
below, as soon as practicable after such exercise) in cash or by tendering
shares of Stock held by the participant for the requisite period necessary to
avoid a charge to the Company's earnings for financial reporting purposes, as
determined by the Committee in its discretion, with a fair market value equal to
the exercise price or by authorizing a third party to sell a portion of the
shares acquired upon exercise and remit to the Company a sufficient portion of
the sale proceeds to pay the exercise price and any tax withholding resulting
from such exercise.
The maximum number of shares for which options (ISOs and NQSOs) and SARS
may be granted to any individual during any calendar year is 1,000,000 shares,
subject to anti-dilution and similar provisions.
Restricted Stock
Restricted stock awards may be made to participants under the Equity
Compensation Plan as an incentive for the performance of future services that
will contribute materially to the successful operation of the Company. The
Company may award restricted stock either alone, in addition to, or in tandem
with other
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<PAGE> 11
awards granted under the Equity Compensation Plan and/or cash payments made
outside of the Equity Compensation Plan.
A restricted stock award under the Equity Compensation Plan will be an
award of Stock issued with such restrictions as the Committee, in its sole
discretion, may impose. These restrictions may include, without limitation, a
restriction on the right to sell, transfer, pledge or assign the Stock, to vote
such Stock and/or to receive cash dividends with respect to the Stock. The
restrictions may lapse separately or in combination and at such time or times as
the Committee may determine appropriate.
In addition to determining the applicable restrictions on restricted stock,
the Committee may also in its discretion determine the purchase price, if any,
to be paid for such restricted stock, the length of the time during which the
restrictions will apply, and whether dividends and other distributions on the
restricted stock will be paid currently to the participant or paid to the
Company for the account of the participant.
A participant receiving an award of restricted stock under the Equity
Compensation Plan must accept the award within 60 days, or such shorter period
as the Committee may specify, after the date of the award, by executing an award
agreement and paying the purchase price, if any, for the restricted stock. Upon
termination of employment of a participant with the Company prior to the lapse
of restrictions, all shares of restricted stock then held by the participant
will be forfeited, unless otherwise provided in the award agreement or
determined by the Committee.
Except as otherwise provided in the Equity Compensation Plan, no shares of
restricted stock received by a participant may be sold, exchanged, transferred,
pledged, or otherwise disposed of during the restriction period. The Committee
in its discretion may waive applicable restrictions in cases of special
circumstances. In its discretion, the Committee may also waive any remaining
restrictions on restricted stock upon hardship or other special circumstances of
a participant whose employment with the Company is involuntarily terminated.
Unless otherwise provided, a participant receiving an award of restricted
stock will have all the rights of a holder of the Stock with respect to such
restricted stock, including the right to vote the shares to the extent, if any,
such shares possess voting rights and the right to receive any dividends
thereon. The Committee may require, however, that any dividends be deferred
automatically and reinvested in additional restricted stock or may require that
dividends and other distributions on restricted stock be paid to the Company for
the account of the participant. If all of the restrictions applicable to
restricted stock expire without a forfeiture of the restricted stock,
unrestricted certificates for such shares will be delivered to the participant.
To better ensure that award payments actually reflect performance of the
Company and the service of the participant, the Committee in its discretion may
provide for a tandem performance-based or other award designed to guarantee a
minimum value, payable in cash or Stock, to the recipient of a restricted stock
award, subject to such performance, future service, deferral, and other terms
and conditions as may be specified by the Committee.
Stock Awards
The Company may grant an award of Stock under the Equity Compensation Plan
in payment of compensation that has been earned or as compensation to be earned,
including without limitation, compensation awarded concurrently with or prior to
the grant of the stock award. In determining the value of the stock award, the
shares of Stock subject to such award will be valued at not less than 100% of
the fair market value of such shares of Stock on the award date, regardless of
whether such shares of Stock are then issued or transferred to the participant
and whether or not such shares of Stock are subject to restrictions that affect
their value.
Shares of Stock subject to a stock award may be issued to the participant
at the time the award is granted, or at any time subsequent thereto, or in
installments from time to time, as determined by the Committee. To the extent
the shares of Stock subject to a stock award are not issued to the participant
at the time the award is granted, dividend equivalents may be issued to the
participant as determined by the Committee. In the Committee's discretion, any
issuance payable in shares of Stock under a stock award may be paid in cash on
the date delivery of shares would otherwise have been made.
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<PAGE> 12
A stock award will be subject to such terms and conditions, including
without limitation, restrictions on the sale or other disposition of the stock
award or the shares of Stock issued pursuant thereto, as determined by the
Committee. Upon issuance of shares to a participant pursuant to a stock award,
the participant will become a holder of the Stock fully entitled to receive
dividends, to vote to the extent, if any, such shares possess voting rights and
to exercise all of the rights of a shareholder, except to the extent otherwise
provided in the stock award.
Performance Shares
Awards of performance shares may be made to participants under the Equity
Compensation Plan as an incentive for the performance of future services that
will contribute materially to the successful operation of the Company. Awards of
performance shares may be made either alone, in addition to, or in tandem with
other awards granted under the Equity Compensation Plan and/or cash payments
made outside of the Equity Compensation Plan.
The Committee in its sole discretion may determine the participants to whom
awards of performance shares will be made, the performance period, and/or the
performance objectives applicable to such awards, the form of settlement of a
performance share, and any other terms and conditions of such awards.
Performance periods may overlap, and participants may participate simultaneously
with respect to performance shares for which different performance periods are
prescribed.
The performance objectives may vary from participant to participant and
between awards and will be based upon such performance criteria or combination
of factors as the Committee may deem appropriate. For example, such performance
criteria may include minimum earnings per share or return on equity. The
Committee is empowered to revise such performance objectives during the
applicable performance period if significant events occur that the Committee
expects to have a substantial effect on the applicable performance objectives
during such period. The Committee may also provide for the proration of
performance shares if a participant terminates service with the Company during a
performance period because of special circumstances in which the Committee, in
its discretion, finds that a waiver is appropriate. If a participant terminates
service with the Company during a performance period for any other reason, then
such participant will not be entitled to any payment with respect to that
performance period, unless otherwise determined by the Committee.
The Committee is also authorized to approve requests by participants to
defer payment of performance shares on terms and conditions approved by the
Committee and set forth in an award agreement entered into in advance of the
time of receipt or constructive receipt of payment by the participant.
No more than 1,000,000 performance shares may be earned by any individual
in any calendar year.
Other Stock-Based Awards
The Equity Compensation Plan also authorizes the grant of other awards that
are valued in whole or in part by reference to, or otherwise based on, Stock.
These other stock-based awards will include without limitation convertible
preferred stock, convertible debentures, exchangeable securities, phantom stock,
and stock-award options valued by reference to book value or performance. Other
stock-based awards may be granted either alone or in addition to or in tandem
with other awards granted under the Equity Compensation Plan and/or cash awards
made outside of the Equity Compensation Plan.
The Committee in its sole discretion is empowered to determine the
participants eligible to receive other stock-based awards, the time or times at
which such awards may be made, the number of shares of Stock subject to such
awards, and all other terms and conditions of such awards. The provisions of
other stock-based awards need not be the same with respect to each recipient.
Shares of Stock subject to other stock-based awards may not be sold,
assigned, transferred, pledged, or otherwise encumbered prior to the date on
which the shares are issued or, if later, the date on which any applicable
restriction, performance, or deferral period lapses. Interest or dividend
equivalents may be payable with respect to other stock-based awards in the
discretion of the Committee. The Committee may also
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<PAGE> 13
determine whether any other stock-based award will be subject to vesting or
forfeiture provisions, and the effects of termination of employment upon such
awards.
No more than 1,000,000 shares of Stock may be earned by any individual in
any calendar year.
Amendment and Termination
The Equity Compensation Plan will continue in effect until terminated by
the Company as provided in the Equity Compensation Plan. Notwithstanding the
perpetual nature of the Equity Compensation Plan, ISOs may only be granted under
the Equity Compensation Plan until ten years after the date it was adopted by
the Board.
Upon the recommendation of the Committee, or otherwise, the Board may amend
the Equity Compensation Plan. To the extent required by Section 422 of the Code
and/or the rules of the exchange upon which the Stock is traded or other
applicable law, no amendment to the Equity Compensation Plan may be made without
approval by the Company's stockholders that would make certain changes,
including altering the group of persons eligible to participate in the Equity
Compensation Plan, increasing the maximum number of shares of Stock available
for awards under the Equity Compensation Plan (except as otherwise provided in
the Equity Compensation Plan), extending the period during which ISOs may be
granted under the Equity Compensation Plan, limiting or restricting the powers
of the Committee in administering the Equity Compensation Plan, changing the
definition of participants eligible for ISOs or increasing the limit or value of
shares of Stock for which eligible participants may be granted ISOs under the
Equity Compensation Plan, materially increasing the benefits accruing to
participants under the Equity Compensation Plan, or changing the amendment
provisions of the Equity Compensation Plan.
Notwithstanding the foregoing, no amendment to or discontinuation of the
Equity Compensation Plan or any provision thereof may adversely affect any award
previously granted to a participant under the Equity Compensation Plan without
the written consent of such participant. The Committee is empowered to determine
whether an amendment or discontinuation adversely affects any existing award.
Notwithstanding the foregoing, the Committee retains the power to (a) cancel any
award if the participant is terminated for cause as determined by the Committee,
(b) provide for the forfeiture of shares of Stock or other gain under an award
as determined by the Committee for competing against the Company, and (c)
convert any outstanding ISO to an NQSO.
RESALE RESTRICTIONS
Participants under the Equity Compensation Plan may be restricted under
certain circumstances in their ability to resell shares of Stock purchased or
awarded under the Equity Compensation Plan. Resale restrictions may be imposed
by virtue of the provisions of the Equity Compensation Plan and the applicable
award agreement and/or by application of the federal and state securities laws.
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NEW PLAN BENEFITS
The following table sets forth the amount of compensation that will be paid
pursuant to the grant of awards under the Equity Compensation Plan in the
current year to the following persons, subject to vesting, performance and other
requirements:
NEW PLAN BENEFITS
PNV INC. 2000 EQUITY COMPENSATION PLAN
<TABLE>
<CAPTION>
DOLLAR
VALUE NUMBER OF
NAME AND POSITION ($) UNITS
----------------- ------ ---------
<S> <C> <C>
Robert P. May.......................................... (1) 836,666
President and Chief Executive Officer
Jeffrey T. Hendrickson................................. (2) 150,000
Executive Vice President and Chief Operating Officer
EXECUTIVE GROUP........................................ (1)(2) 986,666
</TABLE>
---------------
(1) The dollar value of the options that the Company has agreed to grant to Mr.
May, subject to stockholder approval of the Equity Compensation Plan, is not
determinable until the date of grant. Mr. May agreed to accept from July
2000 to January 2001 options to purchase an aggregate of 193,333 shares of
the Company's Common Stock at a purchase price of $0.01 per share in lieu of
his base salary during that period, which will vest monthly through January
2001 at which time they will be fully vested. The Company also has agreed to
grant to Mr. May options to purchase an additional 193,333 shares of the
Company's Common Stock at a purchase price of $0.01 per share, which will
vest five years from the date of grant or earlier upon the achievement of
certain financing and performance objectives. The Company also has agreed to
grant to Mr. May options to purchase an additional 450,000 shares of the
Company's Common Stock at a purchase price equal to the fair market value
per share on the date of the grant of the option. Each of the option grants
to Mr. May is subject to the approval of the Equity Compensation Plan by the
Company's stockholders.
(2) The dollar value of the options that the Company has agreed to grant to Mr.
Hendrickson, subject to stockholder approval of the Equity Compensation
Plan, is not determinable until the date of grant.
Except as set forth in the table above, no determination has been made with
respect to any awards that may be made under the Equity Compensation Plan in the
future. Future awards will be determined in accordance with the terms of the
Equity Compensation Plan. Consequently, it is not possible to determine the
benefits or amounts that will be received by or allocated to any other executive
officers or employees of the Company or other persons pursuant to the Equity
Compensation Plan in the future.
TAX EFFECTS OF EQUITY COMPENSATION PLAN
The following discussion of the federal income tax consequences of awards
granted under the Equity Compensation Plan is intended only as a summary of the
present federal income tax treatment of stock options (ISOs and NQSOs), SARs,
and other stock awards under the Equity Compensation Plan. The federal income
tax laws pertaining to the Equity Compensation Plan are highly technical, and
such laws are subject to change at any time. Some variations on the federal
income tax effects of Equity Compensation Plan participation described below may
occur with respect to participation by persons subject to Section 16(b) of the
Exchange Act.
Incentive Stock Options
Although the Company has obtained neither a letter ruling from the Internal
Revenue Service nor an opinion of counsel stating that the ISO provisions of the
Equity Compensation Plan constitute an incentive stock option plan under the
Code, it is expected that the options granted under the ISO provisions of the
Equity Compensation Plan will qualify as ISOs for federal income tax purposes.
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In general, no taxable income will be realized by an optionee, and no
federal income tax deduction will be allowed to the Company, upon the grant or
exercise of an ISO. The federal income tax consequences of a disposition of
Stock received pursuant to the exercise of an ISO will depend upon whether the
optionee has held the shares for the requisite holding period. If the optionee
disposes of such shares after the later to occur of (1) two years from the date
of the grant of the ISO or (2) one year after the date of the transfer of the
shares to him (the "Holding Period"), then the optionee will be taxed according
to the rules of sales and exchanges generally. The amount subject to tax will be
the difference between the amount realized and the optionee's cost basis in the
shares of Stock, which difference will be a capital gain if the shares are held
as a capital asset. In such event, the Company will not be entitled to a tax
deduction by reason of the disposition. For purposes of this discussion,
"disposition" means a lifetime transfer of legal title, such as by sale,
exchange, or gift, but does not include a transfer that is triggered by death,
such as one by bequest or inheritance or one made by a decedent to his estate.
The Holding Period will not apply to an ISO that is exercised after the
optionee's death by his estate or by a person who acquired the right to exercise
it by bequest or inheritance or otherwise by reason of the optionee's death. The
Holding Period will apply if the optionee dies after he exercises his ISO. In
that case, his estate, or any other person holding the shares acquired pursuant
to the ISO, must either hold the shares for the applicable Holding Period or
suffer the tax consequences discussed below for a "disqualifying disposition."
A "disqualifying disposition" takes place if the optionee makes a
disposition of the shares of Stock acquired through the exercise of an ISO
before satisfying the Holding Period. If a "disqualifying disposition" occurs,
the optionee must include as ordinary income the gain realized on that
disposition to the extent of the lesser of (1) the fair market value of the
Stock on the date of exercise of the ISO minus the option price or (2) the
amount realized on the disposition minus the option price. Upon the occurrence
of a "disqualifying disposition," the Company will be entitled to deduct, as
compensation paid, the amount so included as ordinary income by the optionee.
As described above, an optionee who exercises an option may be allowed to
pay for his shares with cash or with shares of Stock, including shares acquired
in a prior ISO exercise. Generally, such payment would not give rise to
recognition by the optionee of a gain or loss. If, however, an optionee
exercises an option and pays for the shares upon exercise with shares that the
optionee acquired in a prior ISO exercise but has not held for the requisite
Holding Period, the optionee will be taxed on the disposition of the shares
acquired in the prior ISO exercise as if a "disqualifying disposition" of those
shares had occurred. In addition, if an optionee exercises an ISO by way of
"cashless exercise" as described above, the disposition of shares to pay the
exercise price will constitute a "disqualifying disposition" of those shares.
In order for an ISO granted under the Equity Compensation Plan to be
governed by the general rules pertaining to ISOs, the optionee must be an
employee of the Company for the entire time from the date the ISO is granted
until three months before its exercise (twelve months for an optionee who is
disabled). These employment requirements do not apply if the optionee dies
before exercising an ISO, but in such circumstances the employment requirement
must have been met by the employee at his death.
The federal alternative minimum tax consequences of the exercise of an ISO
under the Equity Compensation Plan may differ from the federal income tax
consequences of such exercise. The alternative minimum tax consequences of the
disposition of shares acquired upon the exercise of an ISO may also differ from
the regular income tax consequences of such disposition. The difference between
the option price and the fair market value of the shares upon exercise will be a
preference item subject to the federal alternative minimum tax. For purposes of
the individual alternative minimum tax, the income tax rules governing the
transfer of property in connection with the performance of services apply, not
the regular income tax rules applicable only to ISOs. For example, if an
optionee acquires shares pursuant to the exercise of an ISO under the Equity
Compensation Plan and disposes of the shares in the same taxable year, tax
treatment under the regular income tax and the alternative minimum tax will be
the same. If, however, the shares are disposed of in a disqualifying disposition
in a later taxable year, the difference between the option price and the fair
market value of the shares will be included in alternative minimum taxable
income in the year of exercise and in regular taxable income, but not in
alternative taxable income, in the year of the disposition. Similarly, if an
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<PAGE> 16
optionee acquires shares pursuant to the exercise of an ISO under the Equity
Compensation Plan and disposes of the shares after the Holding Period is
satisfied, the difference between the option price and the fair market value of
the Stock at the time of exercise will be included in alternative minimum
taxable income, but not in regular taxable income, in the year of exercise, and
for alternative minimum tax purposes the cost basis of the shares will be the
sum of the option price and the amount of income included in alternative minimum
taxable income in the year of exercise.
Nonqualified Options
Holders of NQSOs will not be entitled to the special tax treatment afforded
to ISOs. Under the Code, an optionee granted an NQSO generally will realize no
taxable income upon receipt of the NQSO, but instead will realize ordinary
taxable income equal to the excess of the fair market value of the stock
acquired at the time of the exercise of the NQSO over the option price paid,
unless at the time of exercise the stock remains subject to a "substantial risk
of forfeiture" as defined in Section 83 of the Code. Whether an optionee who
exercises an NQSO under the Equity Compensation Plan will acquire the stock
subject to such risk will depend upon the terms of the NQSO award as determined
by the Committee. For a complete discussion of the income tax treatment when a
participant acquires Stock subject to a "substantial risk of forfeiture," see
"Restricted Stock" below. The Company is required for federal income tax
purposes to withhold tax on the amount of income realized by the optionee in the
transaction. The Company will be entitled to a deduction for federal income tax
purposes in the year the optionee must report the income in an amount equal to
the ordinary income realized by the optionee as a result of exercise of his
NQSO.
An optionee's tax basis in shares acquired upon the exercise of an NQSO
will be the fair market value of such shares used to determine the amount of
ordinary taxable income reported by the optionee with respect to the exercise of
the NQSO. Upon any sale of such shares of Stock, the optionee's gain or loss
will therefore equal the difference between the sale price and such tax basis.
Any such gain or loss will be capital gain or loss. In general, when an NQSO is
exercised by the exchange of previously acquired stock, the optionee will
receive a tax-free exchange and basis carryover for old shares for an equivalent
number of new shares. The basis for any additional shares will equal the sum of
the amount included in gross income by reason of the exercise of the NQSO, plus
any amount of cash paid by the optionee upon the exercise of the NQSO.
SARs
The grant of an SAR to a participant under the Equity Compensation Plan
will not require recognition of taxable income. Upon the exercise of an SAR,
however, payments received by the participant will be included in that
participant's income as compensation in that year. If payment is made in cash,
that amount of cash must be recognized as income. If the SAR is paid in Stock,
income will be recognized in the amount of the Stock's fair market value. The
Company will be entitled to a deduction for compensation in an equal amount
equal to the income realized by the participant, to be recognized in its taxable
year in which the participant's taxable year of income inclusion ends. Upon the
sale of any Stock acquired by the exercise of SARs, the participant will realize
gain or loss equal to the difference between the amount realized on the sale and
the participant's basis in such Stock.
Restricted Stock
A recipient of restricted stock, or any other stock award under the Equity
Compensation Plan that is subject to a "substantial risk of forfeiture,"
generally will be subject to federal income tax at ordinary income rates on the
excess of the fair market value of the restricted stock or other stock award, at
such time that the stock is no longer subject to forfeiture and restrictions on
transfer for purposes of Section 83 of the Code ("restrictions"), over the
purchase price, if any, of such restricted stock or other stock award. However,
a recipient who so elects under Code Section 83(b) within 30 days of the date of
transfer of the Stock will have ordinary taxable income on the date of transfer
of the shares equal to the excess of the fair market value of such shares on the
transfer date, determined without regard to the restrictions, over the purchase
price, if any, of such restricted stock or other stock award. No additional
ordinary taxable income will then be recognized when the restrictions expire,
although any gain on the disposition of the stock will be subject to tax as
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<PAGE> 17
discussed below. If the shares subject to such election are forfeited, the
recipient will only be entitled to a deduction, refund, or loss for tax purposes
equal to the purchase price, if any, of the forfeited shares, regardless of
whether the recipient made an election Section 83(b) of the Code.
Upon the sale of any Stock following the expiration of the forfeiture
period for restricted stock or other stock award or upon the sale of Stock for
which a timely election under Section 83(b) of the Code was made, the
participant will realize capital gain or loss equal to the difference between
the amount realized on the sale and the participant's basis in such stock. The
holding period to determine whether the participant has long-term or short-term
capital gain will generally begin when the restrictions expire, and the tax
basis for such shares will generally be based on the fair market value of such
shares on such date. However, if the participant timely elects to be taxed as of
the date of transfer of the shares, the holding period will commence on such
date, and the tax basis will be equal to the fair market value of the shares on
such date, determined without regard to the restrictions.
The Company will be entitled to a deduction for federal income tax purposes
in the year the participant is taxable in an amount equal to the ordinary income
realized by the participant as a result of the restricted stock or other stock
award. The Equity Compensation Plan requires any participant exercising an award
to give the Committee prompt written notice of any election made by the
participant under Section 83(b) of the Code.
Stock Awards
Unrestricted awards of Stock will be taxable to the participant and
deductible by the Company at the time of the award in an amount equal to the
fair market value of the shares at that time. If the shares are subject to
forfeitability and nontransferability restrictions, the participant may either
elect immediate taxability in an amount equal to the fair market value of the
shares at the time of the award, less any payment therefor, or delay the
recognition of taxable income in an amount equal to the fair market value of the
shares, less the purchase price, if any, when the restrictions lapse. See
"Restricted Stock" above. Upon a sale of shares received as a stock award, the
participant will realize capital gain or loss in an amount equal to the
difference between the amount realized and the participant's tax basis, which is
generally the amount of ordinary income previously recognized plus any cash
payment. The Company will be entitled to a deduction for federal income tax
purposes in the year the participant is taxable in an amount equal to the
ordinary income realized by the participant as a result of the stock award.
Performance Shares
A participant granted an award of performance shares will not realize
income at the time of grant but generally will realize ordinary income when the
award is settled, either at the conclusion of the performance period or at the
end of the deferral period elected by a participant. The amount of ordinary
income realized will be equal to the sum of the cash received, if any, plus the
then fair market value of the shares of stock of the Company received. The
Company will be entitled to a deduction for federal income tax purposes in the
year the participant is taxable in an amount equal to the ordinary income
realized by the participant as a result of the performance share award.
Compliance with Section 162(m) of the Internal Revenue Code
Section 162(m) of the Code prohibits a deduction by an employer for certain
compensation in excess of $1 million per year paid by a publicly traded
corporation to its chief executive officer or any of the four most highly
compensated executive officers other than the chief executive officer.
Compensation realized with respect to stock options and SARs, as described above
under "Certain Federal Income Tax Consequences," will be excluded from this
deduction limit if it satisfies certain requirements, including a requirement
that the Equity Compensation Plan be approved by the Company's stockholders. In
addition, performance shares and other stock-based awards may be structured by
the Committee to be excluded from this deduction limit as performance-based
compensation in accordance with special terms of the Equity Compensation Plan.
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Payments Upon Change in Control
The Committee has the authority under Equity Compensation Plan to provide
for the acceleration of payment of awards and related shares of Stock in the
event of a change in control of the Company. Such acceleration of payment may
cause part or all of the consideration involved to be treated as a "parachute
payment" under the Code, which may subject the recipient thereof to a 20% excise
tax and which may not be deductible by the Company for federal income tax
purposes.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
ADOPTION OF THE EQUITY COMPENSATION PLAN.
PROPOSAL 3:
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
GENERAL
On October 11, 2000, the Board of Directors adopted, subject to stockholder
approval, the Employee Stock Purchase Plan and reserved for issuance 250,000
shares of Common Stock for issuance pursuant to the Employee Stock Purchase
Plan, subject to adjustment in the event of stock dividends, stock splits,
combination of shares, recapitalizations, or other changes in the outstanding
Common Stock.
The following is a summary of the Employee Stock Purchase Plan, which is
incorporated by reference into this summary description. This summary is
qualified entirely by reference to the Employee Stock Purchase Plan, a copy of
which is attached to this Proxy Statement as Exhibit B. Any capitalized terms
used in this summary description that are not defined herein have the meanings
assigned to them in the Employee Stock Purchase Plan.
PURPOSE
The purpose of the Employee Stock Purchase Plan is to provide a means by
which eligible employees of the Company may be given an opportunity to purchase
Common Stock through payroll deductions. In addition, the Board of Directors
believes the Employee Stock Purchase Plan provides a means to attract and retain
employees and provide incentives for employees to exert maximum efforts for the
success of the Company. The rights granted under the Employee Stock Purchase
Plan to purchase Common Stock are intended to qualify as options issued under an
"employee stock purchase plan," as that term is defined in Section 423(b) of the
Code.
ADMINISTRATION
The Board of Directors of the Company has delegated the administration of
the Employee Stock Purchase Plan to the Compensation Committee of the Board of
Directors. The Board of Directors has the full power and authority to take any
action that may be taken by the Compensation Committee under the Employee Stock
Purchase Plan. As used below in this discussion of the Employee Stock Purchase
Plan, the term "Board of Directors" includes the Compensation Committee acting
under such delegated authority.
OFFERINGS
The Board of Directors may grant rights from time to time to eligible
employees of the Company to purchase Common Stock pursuant to an offering. Each
offering will have a duration of approximately six months beginning with the
first business day on or after each January 1 and July 1 and ending on the last
business day the period ending six months thereafter. No shares of Common Stock
have yet been purchased under the Employee Stock Purchase Plan and no shares of
Common Stock will be issued under the Employee Stock Purchase Plan unless and
until the stockholders approve the Employee Stock Purchase Plan at the Annual
Meeting. The Company anticipates that the internal administrative steps
necessary to implement the Employee Stock Purchase Plan will be completed by,
and that the first offering period (as described below) will begin on January 1,
2001.
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<PAGE> 19
STOCK SUBJECT TO EMPLOYEE STOCK PURCHASE PLAN
An aggregate of 250,000 shares of Common Stock have been authorized for
issuance under the Employee Stock Purchase Plan, subject to adjustment in the
event of stock dividends, stock splits, combination of shares,
recapitalizations, or other changes in the outstanding Common Stock. If rights
granted under the Employee Stock Purchase Plan expire, lapse or otherwise
terminate without being exercised, the shares of Common Stock not purchased
under such rights again become available for issuance under the Employee Stock
Purchase Plan.
ELIGIBILITY
Any person (including a director or officer) who is customarily employed by
the Company at least 20 hours per week and five months per calendar year as of
the first day of an offering period under the Employee Stock Purchase Plan is
eligible to participate in that offering, provided that such employee has been
in the continuous employ of the Company for a minimum of six months preceding
the first day of the offering period. The Board of Directors may provide that an
employee who becomes eligible during the course of an offering may participate
in that offering.
An employee is not eligible for the grant of any rights under the Employee
Stock Purchase Plan if, immediately after such grant, the employee would own
stock constituting 5% or more of the total combined voting power or value of all
classes of stock of the Company or of any affiliate of the Company. In addition,
an employee will not be granted rights to buy more than $25,000 worth of Common
Stock (determined at the fair market value of the shares at the time such rights
are granted) under all employee stock purchase plans of the Company in any
calendar year. As of September 30, 2000, 255 employees of the Company were
eligible to participate in the Employee Stock Purchase Plan.
PARTICIPATION IN THE EMPLOYEE STOCK PURCHASE PLAN; PAYROLL DEDUCTIONS
An eligible employee becomes a participant in the Employee Stock Purchase
Plan by delivering a participation agreement to the Company before the beginning
of the offering. The participation agreement contains an authorization from the
employee to the Company to make payroll deductions up to 15% of such employee's
compensation during that offering. The payroll deductions made for each employee
are credited to an account for such employee under the Employee Stock Purchase
Plan and deposited with the general funds of the Company. A participant may
increase, reduce or commence payroll deductions after the beginning of any
offering period only as provided for in such offering. The accumulated payroll
deductions are applied to the purchase of shares of Common Stock on each
purchase date.
PURCHASE PRICE
The purchase price per share for shares sold in an offering under the
Employee Stock Purchase Plan cannot be less than 85% of the fair market value of
a share of the Common Stock on the date of commencement of the offering or 85%
of the fair market value of a share of the Common Stock on the date of purchase,
whichever is lower.
WITHDRAWAL; TERMINATION OF EMPLOYMENT
A participant may withdraw from a given offering by delivering to the
Company a notice of withdrawal at any time before the end of the applicable
offering period. Upon a withdrawal from an offering, the Company will distribute
all of a participant's accumulated payroll deductions under the offering, to the
extent they have not been used to acquire shares of Common Stock for the
participant, without interest, and the participant's right to acquire Common
Stock under that offering will be automatically terminated. An employee is
eligible to participate in subsequent offerings under the Employee Stock
Purchase Plan after withdrawing from an offering.
Rights granted pursuant to any offering under the Employee Stock Purchase
Plan terminate immediately when an employee's employment ceases for any reason.
Upon termination of an employee's interest in an
17
<PAGE> 20
offering following a termination of employment, the Company will distribute to
the employee all of the employee's accumulated payroll deductions, to the extent
they have not been used to acquire shares of Common Stock for such employee,
without interest.
DURATION, AMENDMENT AND TERMINATION
The Board of Directors may suspend, terminate or amend the Employee Stock
Purchase Plan at any time. Any amendment of the Employee Stock Purchase Plan
must be approved by the stockholders of the Company within 12 months of the
adoption of such amendment by the Board of Directors, if stockholder approval is
required in order for the Employee Stock Purchase Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934 or any
stock exchange or market listing requirements.
EFFECT OF CERTAIN CORPORATE EVENTS
In the event of a dissolution or liquidation of the Company and certain
mergers and acquisitions involving the Company, (i) any surviving corporation
may assume outstanding rights or substitute similar rights for those outstanding
under the Employee Stock Purchase Plan, (ii) the outstanding rights may continue
in full force and effect, or (iii) participants' accumulated payroll deductions
may be used to purchase Common Stock immediately prior to the transaction
described and the participants' rights under any ongoing offering be terminated.
FEDERAL INCOME TAX INFORMATION
The following summary is intended only as a general guide to the United
States federal income tax consequences under current law of participation in the
Employee Stock Purchase Plan and does not attempt to describe all possible
federal or any foreign, state, local or other tax consequences of such
participation or tax consequences based on particular circumstances.
Rights granted under the Employee Stock Purchase Plan are intended to
qualify for favorable federal income tax treatment associated with rights
granted under an employee stock purchase plan which are qualified under the
provisions of Section 423 of the Code.
A participant will be taxed on amounts withheld for the purchase of shares
as if such amounts were actually received. No other income with respect to the
shares purchased will be taxable to a participant until disposition of the
shares acquired, and the method of taxation will depend on the holding period of
the purchased shares.
If the shares purchased in an offering are sold or otherwise disposed of
more than two years after the beginning of the offering and more than one year
after the stock was transferred to the participant, then (i) the excess of the
fair market value of the shares at the time of such disposition over the
purchase price or (ii) the excess of the fair market value of the shares as of
the beginning of the offering over the purchase price (determined as of the
beginning of the offering), whichever is less, will be treated as ordinary
income. Any further gain or any loss will be taxed as capital gain or loss.
If the shares are sold or disposed of before the expiration of either of
the holding periods described above, then the excess of the fair market value of
the shares on the purchase date over the purchase price will be treated as
ordinary income at the time of such disposition, and the Company may, in the
future, be required to withhold income taxes relating to such ordinary income
from other payments made to the participant. The balance of any gain will be
treated as a capital gain. Even if the shares are later disposed of for less
than their fair market value on the purchase date, the same amount of ordinary
income is attributed to the participant, and a capital loss is recognized equal
to the difference between the sales price and the fair market value of the stock
on such purchase date. Any capital gain or loss will be long-term, mid-term or
short-term depending on how long the shares were held.
There are no federal income tax consequences to the Company by reason of
the grant or the exercise of rights (i.e., purchase of stock) under the Employee
Stock Purchase Plan. The Company is entitled to a
18
<PAGE> 21
deduction to the extent amounts are taxed as ordinary income to a participant by
reason of a disposition before the expiration of the holding periods described
above (subject to the requirement of reasonableness and a tax reporting
obligation).
An employee who is a nonresident of the United States generally will not be
subject to the federal income tax rules described above with respect to shares
of Common Stock purchased under the Employee Stock Purchase Plan.
VOTE REQUIRED
The Employee Stock Purchase Plan has been adopted by the Board of
Directors, subject to approval by the Company's stockholders. Such approval is
required for the Employee Stock Purchase Plan to qualify as an "employee stock
purchase plan" under Section 423 of the Code.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO
APPROVE THE ADOPTION OF THE EMPLOYEE STOCK PURCHASE PLAN.
19
<PAGE> 22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to the Company regarding
the beneficial ownership of the Common Stock as of September 30, 2000, by (a)
each person or group of affiliated persons who is known by the Company to
beneficially own 5% or more of the Company's Common Stock, (b) the Company's
Chief Executive Officer and the Company's four other most highly compensated
executive officers, (c) each director of the Company, and (d) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
------------------------------------
PERCENT OF SHARES
NAME NUMBER OF SHARES OUTSTANDING
---- ---------------- -----------------
<S> <C> <C>
Patricof & Co. Ventures, Inc., as Manager(2)................ 2,407,249 15.05%
445 Park Avenue,
New York, New York 10022
ABRY Broadcast Partners III, L.P............................ 1,921,919 12.01
18 Newbury Street,
Boston, Massachusetts 02116
State of Michigan Retirement System(3)...................... 1,250,656 7.82
430 West Allegan Street,
Lansing, Michigan 48922
Sam Hashman(4).............................................. 1,011,560 6.32
Henry L. Hillman, Elsie Hilliard Hillman and C.G.
Grefenstette, Trustee(5).................................. 1,155,472 7.22
Robert M. Chefitz(6)........................................ 2,407,249 15.05
c/o Patricof & Co. Ventures, Inc.,
445 Park Avenue,
New York, New York 10022
Daniel K. O'Connell(7)...................................... 275,810 1.72
Robert P. May(8)............................................ 724,119 4.34
Ian Williams(8)(9).......................................... 441,953 2.76
Stephen L. Conkling(8)...................................... 80,596 *
Steven Yevoli(8)............................................ 47,500 *
Mark Cleveland(8)........................................... 32,500 *
James D. Green(8)........................................... 68,225 *
Raymond B. Greer(8)......................................... 25,000 *
William J. Razzouk(8)....................................... 25,000 *
All directors and officers as group (14 persons)(10)........ 4,289,601 25.11
</TABLE>
---------------
* Less than 1%
(1) This table is based upon information supplied by officers, directors and
principal stockholders of the Company and by Schedules 13G filed with the
Securities and Exchange Commission (the "Commission"). Unless otherwise
indicated in the footnotes to this table and subject to marital property
laws where applicable, each of the stockholders named in this table has
sole voting and investment power with respect to the shares indicated as
beneficially owned and has a business address of PNV Inc., 11711 N.W. 39th
Street, Coral Springs, Florida, 33065. Applicable percentages are based on
15,997,356 shares of Company Common Stock outstanding, adjusted as required
by rules promulgated by the Commission.
(2) Consists of shares of common stock owned as follows:
- 1,780,595 shares held by APA Excelsior IV, L.P.
- 313,977 shares held by APA Excelsior IV/Offshore, L.P.
- 312,677 shares held by The P/A Fund, L.P.
Patricof & Co. Ventures, Inc., directly or indirectly, controls, and has
sole voting or investment power with regard to shares beneficially owned by
such limited partnerships.
20
<PAGE> 23
(3) Does not include shares held by APA Excelsior IV, L.P., a limited
partnership of which the State of Michigan Retirement System is a limited
partner.
(4) Includes 22,950 shares of common stock beneficially owned by PNV General
Partner, Inc., of which Mr. Williams, Mr. Hashman and Monte Nathanson, the
general partner of MPN Partners, Ltd., each owns one-third of such shares.
(5) Consists of shares of common stock beneficially owned as follows:
- 685,217 shares held by Juliet Challenger, Inc., an indirect, wholly-owned
subsidiary of The Hillman Company.
- 268,720 shares held by four trusts for the benefit of members of the
Hillman family.
- 201,535 shares held by a trust for the benefit of Henry L. Hillman.
The Hillman Company is controlled by the trust for the benefit of Henry L.
Hillman. The trustees of the trust are Henry L. Hillman, Elsie Hilliard
Hillman and C.G. Grefenstette. The trustees share voting and investment
power with respect to the shares held of record by the trust and the assets
of The Hillman Company. Does not include 202,265 shares held by Venhill
Limited Partnership, as to which shares the trustees disclaim beneficial
ownership. Howard B. Hillman, the general partner of Venhill Limited
Partnership, is a step-brother of Henry L. Hillman.
(6) Represents an aggregate of 2,407,249 shares of common stock owned by funds
managed by Patricof. Mr. Chefitz, a director of PNV, is a Managing Director
of Patricof, and a general partner in the limited partnerships which
Patricof & Co. Ventures, Inc. manages. Mr. Chefitz does not exercise sole
or shared voting or investment power with respect to such shares and
disclaims beneficial ownership of such shares, except to the extent of his
pecuniary interest therein.
(7) Includes an aggregate of 270,810 shares of common stock owned by Nelgo
Investments, a partnership of which Mr. O'Connell is a general partner. Mr.
O'Connell owns 15% of Nelgo Investments.
(8) The following table indicates those people whose total number of
beneficially owned shares include shares subject to options exercisable
prior to December 31, 2000:
<TABLE>
<CAPTION>
SHARES SUBJECT
TO OPTIONS
--------------
<S> <C>
Robert P. May............................................... 697,180
Stephen L. Conkling......................................... 26,294
Steven Yevoli............................................... 47,500
Mark Cleveland.............................................. 32,000
James D. Green.............................................. 68,225
Raymond B. Greer............................................ 25,000
William J. Razzouk.......................................... 25,000
</TABLE>
(9) Includes 22,950 shares of common stock beneficially owned by PNV General
Partner, Inc., of which Mr. Williams, Mr. Hashman and Monte Nathanson, the
general partner of MPN Partners, Ltd., each owns one-third of such shares.
(10) Includes an aggregate of 1,032,598 shares of common stock subject to
options that are presently exercisable or become exercisable by December
31, 2000.
21
<PAGE> 24
EXECUTIVE COMPENSATION
The following table sets forth all compensation received for services
rendered to the Company in all capacities, for the last three fiscal years ended
June 30, 2000 by the Company's Chief Executive Officer, each of the four of the
most highly compensated executive officers whose salary and bonus exceeded
$100,000 in the fiscal year ended June 30, 2000, and Stephen L. Conkling, who
resigned from the Company in March 2000 (collectively with the Chief Executive
Officer, the "Named Executive Officers"). In accordance with the rules of the
SEC, the compensation set forth in the table below does not include medical,
group life or other benefits which are available to all of the Company's
salaried employees, and perquisites and other benefits, securities or property
which do not exceed the lesser of $50,000 or 10% of the person's salary and
bonus shown in the table.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS COMPENSATION(2)
--------------------------- ------ -------- -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. May................ 2000 $275,000 $92,000 $132,909 130,097 $5,000
President and Chief 1999 91,667 50,000 15,775 567,083 1,375
Executive Officer and 1998 -- -- -- -- --
Director(3)
Ian Williams................. 2000 200,000 -- -- -- 5,738
Chairman of the Board 1999 165,000 107,750 -- -- 1,856
and Director(4) 1998 157,000 -- -- -- --
Steven Yevoli................ 2000 135,000 50,000 -- 3,000 --
President PNV.com 1999 14,365 4,303 -- 105,000 --
1998 -- -- -- -- --
Mark Cleveland............... 2000 160,000 32,000(5) 28,653 -- --
Vice President -- Business 1999 4,293 -- -- 80,000 --
Development and Fleet Sale 1998 -- -- -- -- --
James D. Green............... 2000 160,000 -- -- -- 4,200
Vice President -- Product 1999 130,000 42,400 -- 75,867 1,556
Development 1998 127,500 -- -- -- --
Stephen L. Conkling.......... 2000 150,000 30,000(6) -- 3,000 4,050
1999 140,000 96,920 -- 65,735 1,575
1998 132,501 -- -- -- --
</TABLE>
---------------
(1) Represents discretionary cash bonuses, except where otherwise indicated.
(2) Represents the Company's contribution under its 401(k) Profit Sharing Plan
on behalf of this executive officer.
(3) Mr. May joined us in March 1999. Mr. May's "Other Annual Compensation"
includes reimbursements of $26,964 for premiums paid by Mr. May on a
whole-life insurance policy for the benefit of Mr. May's designated
beneficiaries and $105,945 paid to Mr. May for temporary living and
relocation expenses.
(4) Mr. Williams served as the Company's Chief Executive Officer until March
1999.
(5) Represents cash bonus paid pursuant to Mr. Cleveland's employment agreement.
(6) Represents payment made to Mr. Conkling in connection with his resignation
from the Company in March 2000.
22
<PAGE> 25
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information concerning the number of options
granted, exercise price and potential realized value at assumed annual rates of
stock price appreciation for the option term for grants to each of the Named
Executive Officers for the fiscal year ended June 30, 2000.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
--------------------------------------------------- ----------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(1) FISCAL YEAR PER SHARE DATE 0% 5% 10%
---- ---------- ------------- --------- ---------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert P. May........ 130,097(3) 23.8% $5.00 9/16/09 $ -- $ 292,442 $ 465,665
Ian Williams......... -- -- -- -- -- -- --
Steven Yevoli........ 3,000(4) .5 .01 12/22/09 4,110 6,744 10,738
Mark Cleveland....... -- -- -- -- -- -- --
James D. Green....... -- -- -- -- -- -- --
Stephen L. Conkling.. 3,000(4) .5 .01 12/22/09 4,110 6,744 10,738
</TABLE>
---------------
(1) Options granted by the Company to executive officers in its fiscal year
ending June 30, 2000 become exercisable in equal installments on the date of
grant and each of the first through fourth anniversaries of the date of
grant, except as otherwise noted.
(2) Calculated on the assumption that the market value of the underlying Common
Stock increases at the stated values, compounded annually. Options granted
under the Company's Stock Option Plan generally have a maximum term of ten
years.
(3) Options become exercisable as follows, if Mr. May is employed by the Company
on the specified date: (a) 12.4998% on September 16, 1999; (b) 2.0833% on
the first day of every calendar month commencing on October 1, 1999 and
ending on February 1, 2003; and (c) 2.0849% on March 1, 2003. If Mr. May is
employed by the Company as of November 23, 2000, which is the first
anniversary of the Company's initial public offering of its common stock,
then all remaining unvested options will automatically become exercisable.
(4) Options become exercisable in full on December 22, 2000 if the optionholder
is employed by the Company on such date. Mr. Conkling resigned from the
Company in March 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth information regarding stock option exercises
in the last fiscal year and exercisable and unexercisable stock options held as
of July 1, 2000 by each of the Named Executive Officers. The fair market value
of the Common Stock as of June 30, 2000, which is the per share price as quoted
on the Nasdaq National Market, was $1.38.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED AS OF JUNE 30, 2000 AS OF JUNE 30, 2000
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. May................... -- -- 217,869 479,311 -- --
Ian Williams.................... -- -- -- -- -- --
Steven Yevoli................... -- -- 44,500 63,500 -- $4,110
Mark Cleveland.................. -- -- 32,000 -- -- --
James D. Green.................. -- -- 60,649 53,096 $3,939 985
Stephen L. Conkling............. 54,302 $27,151 26,294 -- -- --
</TABLE>
23
<PAGE> 26
EMPLOYMENT, SEVERANCE AND OTHER ARRANGEMENTS
In March 1999, under an employment agreement without a fixed term that
either party may terminate at any time, the Company employed Robert P. May as
the Company's chief executive officer, and agreed to nominate him as a director.
Under this agreement, Mr. May's base annual salary initially was $275,000 and he
is eligible for a bonus initially targeted at 50% of his base annual salary
based upon goals and objectives to be established by the Board of Directors
annually following the Company's fiscal year-end. This bonus may be increased or
decreased by the Board of Directors. Mr. May may also receive a discretionary
bonus. The Company agreed to reimburse Mr. May for certain expenses related to
his temporary living and relocation, to pay certain life insurance premiums on
his behalf and to establish a nonqualified deferred compensation plan under
which he may defer amounts in excess of permissible contributions to the
Company's 401(k) plan. For fiscal 2001, the Company increased Mr. May's base
annual salary to $290,000. Mr. May agreed to accept from July 2000 to January
2001 options to purchase an aggregate of 193,333 shares of the Company's Common
Stock at a purchase price of $0.01 per share in lieu of his base salary during
that period, which will vest monthly through January 2001 at which time they
will be fully vested. As additional compensation for fiscal 2001, the
Compensation Committee has agreed to grant to Mr. May options to purchase an
additional 193,333 shares of the Company's Common Stock at a purchase price of
$0.01 per share, which will vest five years from the date of grant or earlier
upon the achievement of certain financing and performance objectives. The
Compensation Committee also has agreed to grant to Mr. May options to purchase
an additional 450,000 shares of the Company's Common Stock at a purchase price
equal to the fair market value per share on the date of the grant of the option.
Each of the option grants to Mr. May is subject to the approval of the Equity
Compensation Plan by the Company's stockholders.
In March 1999, in accordance with this employment agreement, the Company
issued to Mr. May 23,000 shares of the Company's Series C preferred stock for a
purchase price of $8.00 per share. In partial payment of this purchase price,
Mr. May issued to the Company his promissory note, also dated March 1999, in the
original principal amount of $92,000, which amount accrued interest at the rate
of 6% per annum. The principal balance of this note, together with accrued
interest, was due in March 2003. Under his employment agreement, Mr. May paid
the remaining $92,000 of this purchase price over an eight month period that
began in March 1999.
If the Company terminates Mr. May's employment without cause, the Company
is obligated to pay him his base salary and the amount of the life insurance
premiums that the Company has agreed to pay on his behalf for six months. If a
change in the Company's control occurs and the Company terminates Mr. May's
employment without cause during the 18 months following the change in control,
the Company is obligated to pay him his base salary for 18 months and the amount
of the life insurance premiums for six months, as well as an amount equal to any
bonus paid to Mr. May in the previous year. If Mr. May does not agree to release
the Company and its representatives from liability relating to his employment,
the Company is obligated to pay him his base salary for one month only upon
termination.
In March 1999, in accordance with his employment agreement, the Company
granted Mr. May, under the Company's Stock Option Plan, an option to purchase
567,083 shares of common stock for $5.00 per share. The Company also agreed with
Mr. May that, if certain sales of the Company's stock in an aggregate amount up
to $20.0 million closed prior to February 29, 2000, the Company would grant him
additional options to purchase shares of common stock such that, immediately
following any such grant of additional options, he would hold options to
purchase an aggregate of up to five percent of the common stock, calculated on a
fully diluted basis, outstanding after such sale. Under this agreement, the
Company granted to Mr. May an option to purchase 130,097 shares of common stock
having an exercise price of $5.00 per share upon the closing of the sale of the
Company's Series D preferred stock in September 1999. This option became
exercisable as to 12.48% of the underlying shares of common stock on the date of
grant and becomes exercisable in equal monthly increments of approximately 2.1%
each, subject to accelerated vesting in the event Mr. May remains employed by
the Company until November 23, 2000, which is the first anniversary of the
Company's initial public offering of its common stock.
24
<PAGE> 27
In May 1999, the Company entered into an employment agreement with the
President of PNV.com, Steven Yevoli. The agreement provides for a minimum annual
compensation of $135,000 and he is eligible for an incentive bonus upon
satisfaction of certain goals and objectives. The Company may terminate Mr.
Yevoli's employment at any time pursuant to the agreement. In connection with
his employment agreement, the Company granted to Mr. Yevoli a nonqualified stock
option to purchase 80,000 shares of the Company's common stock at an exercise
price of $5.00 per share. The options vest one-fifth on the date of grant and
one-fifth on each anniversary of the date of grant over the next four years.
Also, in connection with his employment agreement, the Company granted to Mr.
Yevoli an additional nonqualified stock option to purchase 25,000 shares of the
Stock at an exercise price of $5.00 per share. The options will vest either in
12,500 share increments upon meeting certain performance achievements and
milestones established by the Chief Executive Officer for the fiscal years ended
June 30, 2000 and 2001, respectively, or will vest at the fifth anniversary of
date of grant.
In June 1999, the Company entered into an employment agreement with its
Vice President of Sales, Mark Cleveland. The agreement provides for a minimum
annual compensation of $160,000 and he is eligible for an incentive bonus upon
satisfaction of certain goals and objectives. The Company may terminate Mr.
Cleveland's employment at any time pursuant to the agreement. In connection with
the employment agreement, the Company granted to Mr. Cleveland a nonqualified
stock option to purchase 80,000 shares of the Stock at an exercise price of
$5.00 per share. The options vest one-fifth on the date of grant and one-fifth
on each anniversary of the date of grant over the next four years. In May 2000,
the Company extended to Mr. Cleveland a loan in the aggregate principal amount
of $135,000, bearing interest at the rate of 7% per annum, which Mr. Cleveland
used to pay for the purchase of a home pending the sale of his prior residence.
The loan is due and payable in full upon the earlier of the sale of Mr.
Cleveland's prior residence or December 31, 2000.
In April 2000, Stephen L. Conkling resigned from employment with the
Company. In connection with Mr. Conkling's resignation, the Company agreed to
pay to Mr. Conkling nine months base salary and benefits in accordance with the
Company's customary payroll practices. The Company also agreed to pay to Mr.
Conkling $16,666 per month, less applicable withholding, for a period of three
months upon the conclusion of this nine month period. In the event that Mr.
Conkling is not employed by the end of the nine month period, the Company also
will pay up to three months of premiums under the Company's health care plan to
maintain Mr. Conkling's health insurance coverage. The Company also extended to
Mr. Conkling a loan in the aggregate principal amount of $54,302.00, bearing
interest at the rate of 7% per annum, which Mr. Conkling used to pay the
exercise price on his vested options to purchase the Company's stock as of the
termination of his employment. The promissory note evidencing the loan to Mr.
Conkling is secured by the shares of the Company's stock issued upon exercise of
the options.
In April 2000, the Company entered into a letter agreement with Casey L.
Gunnell, who serves as the Company's Chief Financial Officer. Pursuant to the
letter agreement, if the Company terminates Mr. Gunnell for any reason other
than for cause during the first two years of his employment by the Company, the
Company has agreed to pay to Mr. Gunnell an amount equal to his annual salary
and bonus and to continue Mr. Gunnell's benefits for twelve months. The Company
also has agreed to pay to Mr. Gunnell an amount equal to his annual salary and
bonus, as well as to continue his benefits for twelve months, in the event of a
change in control of the Company resulting in Mr. Gunnell's termination within
twelve months after the change in control. The Company also granted to Mr.
Gunnell options to purchase 130,000 shares of stock, which will vest immediately
upon a change in control of the Company.
In August 2000, the Company entered into a letter agreement with Jeffrey T.
Hendrickson, who serves as the Company's Executive Vice President and Chief
Operating Officer. Pursuant to the letter agreement, the Company agreed that Mr.
Hendrickson's minimum bonus for fiscal 2001 would be at least twenty-five
percent of his annual salary, which is currently $250,000. The Company also has
agreed to grant to Mr. Hendrickson options to purchase 150,000 shares of stock,
which will vest immediately upon a change in control of the Company. Subject to
stockholder approval of the Equity Compensation Plan, the Company also has
agreed to grant to Mr. Hendrickson options to purchase 150,000 shares of the
Company's stock. If the Company terminates Mr. Hendrickson for any reason other
than for cause during the first two years of his employment
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<PAGE> 28
by the Company (or thereafter, if the Company has not implemented a severance
plan applicable to all members of the Company's management team), the Company
has agreed to pay to Mr. Hendrickson an amount equal to his annual salary and
bonus, to continue his benefits for twelve months and to reimburse him for
expenses incurred for outplacement services up to $25,000. The Company has
agreed to pay to Mr. Hendrickson an amount equal to twice his annual salary and
bonus, to continue his benefits for twelve months and to reimburse him for
expenses incurred for outplacement services up to $25,000 in the event of a
change in control of the Company resulting in Mr. Hendrickson's termination
within twelve months of the change in control.
In November 1996, the Company acquired computer software from a software
development company known as GreenLight Technologies, Inc., of which James D.
Green owned 50% of its capital stock. In connection with the acquisition, the
Company agreed to pay Mr. Green an annual salary of at least $100,000 as long as
he is employed by the Company.
Other than Mr. May, Mr. Yevoli and Mr. Cleveland, the Company does not have
an employment agreement with any Named Executive Officer. In the event the
employment of any other named Executive Officer is terminated, the Company has
verbally agreed to pay each of these officers his base annual salary for a
three-month period. Pursuant to the Company's Stock Option Plan, the
exercisability of options granted under the plan is accelerated in the event of
certain changes in control of PNV.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1999, the Company sold an aggregate of 3,000,000 shares of
Series D preferred stock for $31.5 million, of which ABRY Broadcast Partners
III, L.P. purchased 1,904,762 shares of Series D preferred stock for $20.0
million.
The Company used a portion of the net proceeds of the initial public
offering of its common stock in November 1999 to redeem the Company's Series A
preferred stock for $3.9 million, plus accrued dividends of $1.0 million. Funds
managed by Patricof & Co. Ventures, Inc., owned more than 99% of the Company's
Series A preferred stock.
From time to time, the Company has entered into employment, severance and
other arrangements with certain or its executive officers. See "Executive
Compensation -- Employment, Severance and Other Arrangements."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee consists of three directors, Mr. Chefitz, Mr.
Razzouk and Mr. Williams. The Compensation Committee evaluates the performance
of the Company's Chief Executive Officer, reviews the performance of other
members of management, and reviews and approves or recommends to the Board of
Directors compensation levels, policies and programs.
The Compensation Committee seeks to:
- Provide rewards which are closely linked to Company and individual
performance;
- Align the interests of the Company's employees with those of its
stockholders through potential stock ownership; and
- Ensure that compensation and benefits are at levels which enable the
Company to attract and retain the high quality employees it needs.
COMPENSATION PHILOSOPHY
Through the Compensation Committee, the Company has developed and
implemented compensation policies, plans and programs which seek to tie
executive compensation to the attainment of specific individual, operating group
and Company-wide objectives, while providing compensation sufficient to attract
and retain
26
<PAGE> 29
talented executives who will contribute to the Company's long-term success. In
furtherance of these goals, annual base salaries are generally set at levels
which take into account both competitive and performance factors. The Company
also relies to a significant degree on annual and longer-range incentive
compensation to attract and motivate its executives. Incentive compensation is
variable and is closely tied to corporate performance to encourage profitability
growth and the enhancement of stockholder value. During fiscal 2000, the
compensation for the Company's executive officers consisted of base salary,
annual cash incentive opportunities, longer-term equity incentives,
participation as eligible (with all other eligible employees of the Company) in
the Company's 401(k) Savings Plan, and certain benefits available generally to
employees of the Company.
Cash-Based Compensation
Base Salary. The Compensation Committee fixes the base salary of the Chief
Executive Officer and reviews and approves base salaries for each of the
Company's other executive officers annually in connection with annual
performance reviews. In adjusting these base salaries, the Compensation
Committee examines both qualitative and quantitative factors relating to
corporate and individual performance, as well as prevailing market-based salary
levels. In many instances, the qualitative factors necessarily involve a
subjective assessment by the Committee. The Committee does not base its
considerations on any single performance factor nor does it specifically assign
relative weights to factors but rather considers a mix of factors and evaluates
individual performance against that mix both in absolute terms and in relation
to the executive's peers within the Company. Generally, in determining salary
adjustments for executive officers (other than the Chief Executive Officer), the
Committee relies primarily on the evaluation and recommendations of Mr. May.
Bonuses. The Company also provides annual discretionary bonuses in the
form of cash and/or stock. These bonuses reward employees for corporate and
individual performance based on a mix of objective and subjective factors.
Generally, in determining bonuses for executive officers (other than the Chief
Executive Officer), the Committee relies primarily on the evaluation and
recommendations of Mr. May.
Equity Incentives
The Company utilizes its Stock Option Plan to further align the interests
of stockholders and management by creating common incentives related to the
possession by management of a substantial economic interest in the long-term
appreciation of the Company's Stock. Generally, options under the Plan are
granted with exercise prices set at 100% of the fair market value of the
underlying stock on the date of grant, have a term of ten years, and are subject
to vesting over four years although other vesting schedules have been used in
some situations. In determining the size of an option to be granted to an
executive officer, the Compensation Committee takes into account the officer's
position and level of responsibility within the Company, the officer's existing
stock and unvested option holdings, the potential reward to the officer if the
stock price appreciates in the public market, and the competitiveness of the
officer's overall compensation arrangements, including stock options, although
outstanding performance by an individual may also be taken into consideration.
Option grants may also be made to new executives upon commencement of employment
and, on occasion, to executives in connection with a significant change in job
responsibility. The Compensation Committee generally grants options taking into
account multiple year periods. Therefore option grants are not necessarily made
each year.
Within the total number of shares authorized by stockholders, the
Compensation Committee aims to provide stock option awards broadly and deeply
throughout the Company. Individual executive officer stock option awards are
based on level of position, individual contribution and the Company's stock
ownership objectives for executives. The Company's long-term performance
ultimately determines compensation from stock options, since stock option value
is entirely dependent on the long-term growth of the Company's stock price.
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<PAGE> 30
CHIEF EXECUTIVE OFFICER COMPENSATION PROGRAM
In March 1999, under an employment agreement without a fixed term that
either party may terminate at any time, we employed Robert P. May as our Chief
Executive Officer. Under this agreement, Mr. May's initial base annual salary
was $275,000 for fiscal 2000 and he is eligible for a bonus initially targeted
at 50% of his base annual salary based upon goals and objectives to be
established by the Compensation Committee annually following the Company's
fiscal year-end.
In accordance with Mr. May's employment agreement, the Company issued to
Mr. May 23,000 shares of the Company's Series C Convertible Preferred Stock for
a purchase price of $8.00 per share. The Series C Convertible Preferred Stock
converted into Common Stock in connection with the Company's initial public
offering of its Common Stock in November 1999. In partial payment of the
purchase price, Mr. May issued to the Company his promissory note in the
original principal amount of $92,000, which accrued interest at the rate of 6%
per annum. In accordance with Mr. May's employment agreement, Mr. May paid the
remaining $92,000 of the purchase price over an eight month period beginning in
March 1999.
For fiscal 2001, the Company increased Mr. May's base annual salary to
$290,000. Mr. May agreed to accept until January 2001 options to purchase an
aggregate of 193,333 shares of the Company's Common Stock at a purchase price of
$0.01 per share in lieu of his base salary during that period. The Compensation
Committee granted to Mr. May options to purchase an additional 193,333 shares of
the Company's Common Stock at a purchase price of $0.01 per share, which will
vest upon the achievement of certain financing and performance objectives. The
Compensation Committee also granted to Mr. May options to purchase an additional
450,000 shares of the Company's Common Stock at a purchase price equal to the
fair market value per share on the date of the grant of the option. Each of the
option grants to Mr. May is subject to the approval of the Equity Compensation
Plan by the Company's stockholders.
The Compensation Committee
Robert M. Chefitz
William J. Razzouk
Ian Williams
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<PAGE> 31
COMPARATIVE PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative total
stockholder return on the Common Stock during the period from the Company's
initial public offering on November 23, 1999 through June 30, 2000 with the
cumulative total return for the Nasdaq Stock Market (U.S. and Foreign) Index and
Nasdaq Non-Financial. The comparison assumes $100 was invested on November 24,
1999, the date the Company's Common Stock began publicly trading, in the Common
Stock and in each of the foregoing indices and assumes reinvestment of
dividends, if any.
<TABLE>
<CAPTION>
PNV NASDAQ NASDAQ NON-FINANCIAL
--- ------ --------------------
<S> <C> <C> <C>
11/24/99 100.00 100.00 100.00
06/30/00 8.87 133.47 137.40
</TABLE>
Prior to November 24, 1999, the Company's Common Stock was not publicly
traded. Comparative data is provided only for the period since that date. This
graph is not "soliciting material," is not deemed filed with the Securities and
Exchange Commission and is not to be incorporated by reference in any filing of
the Company under the Securities Exchange Act of 1934, as amended, whether made
before or after the date hereof and irrespective of any general incorporation
language in any such filing.
The stock price performance shown on the graph is not necessarily
indicative of future price performance. Information used in the graph was
obtained from Research Data Group, Inc., a source believed to be reliable, but
the Company is not responsible for any errors or omissions in such information.
PROPOSAL 4:
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Deloitte & Touche LLP,
certified public accountants, to serve as independent auditors for the fiscal
year ending June 30, 2001. Deloitte & Touche has served as the Company's
independent auditors since 1996. It is expected that a member of the firm will
be present at the Annual Meeting of Stockholders with the opportunity to make a
statement if so desired and will be available to respond to appropriate
questions. The directors recommend a vote FOR ratification of this selection.
The ratification of this selection is not required under the laws of the State
of Delaware where the Company is incorporated, but the results of this vote will
be considered by the Board of Directors in selecting auditors for the Company's
next fiscal year.
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<PAGE> 32
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF DELOITTE & TOUCHE
LLP, AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING JUNE
30, 2001.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals to be considered for stockholder action
at the 2001 Annual Meeting if they do so in accordance with the appropriate
regulations of the Securities and Exchange Commission. Any such proposals must
be submitted to the Company's Secretary no later than June 17, 2001.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company registered
in the names of a nominee and, if so, will reimburse such banks, brokers and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
costs. Solicitation by officers and employees of the Company and/or a proxy
solicitor may also be made of some stockholders in person or by mail, telephone
or telegraph following the original solicitation.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and holders of more than
10% of the Company's Common Stock (collectively, "Reporting Persons") to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of Common Stock of the Company. Such persons are
required by regulations of the Commission to furnish the Company with copies of
all such filings. Based on its review of the copies of such filings received by
it with respect to the fiscal year ended June 30, 2000 and written
representations from certain Reporting Persons, the Company believes that all
Reporting Persons complied with all Section 16(a) filing requirements in the
fiscal year ended June 30, 2000 with the following exceptions: Daniel O'Connell
did not file a Form 4 reporting two acquisitions of Common Stock in June 2000
and Bill Buzbee did not file a Form 4 reporting one acquisition of Common Stock
in June 2000. Each of these persons instead reflected these transactions on a
Form 5 filed in August 2000. Neither Casey Gunnell nor Ray Greer filed a Form 3
and instead included their Form 3 information on a Form 5. Mark Cleveland filed
in January 2000 a Form 4 reporting an acquisition of Common Stock that took
place November 1999.
ANNUAL REPORT
The Annual Report of the Company (which does not form a part of the proxy
solicitation materials), containing the consolidated financial statements of the
Company for the fiscal year ended June 30, 2000, is being distributed
concurrently herewith to all stockholders entitled to notice of and to vote at
the Annual Meeting.
FORM 10-K
THE COMPANY FILED ITS ANNUAL REPORT ON FORM 10-K WITH THE COMMISSION ON
SEPTEMBER 28, 2000. STOCKHOLDERS MAY OBTAIN A COPY OF THIS REPORT, WITHOUT
CHARGE, BY WRITING TO THE COMPANY'S CHIEF FINANCIAL OFFICER, PNV INC., 11711
N.W. 39TH STREET, CORAL SPRINGS, FLORIDA 33065, (954) 745-7800.
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<PAGE> 33
OTHER BUSINESS
The Company is not aware that any matters other than those mentioned above
will be presented for action at the 2000 Annual Meeting, but if any other
matters do properly come before the Meeting, the persons named as proxies will
vote upon such matters in accordance with their best judgment.
IAN WILLIAMS
Chairman of the Board
Dated: October 16, 2000
31
<PAGE> 34
EXHIBIT A
PNV INC.
2000 EQUITY COMPENSATION PLAN
ARTICLE I
GENERAL PROVISIONS
1.1 The Plan is designed for the benefit of the Company to secure and
retain the services of Eligible Participants. The Board believes the Plan will
promote and increase personal interests in the welfare of the Company by, and
provide incentive to, those who are primarily responsible not only for its
regular operations but also for shaping and carrying out the long-range plans of
the Company and ordering its continued growth and financial success.
1.2 Awards under the Plan may be made to Participants in the form of (i)
Incentive Stock Options; (ii) Nonqualified Stock Options; (iii) Stock
Appreciation Rights; (iv) Restricted Stock, (v) Stock Awards; (vi) Performance
Shares and/or (vii) Other Stock-Based Awards.
1.3 The Plan shall be effective on the date the Plan is approved at a
meeting of the stockholders of the Company by the affirmative vote of the
holders of the majority of the Stock outstanding (the "Effective Date").
ARTICLE II
DEFINITIONS
Except where the context otherwise indicates, the following definitions
apply:
2.1 "Act" means the Securities Exchange Act of 1934, as now in effect or as
hereafter amended. All citations to sections of the Act or rules thereunder are
to such sections or rules as they may from time to time be amended or
renumbered.
2.2 "Agreement" means the written agreement evidencing an Award granted to
the Participant under the Plan.
2.3 "Award" means an award granted to a Participant under the Plan of a
Stock Option, Stock Appreciation Right, Restricted Stock, Stock Award,
Performance Share, Other Stock-Based Award or of any combination thereof.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. All citations to sections of the Code are to such sections as
they may from time to time be amended or renumbered.
2.6 "Committee" means the Compensation Committee of the Board or such other
committee consisting of two or more members as may be appointed by the Board to
administer this Plan pursuant to Article III.
2.7 "Company" means PNV Inc, a Delaware corporation, and its successors and
assigns.
2.8 "Disability" means, with respect to any Incentive Stock Option,
disability as determined under Code section 22(e)(3), and with respect to any
other Award, (i) with respect to a Participant who is eligible to participate in
the Employer's program of long-term disability insurance, if any, a condition
with respect to which the Participant is entitled to commence benefits under
such program, and (ii) with respect to any Participant (including a Participant
who is eligible to participate in the Employer's program of long-term disability
insurance, if any), a disability as determined under procedures established by
the Committee or in any Award.
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2.9 "Eligible Participant" means an employee of the Employer (including an
officer) as well as any other natural person, including a non-employee member of
the Board and a consultant or advisor who provides bona fide services to the
Employer not in connection with the offer or sale of securities in a
capital-raising transaction, subject to limitations as may be provided by the
Code, the Act or the Committee, as shall be determined by the Committee.
2.10 "Employer" means the Company and any entity during any period that it
is a "parent corporation" or a "subsidiary corporation" with respect to the
Company within the meaning of Code section 424(d). With respect to all purposes
of the Plan, including but not limited to, the establishment, amendment,
termination, operation and administration of the Plan, the Company shall be
authorized to act on behalf of all other entities included within the definition
of "Employer."
2.11 "Fair Market Value" means the fair market value of a share of Stock,
as determined in good faith by the Committee; provided, however, that
(a) if the Stock is listed on a national securities exchange, Fair
Market Value on a date shall be the closing sale price reported for the
Stock on such exchange on such date if at least 100 shares of Stock were
sold on such date or, if fewer than 100 shares of stock were sold on such
date, then Fair Market Value on such date shall be the closing sale price
reported for the Stock on such exchange on the last prior date on which at
least 100 shares were sold, all as reported in The Wall Street Journal or
such other source as the Committee deems reliable; and
(b) if the Stock is not listed on a national securities exchange but
is admitted to quotation on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or other comparable quotation system,
Fair Market Value on a date shall be the last sale price reported for the
Stock on such system on such date if at least 100 shares of Stock were sold
on such date or, if fewer than 100 shares of Stock were sold on such date,
then Fair Market Value on such date shall be the average of the high bid
and low asked prices reported for the Stock on such system on such date or,
if no shares of Stock were sold on such date, then Fair Market Value on
such date shall be the last sale price reported for the Stock on such
system on the last date on which at least 100 shares of Stock were sold,
all as reported in The Wall Street Journal or such other source as the
Committee deems reliable; and
(c) If the Stock is not traded on a national securities exchange or
reported by a national quotation system, if any broker-dealer makes a
market for the Stock, then the Fair Market Value of the Stock on a date
shall be the average of the highest and lowest quoted selling prices of the
Stock in such market on such date if at least 100 shares of Stock were sold
on such date or, if fewer than 100 shares of Stock were sold on such date,
then Fair Market Value on such date shall be the average of the high bid
and low asked prices for the Stock in such market on such date or, if no
prices are quoted on such date, then Fair Market Value on such date shall
be the average of the highest and lowest quoted selling prices of the Stock
in such market on the last date on which at least 100 shares of Stock were
sold.
The Committee shall determine Fair Market Value in connection with an
Incentive Stock Option in accordance with Code section 422 and the rules
and regulations thereunder.
2.12 "Incentive Stock Option" means a Stock Option granted to an Eligible
Participant under Article IV of the Plan.
2.13 "Named Executive Officer" means a Participant who, as of the date of
vesting and/or payout of an Award, is one of the group of "covered employees" as
defined in the regulations promulgated or other guidance under Code section
162(m).
2.14 "Nonqualified Stock Option" means a Stock Option granted to an
Eligible Participant under Article V of the Plan.
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2.15 "Option Grant Date" means, as to any Stock Option, the latest of:
(a) the date on which the Committee takes action to grant the Stock
Option to the Participant;
(b) the date the Participant receiving the Stock Option becomes an
employee of the Employer, to the extent employment status is a condition of
the grant or a requirement of the Code or the Act; or
(c) such other date (later than the dates described in (a) and (b)
above) as the Committee may designate.
2.16 "Participant" means an Eligible Participant to whom an Award has been
granted.
2.17 "Performance Share" means an Award under Article X of the Plan of a
unit valued by reference to a designated number of shares of Stock, which value
may be paid to the Participant by delivery of such property as the Committee
shall determine, including without limitation, cash or Stock, or any combination
thereof, upon achievement of such performance objectives during the relevant
performance period as the Committee shall establish at the time of such Award or
thereafter.
2.18 "Plan" means the PNV Inc. 2000 Equity Compensation Plan, as amended
from time to time.
2.19 "Public Offering" means any underwritten public offering by the
Company or its stockholders of its equity securities pursuant to an effective
registration statement filed under the Securities Act of 1933.
2.20 "Restricted Stock" means an Award of Stock under Article VIII of the
Plan, which Stock is issued with such restriction(s) as the Committee, in its
sole discretion, may impose, including without limitation, any restriction on
the right to sell, transfer, pledge or assign such Stock, to vote such Stock,
and/or to receive any cash dividends with respect to such Stock, which
restrictions may lapse separately or in combination at such time or times, in
installments or otherwise, as the Committee may deem appropriate.
2.21 "Restriction Period" means the period commencing on the date an Award
of Restricted Stock is granted and ending on such date as the Committee shall
determine.
2.22 "Retirement" means retirement from active employment with the
Employer, as determined by the Committee.
2.23 "Stock" means the common stock of the Company, as it may be adjusted
pursuant to the provisions of Plan section 3.10.
2.24 "Stock Appreciation Right" means an Award granted under Article VI
which provides for an amount payable in Stock and/or cash, as determined by the
Committee, equal to the excess of the Fair Market Value of a share of Stock on
the day the Stock Appreciation Right is exercised over the specified purchase
price.
2.25 "Stock Award" means as Award of Stock granted in payment of
compensation pursuant to Article IX of the Plan.
2.26 "Stock Option" means an Incentive Stock Option or a Nonqualified Stock
Option. A Stock Option shall be designated as either an Incentive Stock Option
or a Nonqualified Stock Option, and in the absence of such designation, shall be
treated as a Nonqualified Stock Option.
2.27 "Termination of Employment" means, with respect to a Participant, the
discontinuance of the Participant's service relationship with the Employer,
including but not limited to service as an employee of the Employer, as a
non-employee member of the board of directors of any entity constituting the
Employer, or as a consultant or advisor to the Employer who otherwise
constitutes an Eligible Participant. Except to the extent provided otherwise in
an Agreement or determined otherwise by the Committee, a Termination of
Employment shall not be deemed to have occurred if the capacity in which the
Participant provides service to the Employer changes (for example, a change from
consultant status to Employee status) or if the Participant transfers among the
various entities constituting the Employer, so long as there is no interruption
in the provision of service by the Participant to the Employer. The
determination of whether a Participant has incurred a Termination of Employment
shall be made by the Committee in its discretion. A Participant shall
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not be deemed to have incurred a Termination of Employment if the Participant is
on military leave, sick leave, or other bona fide leave of absence approved by
the Employer of 90 days or fewer (or any longer period during which the
Participant is guaranteed reemployment by statute or contract.) In the event a
Participant's leave of absence exceeds this period, he will be deemed to have
incurred a Termination of Employment on the day following the expiration date of
such period. Notwithstanding the foregoing, the determination of whether a
Termination of Employment has occurred with respect to an Incentive Stock Option
shall be made consistent with Code section 422.
ARTICLE III
ADMINISTRATION
3.1 This Plan shall be administered by the Committee. The Committee, in its
discretion, may delegate to one or more of its members such of its powers as it
deems appropriate. The Committee also may limit the power of any member to the
extent necessary to comply with rule 16b-3 under the Act, Code section 162(m) or
any other law or for any other purpose. Members of the Committee shall be
appointed originally, and as vacancies occur, by the Board, to serve at the
pleasure of the Board. The Board may serve as the Committee if by the terms of
the Plan all Board members are otherwise eligible to serve on the Committee. To
the extent that a Committee has not otherwise been appointed, references to the
"Committee" herein shall mean the Board.
3.2 The Committee shall meet at such times and places as it determines. A
majority of its members shall constitute a quorum, and the decision of a
majority of those present at any meeting at which a quorum is present shall
constitute the decision of the Committee. A memorandum signed by all of its
members shall constitute the decision of the Committee without necessity, in
such event, for holding an actual meeting.
3.3 The Committee shall have the exclusive right to interpret, construe and
administer the Plan, to select the persons who are eligible to receive an Award,
and to act in all matters pertaining to the granting of an Award and the
contents of the Agreement evidencing the Award, including without limitation,
the determination of the number of Stock Options, Stock Appreciation Rights,
Stock Awards or Performance Shares subject to an Award and the form, terms,
conditions and duration of each Award, and any amendment thereof consistent with
the provisions of the Plan. All acts, determinations and decisions of the
Committee made or taken pursuant to grants of authority under the Plan or with
respect to any questions arising in connection with the administration and
interpretation of the Plan, including the severability of any and all of the
provisions thereof, shall be conclusive, final and binding upon all
Participants, Eligible Participants and their estates and beneficiaries.
3.4 The Committee may adopt such rules, regulations and procedures of
general application for the administration of this Plan, as it deems
appropriate.
3.5 Subject to adjustment as provided in Plan section 3.10, the aggregate
number of shares of Stock which are available for issuance pursuant to Awards
under the Plan is Two Million One Hundred Thousand (2,100,000). Such shares of
Stock shall be made available from shares currently authorized but unissued or
currently held or subsequently acquired by the Company as treasury shares,
including shares purchased in the open market or in private transactions.
(a) If, for any reason, any shares of Stock awarded or subject to
purchase under the Plan are not delivered or purchased, or are reacquired
by the Company, for reasons including, but not limited to, a forfeiture of
Restricted Stock or termination, expiration or cancellation of a Stock
Option, Stock Appreciation Right, Stock Award or Performance Shares, such
shares of Stock shall not be charged against the aggregate number of shares
of Stock available for issuance pursuant to Awards under the Plan and shall
again be available for issuance pursuant to Award under the Plan. If the
exercise price and/or withholding obligation under a Stock Option is
satisfied by tendering shares of Stock to the Company (either by actual
delivery or attestation), only the number of shares of Stock issued net of
the shares of Stock so tendered shall be deemed delivered for purposes of
determining the maximum number of shares of Stock available for issuance
under the Plan.
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(b) For all purposes under the Plan, each Performance Share awarded
shall be counted as one share of Stock subject to an Award.
(c) To the extent a Stock Appreciation Right granted in connection
with a Stock Option is exercised without payment being made in the form of
Stock, whether or not Restricted Stock, the shares of Stock which otherwise
would have been issued upon the exercise of such related Stock Option shall
not be charged against the aggregate number of shares of Stock subject to
Awards under the Plan, and may again be available for Award under the Plan.
3.6 Each Award granted under the Plan shall be evidenced by a written
Agreement. Each Agreement shall be subject to and incorporate, by reference or
otherwise, the applicable terms and conditions of the Plan, and any other terms
and conditions, not inconsistent with the Plan, as may be imposed by the
Committee. A copy of such document shall be provided to the Participant, and the
Committee may, but need not, require that the Participant sign a copy of the
Agreement.
3.7 The Company shall not be required to issue or deliver any certificates
for shares of Stock prior to:
(a) the listing of such shares on any stock exchange on which the
Stock may then be listed or the admission of such shares to quotation on
NASDAQ or other comparable quotation system; and
(b) the completion of any registration or qualification of such shares
of Stock under any federal or state law, or any ruling or regulation of any
government body which the Company shall, in its discretion, determine to be
necessary or advisable.
3.8 All certificates for shares of Stock delivered under the Plan shall
also be subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed and any applicable federal or state laws, and the
Committee may cause a legend or legends to be placed on any such certificates to
make appropriate reference to such restrictions. In making such determination,
the Committee may rely upon an opinion of counsel for the Company.
3.9 Subject to the restrictions on Restricted Stock, as provided in Article
VIII of the Plan and in the Restricted Stock Agreement, each Participant who
receives an Award of Restricted Stock shall have all of the rights of a
shareholder with respect to such shares of Stock, including the right to vote
the shares to the extent, if any, such shares possess voting rights and receive
dividends and other distributions. Except as provided otherwise in the Plan or
in an Agreement, no Participant awarded a Stock Option, Stock Appreciation
Right, Stock Award, Performance Share or Other Stock-Based Award shall have any
right as a shareholder with respect to any shares of Stock covered by such Award
prior to the date of issuance to him or her of a certificate or certificates for
such shares of Stock.
3.10 If any reorganization, recapitalization, reclassification, stock
split, stock dividend, or consolidation of shares of Stock, merger or
consolidation or separation, including a spin-off, of the Company or sale or
other disposition by the Company of all or a portion of its assets, any other
change in the Company's corporate structure, or any distribution to shareholders
other than a cash dividend results in the outstanding shares of Stock, or any
securities exchanged therefore or received in their place, being exchanged for a
different number or class of shares of Stock or other securities of the Company,
or for shares of Stock or other securities of any other corporation; or new,
different or additional shares or other securities of the Company or of any
other corporation being received by the holders of outstanding shares of Stock,
then equitable adjustments shall be made by the Committee in:
(a) the limitation on the aggregate number of shares of Stock that may
be awarded as set forth in Plan section 3.5;
(b) the number and class of Stock that may be subject to an Award, and
which have not been issued or transferred under an outstanding Award;
(c) the purchase price to be paid per share of Stock under outstanding
Stock Options and the number of shares of Stock to be transferred in
settlement of outstanding Stock Appreciation Rights; and
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(d) the terms, conditions or restrictions of any Award and Agreement,
including the price payable for the acquisition of Stock; provided,
however, that all adjustments made as the result of the foregoing in
respect of each Incentive Stock Option shall be made so that such Stock
Option shall continue to be an incentive stock option within the meaning of
Code section 422.
3.11 In addition to such other rights of indemnification as they may have
as directors or as members of the Committee, the members of the Committee shall
be indemnified by the Company against reasonable expenses, including attorney's
fees, actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any Award granted thereunder, and
against all amounts paid by them in settlement thereof, provided such settlement
is approved by independent legal counsel selected by the Company, or paid by
them in satisfaction of a judgment or settlement in any such action, suit or
proceeding, except as to matters as to which the Committee member has been
negligent or engaged in misconduct in the performance of his duties; provided,
that within 60 days after institution of any such action, suit or proceeding, a
Committee member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
3.12 The Committee may require each person purchasing shares of Stock
pursuant to a Stock Option or other Award under the Plan to represent to and
agree with the Company in writing that he is acquiring the shares of Stock
without a view to distribution thereof. The certificates for such shares of
Stock may include any legend which the Committee deems appropriate to reflect
any restrictions on transfer.
3.13 The Committee shall be authorized to make adjustments in performance
based criteria or in the terms and conditions of other Awards in recognition of
unusual or nonrecurring events affecting the Company or its financial statements
or changes in applicable laws, regulations or accounting principles. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Agreement in the manner and to the extent it
shall deem desirable to carry it into effect. In the event the Company shall
assume outstanding employee benefit awards or the right or obligation to make
future such awards in connection with the acquisition of another corporation or
business entity, the Committee may, in its discretion, make such adjustments in
the terms of Awards under the Plan as it shall deem appropriate.
3.14 All outstanding Awards to any Participant may be canceled if:
(a) the Participant, without the consent of the Committee, during his
or her service relationship with the Employer or after termination of such
relationship, becomes associated with, employed by, renders services to, or
owns any interest in, other than any insubstantial interest, as determined
by the Committee, any business that is in competition with the Employer or
with any business in which the Employer has a substantial interest as
determined by the Committee; or
(b) is terminated for cause as determined by the Committee.
3.15 Notwithstanding any other provision of the Plan, the Company shall
have no liability to deliver any shares of Stock under the Plan or make any
other distribution of the benefits under the Plan unless such delivery or
distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act of 1933), and the applicable
requirements of any securities exchange or similar entity.
3.16 In connection with any Public Offering, a Participant shall not sell,
make any short sale of, loan, hypothecate, pledge, grant any option for the
purchase of, or otherwise dispose or transfer for value or otherwise agree to
engage in any of the foregoing transactions with respect to, any Stock acquired
under the Plan without the prior written consent of the Company or its
underwriters. Such restriction (the "Market Stand-Off") shall be in effect for
such period of time from and after the effective date of the final prospectus
for the Public Offering as may be requested by the Company or such underwriters.
In no event, however, shall such period exceed the period for which securities
owned by the Chief Executive Officer of the Company are subject to the same
restrictions. Any new, substituted or additional securities that are by reason
of any recapitalization or reorganization distributed with respect to Stock
acquired under the Plan shall be immediately subject to the Market Stand-Off, to
the same extent the Stock acquired under the Plan is at such time covered by
such provisions. In order to enforce the Market Stand-Off, the Company may
impose stop-
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transfer restrictions with respect to the Stock acquired under the Plan until
the end of the applicable stand-off period.
3.17 At all times when the Committee determines that compliance with Code
section 162(m) is required or desirable, all Awards granted under this Plan to
Named Executive Officers shall comply with the requirements of Code section
162(m). In addition, in the event that changes are made to Code section 162(m)
to permit greater flexibility with respect to any Awards under the Plan, the
Committee may, subject to the requirements of Article XII, make any adjustments
it deems appropriate.
ARTICLE IV
INCENTIVE STOCK OPTIONS
4.1 Each provision of this Article IV and of each Incentive Stock Option
granted under the Plan shall be construed in accordance with the provisions of
Code section 422, and any provision hereof that cannot be so construed shall be
disregarded.
4.2 Incentive Stock Options shall be granted only to Eligible Participants
who are in the active employment of the Employer, and to individuals to whom
grants are conditioned upon active employment, each of whom may be granted one
or more such Incentive Stock Options for a reason related to his employment at
such time or times determined by the Committee following the Effective Date
through the date which is ten (10) years following the Effective Date, subject
to the following conditions:
(a) The Incentive Stock Option exercise price per share of Stock shall
be set in the Agreement, but shall not be less than 100% of the Fair Market
Value of the Stock on the Option Grant Date. If the Eligible Participant
owns more than 10% of the outstanding Stock (as determined pursuant to Code
section 424(d)) on the Option Grant Date, the Incentive Stock Option
exercise price per share shall not be less than 110% of the Fair Market
Value of the Stock on the Option Grant Date; provided, however, that if an
Incentive Stock Option is granted to such an Eligible Participant at an
exercise price per share that is less than 110% of Fair Market Value of the
stock on the Option Grant Date, such Option shall be deemed a Nonqualified
Stock Option.
(b) The Incentive Stock Option and its related Stock Appreciation
Right, if any, may be exercised in whole or in part from time to time
within ten (10) years from the Option Grant Date (five (5) years if the
Eligible Participant owns more than 10% of the Stock on the Option Grant
Date), or such shorter period as may be specified by the Committee in the
Award; provided, that in any event, the Incentive Stock Option and any
related Stock Appreciation Right shall lapse and cease to be exercisable
upon a Termination of Employment or within such period following a
Termination of Employment as shall have been specified in the Incentive
Stock Option Agreement or related Stock Appreciation Right agreement, which
period shall in no event exceed three months unless:
(i) employment shall have terminated as a result of death or
Disability, in which event such period shall not exceed one year after
the date of death or Disability; or
(ii) death shall have occurred following a Termination of
Employment and while the Incentive Stock Option or Stock Appreciation
Right was still exercisable, in which event such period shall not exceed
one year after the date of death;
provided, further, that such period following a Termination of Employment
shall in no event extend the original exercise period of the Incentive
Stock Option and/or Stock Appreciation Right.
(c) To the extent the aggregate Fair Market Value, determined as of
the Option Grant Date, of the shares of Stock with respect to which
incentive stock options (determined without regard to this subsection) are
first exercisable during any calendar year (under this Plan or any other
plan of the Company and its parent and subsidiary corporations (within the
meaning of Code sections 424(e) and 424(f), respectively)), by Participant
exceeds $100,000, such Incentive Stock Options granted under the Plan shall
be treated as Nonqualified Stock Options granted under Article V.
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(d) The Committee may adopt any other terms and conditions which it
determines should be imposed for the Incentive Stock Option to qualify
under Code section 422, as well as any other terms and conditions not
inconsistent with this Article IV as determined by the Committee.
(e) The maximum number of shares of Stock that may be issued pursuant
to Incentive Stock Option Awards shall be the total number of shares
specified in section 3.5.
4.3 To the extent an Incentive Stock Option fails to meet the requirements
of Code section 422, it shall be deemed a Nonqualified Stock Option.
4.4 If the Incentive Stock Option Agreement so provides, the Committee may
require that all or part of the shares of Stock to be issued upon the exercise
of an Incentive Stock Option shall take the form of Restricted Stock, which
shall be valued on the date of exercise, as determined by the Committee, on the
basis of the Fair Market Value of such Restricted Stock determined without
regard to the deferral limitations and/or forfeiture restrictions involved.
ARTICLE V
NONQUALIFIED STOCK OPTIONS
5.1 Nonqualified Stock Options may be granted to Eligible Participants to
purchase shares of Stock at such time or times determined by the Committee,
subject to the terms and conditions set forth in this Article V.
5.2 The Nonqualified Stock Option exercise price per share of Stock shall
be established in the Agreement and may be more than, equal to or less than 100%
of the Fair Market Value at the time of the grant, but may not be less than par
value of the Stock.
5.3 A Nonqualified Stock Option and its related Stock Appreciation Right,
if any, may be exercised in full or in part from time to time within such period
as may be specified by the Committee in the Agreement; provided, that, in any
event, the Nonqualified Stock Option and related Stock Appreciation Right shall
lapse and cease to be exercisable upon a Termination of Employment or within
such period following a Termination of Employment as shall have been specified
in the Nonqualified Stock Option Agreement or related Stock Appreciation Right
Agreement, provided, that such period following a Termination of Employment
shall in no event extend the original exercise period of the Nonqualified Stock
Option or Stock Appreciation Right.
5.4 The Nonqualified Stock Option Agreement may include any other terms and
conditions not inconsistent with this Article V or Article VII, as determined by
the Committee.
ARTICLE VI
STOCK APPRECIATION RIGHTS
6.1 A Stock Appreciation Right may be granted to an Eligible Participant in
connection with a Stock Option granted under Article IV or Article V of this
Plan or may be granted independent of any Stock Option.
6.2 A Stock Appreciation Right shall entitle the holder, within the
specified period, to exercise the Stock Appreciation Right and receive in
exchange therefore a payment having an aggregate value equal to the amount by
which the Fair Market Value of a share of Stock exceeds the exercise price,
times the number of shares of Stock with respect to which the Stock Appreciation
Right is exercised. A Stock Appreciation Right granted in connection with a
Stock Option shall entitle the holder of the related Stock Option, within the
period specified for the exercise of the Stock Option, to surrender the
unexercised Stock Option, or a portion thereof, and to receive in exchange
therefore a payment having an aggregate value equal to the amount by which the
Fair Market Value of a share of Stock exceeds the Stock Option price per share
of Stock, times the number of shares of Stock under the Stock Option, or portion
thereof, which is surrendered.
6.3 Each Stock Appreciation Right granted hereunder in connection with a
Stock Option shall be subject to the same terms and conditions as the related
Stock Option, including limitations on transferability, and
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shall be exercisable only to the extent such Stock Option is exercisable and
shall terminate or lapse and cease to be exercisable when the related Stock
Option terminates or lapses. The grant of Stock Appreciation Rights related to
Incentive Stock Options must be concurrent with the grant of the Incentive Stock
Options. With respect to Nonqualified Stock Options, the grant either may be
concurrent with the grant of the Nonqualified Stock Options, or in connection
with Nonqualified Stock Options previously granted under Article V, which are
unexercised and have not terminated or lapsed.
6.4 The Committee shall have sole discretion to determine in each case
whether the payment with respect to the exercise of a Stock Appreciation Right
will be in the form of all cash, all Stock, or any combination thereof. If
payment is to be made in Stock, the number of shares of Stock shall be
determined based on the Fair Market Value of the Stock on the date of exercise.
If the Committee elects to make full payment in Stock, no fractional shares of
Stock shall be issued and cash payments shall be made in lieu of fractional
shares.
6.5 The Committee shall have sole discretion as to the timing of any
payment made in cash or Stock, or a combination thereof, upon exercise of Stock
Appreciation Rights. Payment may be made in a lump sum, in annual installments
or may be otherwise deferred; and the Committee shall have sole discretion to
determine whether any deferred payments may bear amounts equivalent to interest
or cash dividends.
6.6 Upon exercise of a Stock Appreciation Right, the number of shares of
Stock subject to exercise under any related Stock Option shall automatically be
reduced by the number of shares of Stock represented by the Stock Option or
portion thereof which is surrendered.
6.7 Notwithstanding any other provision of the Plan, the exercise of a
Stock Appreciation Right is required to satisfy any applicable requirements
under Rule 16b-3 of the Act.
ARTICLE VII
INCIDENTS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
7.1 Each Stock Option and Stock Appreciation Right shall be granted subject
to such terms and conditions, if any, not inconsistent with this Plan, as shall
be determined by the Committee, including any provisions as to continued
employment or other service as consideration for the grant or exercise of such
Stock Option or Stock Appreciation Right and any provisions which may be
advisable to comply with applicable laws, regulations or rulings of any
governmental authority.
7.2 The maximum number of shares of Stock that may be subject to Stock
Options and Stock Appreciation Rights granted to any one individual during any
calendar year shall be 1,000,000 shares.
7.3 Except as provided below, each Stock Option and Stock Appreciation
Right shall not be transferable by the Participant other than by will or by the
laws of descent and distribution or, to the extent otherwise allowed by
applicable law, pursuant to a qualified domestic relations order as defined by
the Code and the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder, and shall be exercisable during the lifetime of the
Participant only by him or in the event of his death or Disability, by his
guardian or legal representative; provided, however, that a Nonqualified Stock
Option or Stock Appreciation Right may be transferred and exercised by the
transferee to the extent determined by the Committee to be consistent with
securities and other applicable laws, rules and regulations and with Company
policy.
7.4 Shares of Stock purchased upon exercise of a Stock Option or Stock
Appreciation Right shall be paid for at the time of exercise (or, in case of an
exercise pursuant to a cashless exercise mechanism described below, as soon as
practicable after such exercise) in cash or by tendering (either by actual
delivery or by attestation) shares of Stock held by the Participant for the
requisite period necessary to avoid a charge to the Company's earnings for
financial reporting purposes, as determined by the Committee in its discretion,
having an aggregate Fair Market Value equal to the amount of cash that would
otherwise be required to pay the full option price or by authorizing a third
party to sell a portion of the shares acquired upon exercise of the Stock Option
or Stock Appreciation Right and remit to the Employer a sufficient portion of
the sales proceeds to pay
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the full option price any tax withholding resulting from such exercise or by any
combination of these methods, subject to any limitations set forth in the
corresponding Agreement.
7.5 Unless expressly provided otherwise in an Agreement or by the
Committee, no dividends shall be paid on shares of Stock subject to unexercised
Stock Options or Stock Appreciation Rights. However, the Committee may provide
in an Agreement or otherwise that a Participant has the right to receive
dividend payments or dividend equivalent payments with respect to Stock subject
to a Stock Option or Stock Appreciation Right (both before and after the Stock
subject to the Award is earned, vested, or acquired), which payments may be
either made currently or credited to an account for the Participant, and may be
settled in cash or Stock, as determined by the Committee. Any such settlements,
and any such crediting of dividends or dividend equivalents or reinvestment in
shares of Stock, may be subject to such conditions, restrictions, and
contingencies as the Committee shall establish, including the reinvestment of
such credited amounts in Stock equivalents. Any such Stock issued, whether
delivered or contingently credited, shall be charged against the limitations set
forth in Plan section 3.5.
7.6 The Committee may permit the voluntary surrender of all or a portion of
any Stock Option or Stock Appreciation Right granted under the Plan to be
conditioned upon the granting to the Participant of a new Stock Option or Stock
Appreciation Right for the same or a different number of shares of Stock as the
Stock Option or Stock Appreciation Right surrendered, or may require such
surrender as a condition precedent to a grant of a new Stock Option or Stock
Appreciation Right to such Participant. Subject to the provisions of the Plan,
such new Stock Option or Stock Appreciation Right shall be exercisable at such
price, during such period and on such other terms and conditions as are
specified by the Committee at the time the new Stock Option or Stock
Appreciation Right is granted. Upon surrender, the Stock Options or Stock
Appreciation Rights surrendered shall be canceled and the shares of Stock
previously subject to them shall be available for the grant of other Awards
under this Plan.
ARTICLE VIII
RESTRICTED STOCK
8.1 Restricted Stock Awards may be made to Participants as an incentive for
the performance of future services that will contribute materially to the
successful operation of the Employer. Awards of Restricted Stock may be made
either alone or in addition to or in tandem with other Awards granted under the
Plan.
8.2 With respect to Awards of Restricted Stock, the Committee shall:
(a) determine the purchase price, if any, to be paid for such
Restricted Stock, which may be more than, equal to, or less than par value
and may be zero, subject to such minimum consideration as may be required
by applicable law;
(b) determine the length of the Restriction Period;
(c) determine any restrictions applicable to the Restricted Stock such
as service or performance;
(d) determine if the restrictions shall lapse as to all shares of
Restricted Stock at the end of the Restriction Period or as to a portion of
the shares of Restricted Stock in installments during the Restriction
Period; and
(e) determine if dividends and other distributions on the Restricted
Stock are to be paid currently to the Participant or paid to the Company
for the account of the Participant.
8.3 Notwithstanding Section 3.6 of the Plan, a Restricted Stock Award must
be accepted within a period of 60 days, or such other period as the Committee
may specify, by executing a Restricted Stock Agreement and paying whatever
price, if any, is required. The prospective recipient of a Restricted Stock
Award shall not have any rights with respect to such Award, unless and until
such recipient has executed a Restricted Stock Agreement and has delivered a
fully executed copy thereof to the Committee, and has otherwise complied with
the applicable terms and conditions of such Award.
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8.4 Except when the Committee determines otherwise, or as otherwise
provided in the Restricted Stock Agreement, if a Participant terminates
employment or other service relationship with the Employer for any reason before
the expiration of the Restriction Period, all shares of Restricted Stock still
subject to restriction shall be forfeited by the Participant and shall be
reacquired by the Company.
8.5 Except as otherwise provided in this Article VIII, no shares of
Restricted Stock received by a Participant shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period.
8.6 To the extent not otherwise provided in a Restricted Stock Agreement,
in cases of death, Disability or Retirement or in cases of special
circumstances, the Committee may in its discretion elect to waive any or all
remaining restrictions with respect to such Participant's Restricted Stock.
8.7 In the event of hardship or other special circumstances of a
Participant whose employment or other service relationship with the Employer is
involuntarily terminated, the Committee may in its discretion elect to waive in
whole or in part any or all remaining restrictions with respect to any or all of
the Participant's Restricted Stock, based on such factors and criteria as the
Committee may deem appropriate.
8.8 Upon an Award of Restricted Stock to a Participant, one or more stock
certificates representing the shares of Restricted Stock shall be registered in
the Participant's name. Such certificates may either:
(a) be held in custody by the Company until the Restriction Period
expires or until restrictions thereon otherwise lapse, and the Participant
shall deliver to the Company one or more stock powers endorsed in blank
relating to the Restricted Stock; and/or
(b) be issued to the Participant and registered in the name of the
Participant, and shall bear an appropriate restrictive legend and shall be
subject to appropriate stop-transfer orders.
8.9 Except as provided in this Article VIII, a Participant receiving a
Restricted Stock Award shall have, with respect to such Restricted Stock Award,
all of the rights of a shareholder of the Company, including the right to vote
the shares to the extent, if any, such shares possess voting rights and the
right to receive any dividends; provided, however, the Committee may require
that any dividends on such shares of Restricted Stock shall be automatically
deferred and reinvested in additional Restricted Stock subject to the same
restrictions as the underlying Award, or may require that dividends and other
distributions on Restricted Stock shall be paid to the Company for the account
of the Participant. The Committee shall determine whether interest shall be paid
on such amounts, the rate of any such interest, and the other terms applicable
to such amounts.
8.10 If and when the Restriction Period expires without a prior forfeiture
of the Restricted Stock subject to such Restriction Period, unrestricted
certificates for such shares shall be delivered to the Participant; provided,
however, that the Committee may cause such legend or legends to be placed on any
such certificates as it may deem advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission and any applicable
federal or state law.
8.11 In order to better ensure that Award payments actually reflect the
performance of the Company and the service of the Participant, the Committee may
provide, in its sole discretion, for a tandem performance-based or other Award
designed to guarantee a minimum value, payable in cash or Stock to the recipient
of a Restricted Stock Award, subject to such performance, future service,
deferral and other terms and conditions as may be specified by the Committee.
ARTICLE IX
STOCK AWARDS
9.1 A Stock Award shall be granted only in payment of compensation that has
been earned or as compensation to be earned, including without limitation,
compensation awarded concurrently with or prior to the grant of the Stock Award.
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9.2 For the purposes of this Plan, in determining the value of a Stock
Award, all shares of Stock subject to such Stock Award shall be valued at not
less than 100% of the Fair Market Value of such shares of Stock on the date such
Stock Award is granted, regardless of whether or when such shares of Stock are
issued or transferred to the Participant and whether or not such shares of Stock
are subject to restrictions which affect their value.
9.3 Shares of Stock subject to a Stock Award may be issued or transferred
to the Participant at the time the Stock Award is granted, or at any time
subsequent thereto, or in installments from time to time, as the Committee shall
determine. If any such issuance or transfer shall not be made to the Participant
at the time the Stock Award is granted, the Committee may provide for payment to
such Participant, either in cash or shares of Stock, from time to time or at the
time or times such shares of Stock shall be issued or transferred to such
Participant, of amounts not exceeding the dividends which would have been
payable to such Participant in respect of such shares of Stock, as adjusted
under Section 3.10, if such shares of Stock had been issued or transferred to
such Participant at the time such Stock Award was granted.
9.4 A Stock Award shall be subject to such terms and conditions, including
without limitation, restrictions on the sale or other disposition of the Stock
Award or of the shares of Stock issued or transferred pursuant to such Stock
Award, as the Committee shall determine; provided, however, that upon the
issuance or transfer of shares pursuant to a Stock Award, the Participant, with
respect to such shares of Stock, shall be and become a shareholder of the
Company fully entitled to receive dividends, to vote to the extent, if any, such
shares possess voting rights and to exercise all other rights of a shareholder
except to the extent otherwise provided in the Stock Award. Each Stock Award
shall be evidenced by a written Agreement in such form as the Committee shall
determine.
ARTICLE X
PERFORMANCE SHARES
10.1 Awards of Performance Shares may be made to certain Participants as an
incentive for the performance of future services that will contribute materially
to the successful operation of the Company. Awards of Performance Shares may be
made either alone, in addition to or in tandem with other Awards granted under
the Plan and/or cash payments made outside of the Plan.
10.2 With respect to Awards of Performance Shares, which may be issued for
no consideration or such minimum consideration as is required by applicable law,
the Committee shall:
(a) determine and designate from time to time those Participants to
whom Awards of Performance Shares are to be granted;
(b) determine the number of Performance Shares to be granted to a
Participant;
(c) determine the performance period and/or performance objectives
pursuant to which Performance Shares may be earned;
(d) determine the form of settlement of a Performance Share; and
(e) generally determine the terms and conditions of each such Award.
At any date, each Performance Share shall have a value equal to the Fair
Market Value, determined as set forth in Section 2.11.
10.3 The Committee may designate whether any Performance Share is intended
to be "performance-based compensation" within the meaning of Code section
162(m). Notwithstanding anything herein to the contrary, any such Award shall be
conditioned on achievement of one or more performance measures selected by the
Committee from among the following: earnings, earnings per share, revenues,
revenue growth, gross margin, market value added, economic value added, EBIT,
EBITDA, return on equity, return on investment, return on assets, return on net
assets, return on capital employed, total shareholder return, profit, economic
profit, capitalized economic profit, after-tax profit, pre-tax profit, cash
flow, cash flow return, sales, sales
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volume, inventory turnover ratio, stock price, cost, and/or unit cost. The grant
of such Awards and the establishment of the performance measures shall be made
during the specified performance period, which shall meet the requirements of
Code section 162(m). No more than 1,000,000 Performance Shares may be earned by
any Participant in any calendar year.
10.4 Performance periods may overlap, and Participants may participate
simultaneously with respect to Performance Shares for which different
performance periods are prescribed.
10.5 The Committee shall determine the performance objectives of Awards of
Performance Shares. Performance objectives may vary from Participant to
Participant and between Awards and, except as provided in Section 10.3 above,
shall be based upon such performance criteria or combination of factors as the
Committee may deem appropriate, including for example, but not limited to,
minimum earnings per share or return on equity. If during the course of a
performance period there shall occur significant events which the Committee
expects to have a substantial effect on the applicable performance objectives
during such period, the Committee may revise such performance objectives.
10.6 If a Participant terminates service with the Employer during a
performance period because of death, Disability, Retirement or under other
circumstances in which the Committee in its discretion finds that a waiver would
be appropriate, that Participant, as determined by the Committee, may be
entitled to a payment of Performance Shares at the end of the performance period
based upon the extent to which the performance objectives were satisfied at the
end of such period and pro rated for the portion of the performance period
during which the Participant was in service with the Employer; provided,
however, the Committee may provide for an earlier payment in settlement of such
Performance Shares in such amount and under such terms and conditions as the
Committee deems appropriate or desirable. If a Participant terminates service
with the Employer during a performance period for any other reason, then such
Participant shall not be entitled to any payment with respect to that
performance period unless the Committee shall otherwise determine.
10.7 Each Award of a Performance Share shall be paid in whole shares of
Stock, or cash, or a combination of Stock and cash as the Committee shall
determine, with payment to be made as soon as practicable after the end of the
relevant performance period.
10.8 The Committee shall have the authority to approve requests by
Participants to defer payment of Performance Shares on terms and conditions
approved by the Committee and set forth in a written Agreement between the
Participant and the Company entered into in advance of the time of receipt or
constructive receipt of payment by the Participant.
ARTICLE XI
OTHER STOCK-BASED AWARDS
11.1 Other awards that are valued in whole or in part by reference to, or
are otherwise based on, Stock ("Other Stock-Based Awards"), including without
limitation, convertible preferred stock, convertible debentures, exchangeable
securities, phantom stock and Stock awards or options valued by reference to
book value or performance, may be granted either alone or in addition to or in
tandem with other Awards granted under the Plan and/or cash awards made outside
of the Plan. Subject to the provisions of the Plan, the Committee shall have
authority to determine the Eligible Participants to whom and the time or times
at which Other Stock-Based Awards shall be made, the number of shares of Stock
subject to such Awards, and all other conditions of the Awards. The Committee
also may provide for the grant of shares of Stock upon the completion of a
specified performance period. The provisions of Other Stock-Based Awards need
not be the same with respect to each recipient.
11.2 Other Stock-Based Awards made pursuant to this Article XI shall be
subject to the following terms and conditions:
(a) Subject to the provisions of this Plan and the applicable
Agreement, shares of Stock subject to Other Stock-Based Awards may not be
sold, assigned, transferred, pledged or otherwise encumbered
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prior to the date on which the shares are issued, or, if later, the date on
which any applicable restriction, performance or deferral period lapses.
(b) Subject to the provisions of this Plan and the applicable
Agreement and unless otherwise determined by the Committee at the time of
the Award, the recipient of an Other Stock-Based Award shall be entitled to
receive, currently or on a deferred basis, interest or dividends or
interest or dividend equivalents with respect to the number of shares
covered by the Award, as determined at the time of the Award by the
Committee, in its sole discretion, and the Committee may provide that such
amounts, if any, shall be deemed to have been reinvested in additional
Stock or otherwise reinvested.
(c) Any Other Stock-Based Award and any Stock covered by any such
Award shall vest or be forfeited to the extent so provided in the
applicable Agreement, as determined by the Committee, in its sole
discretion.
(d) Upon the Participant's Retirement, Disability or death, or in
cases of special circumstances, the Committee may, in its sole discretion,
waive in whole or in part any or all of the remaining limitations imposed
hereunder, if any, with respect to any or all of an Other Stock-Based
Award.
(e) Each Other Stock-Based Award shall be evidenced by, and subject to
the terms of, an Agreement.
(f) Stock, including securities convertible into Stock, issued on a
bonus basis under this Article XI may be issued for no cash consideration.
11.3 The Committee may designate whether any Other Stock-Based Award is
intended to be "performance-based compensation" within the meaning of Code
section 162(m). Notwithstanding anything herein to the contrary, any such Award
shall be conditioned on achievement of one or more performance measures selected
by the Committee from among the following: earnings, earnings per share,
revenues, revenue growth, gross margin, market value added, economic value
added, EBIT, EBITDA, return on equity, return on investment, return on assets,
return on net assets, return on capital employed, total shareholder return,
profit, economic profit, capitalized economic profit, after-tax profit, pre-tax
profit, cash flow, cash flow return, sales, sales volume, inventory turnover
ratio, stock price, cost, and/or unit cost. The grant of such Awards and the
establishment of the performance measures shall be made during the specified
performance period, which shall meet the requirements of Code section 162(m). No
more than 1,000,000 shares of Stock may be earned by any Participant in any
calendar year.
11.4 Other Stock-Based Awards may include a phantom stock Award, which is
subject to the following terms and conditions:
(a) The Committee shall select the Eligible Participants who may
receive phantom stock Awards. The Eligible Participant shall be awarded a
phantom stock unit, which shall be the equivalent to a share of Stock.
(b) Under an Award of phantom stock, payment shall be made on the
dates or dates as specified by the Committee or as stated in the applicable
Agreement and phantom stock Awards may be settled in cash, Stock, or some
combination thereof.
(c) The Committee shall determine such other terms and conditions of
each Award as it deems necessary in its sole discretion.
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ARTICLE XII
AMENDMENT AND TERMINATION
12.1 The Board at any time and from time to time, may amend or terminate
the Plan. To the extent required by Code section 422 and/or the rules of the
exchange upon which the Stock is traded or other applicable law, no amendment,
without approval by the Company's shareholders, shall:
(a) alter the group of persons eligible to participate in the Plan;
(b) except as provided in Plan section 3.10, increase the maximum
number of shares of Stock which are available for issuance pursuant to
Awards granted under the Plan;
(c) extend the period during which Incentive Stock Options may be
granted beyond the date which is ten (10) years following the Effective
Date.
(d) limit or restrict the powers of the Committee with respect to the
administration of this Plan;
(e) change the definition of an Eligible Participant for the purpose
of Incentive Stock Options or increase the limit or the value of shares of
Stock for which an Eligible Participant may be granted an Incentive Stock
Option;
(f) materially increase the benefits accruing to Participants under
this Plan; or
(g) change any of the provisions of this Article XII.
12.2 No amendment to or discontinuance of this Plan or any provision
thereof by the Board or the shareholders of the Company shall, without the
written consent of the Participant, adversely affect, as shall be determined by
the Committee, any Award previously granted to such Participant under this Plan;
provided, however, the Committee retains the right and power to treat any
outstanding Incentive Stock Option as a Nonqualified Stock Option in accordance
with Plan section 4.3.
12.3 Notwithstanding anything herein to the contrary, if the right to
receive or benefit from any Award, either alone or together with payments that a
Participant has the right to receive from the Company, would constitute a
"parachute payment" under Code section 280G, all such payments may be reduced,
in the discretion of the Committee, to the largest amount that will avoid an
excise tax to the Participant under Code section 280G.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Nothing in the Plan or any Award granted under the Plan shall confer
upon any Participant any right to continue in the service of the Employer, or to
serve as a director thereof, or interfere in any way with the right of the
Employer to terminate his or her employment or other service relationship at any
time. Unless agreed by the Board, no Award granted under the Plan shall be
deemed salary or compensation for the purpose of computing benefits under any
employee benefit plan or other arrangement of the Employer for the benefit of
its employees. No Participant shall have any claim to an Award until it is
actually granted under the Plan. To the extent that any person acquires a right
to receive payments from the Company under the Plan, such right shall, except as
otherwise provided by the Committee, be no greater than the right of an
unsecured general creditor of the Company.
13.2 The Committee may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes which the
Employer is required by any law or regulation of any governmental authority,
whether federal, state or local, domestic or foreign, to withhold in connection
with any Award or the exercise thereof, including, but not limited to,
withholding the payment of all or any portion of such Award or another Award
under this Plan until the Participant reimburses the Employer for the amount the
Employer is required to withhold with respect to such taxes, or canceling any
portion of such Award or another Award under this Plan in an amount sufficient
to reimburse itself for the amount it is required to so
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withhold, or selling any property contingently credited by the Company for the
purpose of paying such Award or another Award under this Plan in order to
withhold or reimburse itself for the amount it is required to so withhold. The
amount to be withheld shall not exceed the statutory minimum federal and state
income and employment tax liability arising from the exercise transaction. Any
such method of satisfying the withholding obligation must satisfy any applicable
requirements of rule 16b-3 under the Act.
13.3 The Plan and the grant of Awards shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any
United States government or regulatory agency as may be required. Any provision
herein relating to compliance with rule 16b-3 under the Act shall not be
applicable with respect to participation in the Plan by Participants who are not
subject to Act section 16(b).
13.4 The terms of the Plan shall be binding upon the Company, and its
successors and assigns.
13.5 The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver shares of Stock or payments in lieu of or with respect to Awards under
the Plan; provided, however, that, unless the Committee otherwise determines
with the consent of the affected Participant, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.
13.6 Each Participant agrees to give the Committee prompt written notice of
any election made by such Participant under Code section 83(b) or any similar
provision thereof.
13.7 If any provision of this Plan or an Agreement is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Agreement under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Agreement, it shall be stricken and the remainder of the Plan or the
Agreement shall remain in full force and effect.
13.8 Where the context admits, words in any gender shall include the other
gender, words in the singular shall include the plural and words in the plural
shall include the singular.
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EXHIBIT B
PNV INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
1.1 Statement of Purpose. The purpose of the Plan is to provide each
Eligible Employee an opportunity to purchase Stock. The Board believes that
employee participation in ownership will be to the mutual benefit of both the
employees and the Company.
1.2 Internal Revenue Code Considerations. The Plan is intended to
constitute an "employee stock purchase plan" within the meaning of Code section
423. The provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of the Code.
ARTICLE II
DEFINITIONS
2.1 "Administrator" means the individual or committee (which may be a
committee of the Board) appointed by the Board to administer the Plan, as
provided in Section 6.4 hereof.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Company" means PNV Inc., a Delaware corporation.
2.5 "Compensation" means the total earnings paid, during the period of
reference, to an Employee by the Employer, including regular salary or wages,
overtime, bonuses, commissions, vacation pay, and pay for other time off, but
excluding expense reimbursements and other compensation, to which has been added
(a) any elective deferral amounts by which the Employee has had his or her
current remuneration reduced for the purposes of funding a contribution to any
plan sponsored by the Employer and satisfying the requirements of section 401(k)
of the Code, and (b) any amounts by which the Employee's compensation has been
reduced pursuant to a compensation reduction agreement between the Employee and
the Employer for the purpose of funding benefits through any cafeteria plan
sponsored by the Employer meeting the requirements of section 125 of the Code.
2.6 "Continuous Service" means the period of time during which the Employee
has been employed by the Employer and during which there has been no
interruption of Employee's employment by the Employer. For this purpose, periods
of Excused Absence shall not be considered to be interruptions of Continuous
Service. Continuous Service shall, at the election of the Committee, include
periods of service with a corporation or other entity acquired by an Employer
after the Effective Date.
2.7 "Effective Date" shall mean January 1, 2001.
2.8 "Eligible Employee" means each Employee who has completed six (6)
months of Continuous Service other than:
(a) an Employee whose customary employment is for 20 or fewer hours
per week,
(b) an Employee whose customary employment is for not more than five
months in any calendar year, and
(c) an Employee who immediately after a grant of an option under this
Plan owns (or is deemed to own pursuant to Code section 424(d)) stock of
the Company and/or holds outstanding option(s) to purchase such stock
possessing five percent (5%) or more of the total combined voting power or
value of
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all classes of stock of the Company or any subsidiary corporation of the
Company within the meaning of Code section 424(f).
2.9 "Employee" means each person whom the Employer treats as a common law
employee for federal payroll tax purposes.
2.10 "Employer" means the Company and each Subsidiary.
2.11 "Excused Absence" means an absence pursuant to a temporary leave of
absence granted by the Employer, absence due to disability or illness, absence
by reason of a temporary layoff, or absence by reason of active duty in the
armed forces of the United States. An Excused Absence shall terminate upon the
earlier of (a) the ninety-first (91st) day of any such absence unless the
individual's right to reemployment beyond such date is guaranteed either by
statute or by contract, in which case the Excused Absence shall terminate on the
day following the last day on which such reemployment is so guaranteed, or (b)
the last day of the calendar month in which the leave expires by its terms, the
layoff ends by recall or permanent separation from service, or the individual
recovers from illness or disability.
2.12 "Fair Market Value" means the value of the Stock as determined in good
faith by the Administrator, provided, however, that:
(a) if the Stock is admitted to trading on a national securities
exchange, Fair Market Value on any date shall be the closing sale price
reported for the Stock on such exchange on such date or, if no sale was
reported on such date, on the last date preceding such date on which a sale
was reported;
(b) if the Stock is admitted to quotation on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") or other
comparable quotation system and has been designated as a National Market
System ("NMS") security, Fair Market Value on any date shall be the last
sale price reported for the Stock on such system on such date or on the
last day preceding such date on which a sale was reported;
(c) if the Stock is admitted to quotation on NASDAQ and has not been
designated a NMS Security, Fair Market Value on any date shall be the
average of the highest bid and lowest asked prices of the Shares on such
system on such date; or
2.13 "Offering" means the offering of shares of Stock under the Plan.
2.14 "Offering Date" means the first business day of each Purchase Period
during which the Plan is in effect.
2.15 "Participant" means each Eligible Employee who elects to participate
in the Plan.
2.16 "Plan" means the PNV Inc. Employee Stock Purchase Plan, as set forth
herein and as may hereafter be amended.
2.17 "Purchase Agreement" means the document prescribed by the
Administrator pursuant to which an Eligible Employee has enrolled to be a
Participant.
2.18 "Purchase Date" means the last business day of each Purchase Period.
2.19 "Purchase Period" means each approximate six (6) month period
beginning with the first business day on or after each January 1 and July 1 and
ending on the last business day the period ending six (6) months thereafter.
2.20 "Purchase Price" has the meaning set forth in Section 4.3 of this
Plan.
2.21 "Stock" means the Common Stock, no par value, of the Company.
2.22 "Stock Purchase Account" means a bookkeeping account reflecting all
amounts withheld from an Employee's Compensation or otherwise paid into the Plan
for the purpose of purchasing shares of Stock for such Employee under the Plan,
reduced by all amounts applied to the purchase of Stock for such Employee under
the Plan.
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2.23 "Subsidiary" shall mean a corporation described in Code section 424(f)
that has, with the permission of the Administrator, adopted the Plan. The
Subsidiaries are listed on Schedule A attached hereto, which shall be amended
from time to time by the Administrator to reflect the addition and/or deletion
of Subsidiaries.
ARTICLE III
ADMISSION TO PARTICIPATION
3.1 Initial Participation. Only Eligible Employees may participate in the
Plan. Any Eligible Employee may become a Participant by executing and filing
with the Administrator a Purchase Agreement at such time in advance of an
Offering Date, and on such forms, as the Administrator shall prescribe for this
purpose. The effective date of an Eligible Employee's participation shall be the
Offering Date next following the date on which the Administrator receives from
the Eligible Employee a properly executed and timely filed Purchase Agreement.
Participation in the Plan will continue automatically from one Purchase Period
to another unless notice is given pursuant to Section 3.2.
3.2 Voluntary Discontinuance of Participation. Any Participant may
voluntarily withdraw from the Plan by filing a Notice of Withdrawal with the
Administrator at such time in advance of a Purchase Date, and on such forms, as
the Administrator shall prescribe for this purpose. Upon such withdrawal, there
shall be paid to the Participant the amount, if any, credited to his or her
Stock Purchase Account. The delivery of certificates representing the shares of
Stock held for such Participant under the Plan shall be handled in the manner
provided in Section 4.6.
3.3 Involuntary Discontinuance of Participation. If a Participant ceases
to be an Eligible Employee for any reason, the entire amount, if any, credited
to the Participant's Stock Purchase Account shall be refunded to him (or, in the
event of the Participant's death, paid to the Participant's estate). The
delivery of certificates representing the shares of Stock held for such
Participant under the Plan shall be handled in the manner provided in Section
4.6.
3.4 Readmission to Participation. Any Eligible Employee who has previously
been a Participant, who has discontinued participation, and who wishes to be
reinstated as a Participant may again become a Participant for any subsequent
Purchase Period by executing and filing with the Administrator, at such time in
advance of an Offering Date, and on such forms, as the Administrator shall
prescribe for this purpose, a new Purchase Agreement on forms provided by the
Administrator or through telephone or other electronic means as may be
established by the Administrator. Reinstatement to Participant status shall be
effective as of the Offering Date next following the date on which the
Administrator receives from the Eligible Employee the properly executed and
timely filed Purchase Agreement, provided that such Purchase Agreement is filed
no later than the deadline in advance of such Offering Date as prescribed by the
Administrator.
ARTICLE IV
STOCK PURCHASE
4.1 Reservation of Shares. Except as provided in Section 5.2 hereof, the
aggregate number of shares of Stock that may be purchased under the Plan shall
be Two Hundred Fifty Thousand (250,000) Shares of Stock issued pursuant to the
Plan may be either authorized but unissued shares of Stock, or shares of Stock
acquired in the market or directly from shareholders.
4.2 Grant of Option. On the Offering Date of a Purchase Period, each
Eligible Employee participating in the Plan for such Purchase Period shall be
granted an option to purchase on the Purchase Date for such Purchase Period, at
the Purchase Price specified in Section 4.3 below, subject to the other
limitations set forth in the Plan, the lesser of (a) the number of whole and
fractional shares of Stock that can be purchased by applying the full balance of
his or her Stock Purchase Account to such purchase of shares at such Purchase
Price, or (b) the number of shares of Stock that would not cause the Participant
to exceed the limit of Section 2.8(c). Any portion of a Participant's Stock
Purchase Account that cannot be applied by reason of the
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foregoing limitation shall remain in the Participant's Stock Purchase Account
for application to the purchase of Stock on the next Offering Date (unless
withdrawn before such next Offering Date). Exercise of such option shall occur
as provided in Section 4.3 below. Such option shall expire on the Purchase Date.
4.3 Exercise of Option and Purchase Price of Shares. An option to purchase
shares of Stock pursuant to Section 4.2 above shall be exercised automatically
on the Purchase Date for the applicable Purchase Period, and the maximum number
of whole shares of Stock subject to such option pursuant to Section 4.2 above
shall be purchased for the Participant form the balance in his or her Stock
Purchase Account. The Purchase Price per share of Stock purchased for a
Participant pursuant to any Purchase Period shall be the sum of (a) eighty-five
percent (85%) of the Fair Market Value of such share on the Offering Date on
which such Purchase Period commences or on the applicable Purchase Date,
whichever is lower, and (b) any transfer, excise, or similar tax imposed on the
transaction pursuant to which such share of Stock is purchased. No fractional
shares of Stock shall be purchased; any monies accumulated in a Participant's
Stock Purchase Account which are not sufficient to purchase a full share of
Stock shall be retained in the Participant's Stock Purchase Account for the
subsequent Purchase Period, subject to earlier withdrawal as provided herein. If
the Purchase Date with respect to the purchase of Stock is a day on which the
stock is selling ex-dividend but is on or before the record date for such
dividend, then for Plan purposes the Purchase Price per share will be increased
by an amount equal to the dividend per share.
4.4 Establishment of Stock Purchase Account.
(a) Each Participant shall authorize payroll deductions from his or
her Compensation for the purposes of funding his or her Stock Purchase
Account. In the Purchase Agreement, each Participant shall authorize a
deduction from each payment of his or her Compensation during a Purchase
Period, which deduction shall be not less than $10.00 nor more than fifteen
percent (15%) of the gross amount of such payment, subject to Section
4.5(c). The Administrator or its designee may require that any payroll
deduction must be made in whole percentages (i.e., 1%, 2%, 3%, etc.) and
not in any fraction of a percentage. In addition, the Administrator may
allow, in its sole discretion and subject to such terms and procedural
requirements as it may establish, for the delivery of cash payments by
Participants directly to the Administrator or its designee, provided,
however, that the total payroll deductions and direct cash payments may not
exceed, in the aggregate for any calendar year, fifteen percent (15%) of
the total Compensation paid such Participant for the respective calendar
year. Subject to Section 3.2, a Participant may not reduce or increase his
or her payroll deduction rate during any Purchase Period. However, a
Participant may change the deduction to any permissible level for any
subsequent Purchase Period by filing notice thereof at such time preceding
the Offering Date on which such subsequent Purchase Period commences as the
Administrator shall determine. If local law prohibits payroll deductions,
for such purpose, any alternative method approved by the Committee may be
substituted. A Participant's payroll deductions may be decreased by the
Committee to the extent necessary to comply with Section 4.5 below.
(b) No interest shall accrue on any amount credited to a Stock
Purchase Account. Pending application of funds credited to Stock Purchase
Accounts to purchase Stock pursuant to Section 4.5 and other applicable
provisions of this plan, all amounts credited to such accounts may be used
by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such accounts.
4.5 Limitations.
(a) Notwithstanding anything contained herein to the contrary, a
Participant may not during any calendar year purchase shares of Stock
having an aggregate Fair Market Value, determined at the time of each
Offering Date during such calendar year, of more than $25,000.
(b) Shares shall not be issued with respect to an option unless the
exercise of such option and the issuance and delivery of such shares
pursuant thereto shall comply with all applicable provisions of law,
domestic or foreign, including, without limitation, the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, the
rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the shares may then be listed, and shall be
further
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subject to the approval of counsel for the Company with respect to such
compliance. As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a representation
is required by any of the aforementioned applicable provisions of law.
4.6 Share Ownership; Issuance of Certificates.
(a) The shares purchased for a Participant on a Purchase Date shall,
for all purposes, be deemed to have been issued and/or sold at the close of
business on such Purchase Date. Prior to that time, none of the rights or
privileges of a stockholder of the Company shall inure to the Participant
with respect to such shares. All the shares of Stock purchased under the
Plan shall be delivered by the Company in a manner as determined by the
Administrator in accordance with Section 4.6(b).
(b) The Administrator, in its sole discretion, may determine the
method for delivering shares of Stock by the Company including, but not
limited to, (i) by issuing and delivering a certificate or certificates for
the number of shares of Stock purchased for all Participants on a Purchase
Date or during a calendar year to a member firm of the New York Stock
Exchange which is also a member of the National Association of Securities
Dealers, Inc., as selected by the Administrator from time to time, which
shares shall be maintained by such member firm in separate accounts for
each Participant, or (ii) by issuing and delivering a certificate or
certificates for the number of shares of Stock purchased for all
Participants on a Purchase Date or during the calendar year to a bank or
trust Company or affiliate thereof, as selected by the Administrator from
time to time, which shares shall be maintained by such bank or trust
Company or affiliate in separate accounts for each Participant. In
addition, the Administrator may periodically issue and deliver to the
Participant a certificate for the number of whole shares of Stock purchased
for such Participant on a Purchase Date or during such other time period as
the Administrator may determine. Each Participant shall have full
shareholder rights with respect to all shares of Stock purchased under the
Plan, including, but not limited to, voting, dividend and liquidation
rights. Shares which are held in the name of the Company or its agent as
the nominee for the Participant will be covered by proxies provided to such
Participant by the Company or its agent. Unless provided otherwise, cash
dividends paid on Stock issued under the Plan will be automatically
reinvested. A Participant may withdraw certificates for his or her shares
of Stock credited to his or her account at any time by a written request
for such withdrawal delivered to the Administrator or its designee, and
upon any such request, the Company will promptly distribute such
certificates to the requesting Participant. Distributions of stock
certificates will be made promptly after the death, disability, retirement
or other termination of employment of a Participant. In the event of a
Participant's death, such stock certificates will be distributed to the
Participant's estate.
ARTICLE V
SPECIAL ADJUSTMENTS
5.1 Shares Unavailable. If, on any Purchase Date, the aggregate funds
available for the purchase of Stock would purchase a number of shares in excess
of the number of shares then available for purchase under the Plan, the
following shall occur:
(a) The number of shares that would otherwise be purchased for each
Participant shall be proportionately reduced on the Purchase Date in order
to eliminate such excess;
(b) The Plan shall automatically terminate immediately after the
Purchase Date as of which the supply of available shares is exhausted; and
(c) Any amounts remaining in the respective Stock Purchase Accounts of
the Participants shall be refunded to such Participants.
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5.2 Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the maximum number of shares each Participant
may purchase each Purchase Period, as well as the price per share and the
number of shares 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 the 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 issuance by the Company of shares of stock of any
class, or securities convertible into 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.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Purchase Period then in
progress shall be shortened by setting a new Purchase Date (the "New
Purchase Date"), and shall terminate immediately prior to the consummation
of such proposed dissolution or liquidation, unless provided otherwise by
the Board. The New Purchase Date shall be before the date of the Company's
proposed dissolution or liquidation. The Board shall notify each
Participant in writing, at least ten (10) business days prior to the New
Purchase Date, that the Purchase Date for the Participant's option has been
changed to the New Purchase Date and that the Participant's option shall be
exercised automatically on the New Purchase Date, unless prior to such date
the Participant has withdrawn from the Purchase Period as provided in
Section 3.2 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each outstanding option shall be
assumed or an equivalent option substituted by the successor corporation or
a parent or subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the option, any
Purchase Period then in progress shall be shortened by setting a new
Purchase Date (the "New Purchase Date"). The New Purchase Date shall be
before the date of the Company's proposed sale or merger. The Board shall
notify each Participant in writing, at least ten (10) business days prior
to the New Purchase Date, that the Purchase Date for the Participant's
option has been changed to the New Purchase Date and that the Participant's
option shall be exercised automatically on the New Purchase Date, unless
prior to such date the Participant has withdrawn from the Purchase Period
as provided in Section 3.2 hereof.
5.3 Antidilution Provisions. Subject to any required action of the
shareholders of the Company, the aggregate number of shares of Stock reserved
for purchase under the Plan, as provided above, the number of shares of Stock
covered by an option as described in Section 4.2 above and the calculation of
the Purchase Price under Section 4.3 above may be appropriately adjusted to
reflect any increase or decrease in the number of issued shares of Stock
resulting from a recapitalization, reclassification, stock split, stock
dividend, combination of shares, or transaction having similar effect. Any such
adjustment shall be made by the Administrator acting with the consent of, and
subject to the approval of, the Board.
ARTICLE VI
ADMINISTRATION
6.1 Nonalienation and Restriction on Transfer. The right to purchase
shares of Stock under the Plan is personal to the Participant, is exercisable
only by the Participant during his or her lifetime except as hereinafter set
forth, and may not be assigned, transferred, pledged or otherwise disposed of in
any way by the Participant, other than by will, the laws of descent and
distribution or as provided in Section 6.9 hereof. Any such attempt to dispose
of such right shall be void, and the Administrator may elect to treat such act
as an election with withdraw from a Purchase Period pursuant to Section 3.2
hereof.
B-6
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6.2 Administrative Costs. The Company (or a Subsidiary) will pay all
administrative expenses incurred in the administration of the Plan other than
any fees or transfer, excise, or similar taxes imposed on the transaction
pursuant to which any shares of Stock are purchased. The Participant will pay
any transaction fees or commissions on any sale of the shares of Stock and may
also be charged the reasonable costs associated with issuing stock certificates.
6.3 Collection of Taxes. The Company shall be entitled to collect, through
payroll withholding or otherwise, any tax that it determines it is so obligated
to collect with respect to the issuance of Stock under this Plan or the
subsequent sale or disposition of such Stock, and the Administrator shall
institute such mechanisms as shall insure the collection of such taxes. Until
such tax with respect to a Participant is collected, the Company shall be
entitled to retain stock issuable to the Participant as security for collection
of such tax.
6.4 Administrator. The Board shall appoint an Administrator, who shall
have the authority and power to administer the Plan and to make, adopt,
construe, and enforce rules and regulations not inconsistent with the provisions
of the Plan. The Administrator shall adopt and prescribe the contents of all
forms required in connection with the administration of the Plan, including, but
not limited to, the Purchase Agreement, payroll withholding authorizations,
withdrawal documents, and all other notices required under this Plan. The
Administrator shall have the fullest discretion permissible under law in the
discharge of its duties. The Administrator's interpretations and decisions in
respect of the Plan, the rules and regulations pursuant to which it is operated,
and the rights of Participants under this Plan shall be final, conclusive and
binding on all parties.
6.5 Amendment of the Plan. The Board may amend the Plan without the
consent of stockholders or Participants, except that any such action shall be
subject to the approval of the Company's stockholders at or before the next
annual meeting of stockholders for which the record date is set after such Board
action if such stockholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Stock may then be listed or quoted, and the Board may otherwise in its
discretion determine to submit other such changes to the Plan to stockholders
for approval; provided, however, that no such action may (i) without the consent
of an affected Participant, materially impair the rights of such Participant
with respect to any shares of Stock previously purchased for him under the Plan,
or (ii) disqualify the Plan under section 423 of the Code.
6.6 Termination of the Plan. Subject to Section 5.1, the Plan shall
continue in effect unless terminated pursuant to action by the Board, which
shall have the right to terminate the Plan at any time without prior notice to
any Participant and without liability to any Participant. Upon the termination
of the Plan, in the discretion of the Administrator, either Participants shall
be permitted to complete unpaid subscriptions in a manner determined by the
Administrator, or the balance (if any) then standing to the credit of each
Participant in his or her Stock Purchase Account shall be refunded to him in
satisfaction of all rights under the Plan. Certificates representing the shares
of Stock shall be handled in the manner provided in Section 4.6.
6.7 Repurchase of Stock. The Company shall not be required to purchase or
repurchase from any Participant any of the shares of Stock that the Participant
acquired under the Plan.
6.8 Notice. A Purchase Agreement and any notice that a Participant files
pursuant to the Plan shall be on the form prescribed by the Administrator for
such purpose and shall be effective only when received by the Administrator or
its designee. Delivery of such forms may be made by hand or by certified mail,
sent postage prepaid, to PNV Inc., 11711 Northwest 39th Street, Coral Springs,
Florida, 33065 (or such other address as the Administrator may specify for this
purpose), Attention: Administrator: Employee Stock Purchase Plan. Delivery by
any other mechanism shall be deemed effective at the discretion of the
Administrator.
6.9 Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to a
Purchase Date on which the option is exercised but prior to delivery to
such participant of such shares and cash. In addition, a participant may
file a written designation of a beneficiary who is to
B-7
<PAGE> 57
receive any cash from the participant's account under the Plan in the event
of such participant's death prior to exercise of the option. If a
participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant
and in the absence of a beneficiary validly designated under the Plan who
is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the
estate of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or to any one
or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as
the Company may designate.
6.10 Reports. Individual accounts shall be maintained for each participant
in the Plan. Statements of account shall be given to participating Employees at
annually (or more frequently if the Administrator so elects). Statements shall
set forth the amounts of payroll deductions, the Purchase Price, the number of
shares purchased and the remaining cash balance, if any, during the past 12
months (or other period covered by the report).
ARTICLE VII
MISCELLANEOUS
7.1 Government Regulation. The Company's obligation to sell and to deliver
the Stock under the Plan is at all times subject to all approvals of any
governmental authority required in connection with the authorization, issuance,
sale, or delivery of such Stock.
7.2 Gender. The masculine shall include the feminine, and vice versa.
7.3 Severability of Provisions; Prevailing Law. The provisions of the Plan
shall be deemed severable. If any such provision is determined to be unlawful or
unenforceable by a court of competent jurisdiction or by reason of a change in
an applicable statute, the Plan shall continue to exist as though such provision
had never been included therein (or, in the case of a change in an applicable
statute, had been deleted as of the date of such change). The Plan shall be
governed by the laws of the State of Florida, to the extent such laws are not in
conflict with, or superseded by, federal law.
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<PAGE> 58
. FOLD AND DETACH HERE .
PNV INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON NOVEMBER 15, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of Annual Meeting of Stockholders to be held on November 15, 2000 and the
Proxy Statement and appoints Robert P. May and Casey L. Gunnell and each of
them, the Proxy of the undersigned, with full power of substitution, to vote all
shares of common stock of PNV Inc. (the "Company"), which the undersigned is
entitled to vote, either on his or her own behalf or on behalf of any entity or
entities, at the Annual Meeting of Stockholders of the Company to be held on
November 15, 2000 at 3:00 p.m. at the Radisson Resort Coral Springs, 11775 Heron
Bay Boulevard, Coral Springs, Florida, and at any adjournment or postponement
thereof, with the same force and effect as the undersigned might or could do if
personally present thereat. The shares represented by this Proxy shall be voted
as follows:
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS: [ ] FOR All Nominees Listed [ ] WITHHOLD Authority To [ ] WITHHOLD Authority To
Below Vote For All Nominees Vote For Those Nominees
Written in the Space
Provided Below; and FOR
All Other Nominees
</TABLE>
NOMINEES: Robert P. May, Ian Williams, Robert M. Chefitz, Daniel K. O'Connell,
William J. Razzouk and Raymond B. Greer.
INSTRUCTION -- To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below:
--------------------------------------------------------------------------------
2. Approval and adoption of the PNV Inc. 2000 Equity Compensation Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval and adoption of the PNV Inc. Employee Stock Purchase Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
<PAGE> 59
. FOLD AND DETACH HERE .
4. Ratification of the appointment of DeLoitte & Touche LLP as the Company's
independent auditors for the fiscal year ending June 30, 2001.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. The proxies are authorized to vote the shares represented by this proxy in
accordance with their judgment on such other business as may properly come
before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY, IF
SIGNED AND RETURNED, WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED IN
ITEM 1 AND FOR ITEMS 2, 3 AND 4.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated:
------------------------ , 2000
-------------------------------
Signature
-------------------------------
Signature if held jointly
PLEASE COMPLETE, SIGN, DATE AND
RETURN THIS PROXY PROMPTLY IN
THE ENCLOSED ENVELOPE.
