As filed with the Securities and Exchange Commission on May 18, 1999.
Registration No. 33-93272.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_______________________________________________________
DNB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2222567
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4 BRANDYWINE AVENUE, DOWNINGTOWN, PENNSYLVANIA 19335
_______________________________________________________________
(Address of principal executive offices) (Zip Code)
1995 STOCK OPTION PLAN OF DNB FINANCIAL CORPORATION
(as amended and restated, effective as of April 27, 1999)
(Full Title of the Plan)
Henry F. Thorne, President and Chief Executive Officer
DNB FINANCIAL CORPORATION
4 Brandywine Avenue, Downingtown, Pennsylvania 19335
(Name and address of agent for service)
(610) 269-1040
(Telephone number, including area code, of agent for service)
Copy to:
David F. Scranton, Esquire
STRADLEY, RONON, STEVENS & YOUNG, LLP
30 Valley Stream Parkway
Malvern, Pennsylvania 19355-1481
<TABLE>
<CAPTION>
Calculation of Registration Fee
<S> <C> <C> <C> <C>
==================== ======================= ========================= =========================== =====================
Title of Amount to be Proposed maximum Proposed maximum aggregate Amount of
securities registered(1) offering price per offering price (3) registration fee
to be registered share(2)
==================== ======================= ========================= =========================== =====================
Common Stock (par 100,000 $28.875 $2,887,500 $802.72
value $1 per share) shares
==================== ======================= ========================= =========================== =====================
</TABLE>
(1) Represents the number of shares to be issued under the 1995 Stock
Option Plan of DNB Financial Corporation (the "Plan") assuming issuance and
exercise.
(2)The price per share of $28.875 is estimated, in accordance with Rule
457(h)(1) under the Securities Act, solely for the purpose of determining the
registration fee and was the average of the bid and asked prices per share of
the Common Stock on May 14, 1999.
(3)Estimated, in accordance with Rule 457(h)(1) under the Securities Act,
solely for the purpose of determining the registration fee.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents and information filed by DNB Financial Corporation
(the "Company" or "Registrant") with the Securities and Exchange Commission (the
"Commission") are, as of their respective dates, incorporated into this
Registration Statement by reference:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
(b) the Company's Quarterly Report on Form 10Q for the fiscal quarter ended
March 31, 1999;
(c) the description of the Company's securities as contained in the
Company's registration on Form 8-A as filed with the Commission on April 4,
1988, and as contained Articles of Incorporation filed on March 31, 1989,
attached as Exhibit 3.1 to Form 10-K for the fiscal year ended December 31, 1988
(No. 0-16667), Amended Articles of Incorporation filed on May 2, 1990, at Item
7C to Form 8-K, date of report, April 26, 1990 (No. 0-16667), and Amended
Articles of Incorporation of the Registrant effective May 18, 1998, attached as
Exhibit 3.5 to Form 10-K for the fiscal year ended December 31, 1998 (No.
0-16667), each hereby incorporated by reference.
The class of securities to be offered pursuant to this S-8 registration
statement is Common Stock of the par value of $1.00 per share, of which the
Company has authority to issue ten million (10,000,000) shares. The holders of
such shares of voting stock of the Company do not have the right to cumulative
voting. In each election of Directors every shareholder is entitled to one vote
for each Director to be elected, for each share of stock having the right to
vote in such election registered in his or her or its name. In addition, the
shares when issued will be fully paid and non-assessable.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all shares of Common
Stock offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference into this Registration
Statement and to be a part thereof from the date of filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
None.
Item 6. Indemnification of Directors and Officers.
Sections 1741 and 1747 of the Pennsylvania Business Corporation Act, as
amended (the "Act"), provides for indemnification of, and insurance for any
person who is or was a representative of the Company and specifically empowers
the Company to indemnify, subject to the standards therein prescribed, any
person who is or was a representative of the Company in connection with any
action, suit or proceeding brought or threatened by reason of the fact that he
is or was a representative of the Company. Articles 23 and 24 of the Company's
Bylaws require the Company to indemnify each of the Company's directors and
officers in such capacity in which any such director or officer acts for or on
behalf of the Company including as an employee or agent.
<PAGE>
The Bylaws provide that the Company will indemnify any officer or director
who was or is a party to, or is threatened to be made a party to, or who is
called to be a witness in connection with, any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that such person is or was an officer or director of the Company, or
is or was serving at the request of the Company as a director, officer, employee
or agent of a corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
In addition, the Company will indemnify any officer or director who was or
is a party to, or is threatened to be made a party to, or who is called as a
witness in connection with, any threatened, pending or completed action or suit
by or in the right of the Company to procure a judgment in its favor by reason
of the fact that such person is or was a director, officer, and/or employee or
agent of a corporation, partnership, joint venture, trust or other enterprise
against amounts paid in settlement and expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of, or serving as a witness in, such action or suit if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Company. No indemnification will be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable for misconduct in the performance of his duty to the Company.
The Bylaws permit the payment of expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding in advance
of the final disposition of such action, suit or proceeding.
As provided in the Bylaws, the Company may purchase and maintain insurance
on behalf of any person who is or was an officer or director of the Company, or
is or was serving at the request of the Company as an officer or director of a
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such.
The Company will not indemnify any officer or director in any case where
the act or failure to act giving rise to the claim for indemnification
constituted willful misconduct or recklessness. The Bylaws also provide that a
director of the Company will not be personally liable for monetary damages as
such for any action taken or for any failure to take any action, unless:
(a) the director has breached or failed to perform the duties of his
office, and
(b) the breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness.
The Bylaws exclude:
(a) the responsibility or liability of a director pursuant to a criminal
statute, or
(b) the liability of a director for the payment of taxes pursuant to local,
state or federal law.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
See the Exhibit Index attached to this Registration Statement.
Item 9. Undertakings.
<PAGE>
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To the extent required by Item 512 of Regulation S-K, to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To the extent required by Item 512 of Regulation S-K, to reflect in
the prospectus any facts or events arising after the effective date of this
Registration Statement (or the most recent post-effective amendment hereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be an initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy or expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
EXHIBIT INDEX
Exhibit Page
(3) (a) Articles of Incorporation:
Articles of Incorporation filed on March 31, 1989, attached as Exhibit 3.1
to Form 10-K for the fiscal year ended December 31, 1988 (No. 0-16667), Amended
Articles of Incorporation filed on May 2, 1990, at Item 7C to Form 8-K, date of
report, April 26, 1990 (No. 0-16667), and Amended Articles of Incorporation of
the Registrant effective May 18, 1998, attached as Exhibit 3.5 to Form 10-K for
the fiscal year ended December 31, 1998 (No. 0-16667), each hereby incorporated
by reference.
(b) Bylaws.
Amended By-laws of the Registrant filed on January 8, 1990, at Item 7C to
Form 8-K, date of report, January 3, 1990 (No. 0-16667), and Amended by-laws of
the Registrant filed on July 20, 1990, at Item 7C to Form 8-K, date of report
July 18, 1990 (No. 0-16667) each hereby incorporated by reference.
(4) 1995 Stock Option Plan of DNB Financial Corporation (as amended and
restated, effective April 27, 1999)
(5) Opinion of Stradley, Ronon, Stevens & Young, LLP
(15) Not applicable.
(23) Consents.
(a) Consent of Stradley,Ronon,Stevens & Young, LLP (included in Exhibit 5).
(b) Consent of KPMG LLP Certified Public Accountants.
(24) Not applicable.
(28) Not applicable.
(99) None.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Downingtown, Commonwealth of Pennsylvania, on May 14, 1999.
DNB FINANCIAL CORPORATION
(Registrant)
By: /S/ Henry F. Thorne
Henry F. Thorne, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Date
/S/ Henry F. Thorne May 14, 1999
- -----------------------------------------------------
Henry F. Thorne, President,
Chief Executive Officer and Director
/S/ Bruce E. Moroney May 14, 1999
- -----------------------------------------------------
Bruce E. Moroney, Chief Financial Officer
(Principal Accounting Officer)
/S/ Robert J. Charles May 14, 1999
- -----------------------------------------------------
Robert J. Charles
Chairman of the Board
/S/ Vernon J. Jameson May 14, 1999
- -----------------------------------------------------
Vernon J. Jameson
Vice-Chairman of the Board
/S/ James H. Thornton May 14, 1999
- -----------------------------------------------------
James H. Thornton, Director
/S/ William S. Latoff May 14, 1999
- -----------------------------------------------------
William S. Latoff, Director
<PAGE>
/S/ Joseph G. Riper May 14, 1999
- -----------------------------------------------------
Joseph G. Riper, Director
/S/ Louis N. Teti May 14, 1999
- -----------------------------------------------------
Louis N. Teti, Director
- --------------------------------------------------------------------------------
STRADLEY, RONAN, STEVENS & YOUNG, LLP
ATTORNEYS AT LAW
David F. Scranton
(610) 640-5806
[email protected]
Great Valley Corporate Center Philadelphia, Pennsylvania
30 Valley Stream Parkway Cherry Hill, New Jersey
Malvern, Pennsylvania 19355-1481 Wilmington, Delaware
A Pennsylvania Limited Liability Partnership
- --------------------------------------------------------------------------------
May 13, 1999
DNB Financial Corporation
4 Brandywine Avenue
Downingtown, PA 19335
Re: REGISTRATION STATEMENT ON FORM S-8 WITH RESPECT TO THE 1995 STOCK
OPTION PLAN OF DNB FINANCIAL CORPORATION
Dear Sirs:
We have acted as counsel for DNB Financial Corporation (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission of a registration statement on Form S-8 (the "Registration
Statement"), for the purpose of registering under the Securities Act of 1933, as
amended, 100,000 additional shares (the "Shares") of the common stock of the
Company, par value $1.00 per share (the "Common Stock"). The Shares are issuable
upon the exercise of stock options (the "Options") to be granted pursuant to the
Company's 1995 Stock Option Plan, as amended and restated (the "Plan") and
individual option agreements, consistent with the terms of the Plan, to be
entered into hereafter upon approval by the Company's board of directors with
certain employees and directors of the Company (the "Individual Option
Agreements").
In our capacity as counsel, we have been requested to render the opinions
set forth in this letter and, in connection therewith, we have reviewed the
following documents: (i) the Registration Statement, (ii) the Plan, (iii) the
Company's Articles of Incorporation, as amended, certified as true and correct
by the Secretary of the Company, (iv) certain minutes of meetings of the Board
of Directors and shareholders of the Company, certified as true and correct by
the Secretary of the Company, (v) Bylaws of the Company, as amended, certified
as true and correct by the Secretary of the Company, (vi) a Certificate of the
Secretary of the Company dated May 12, 1999, and (vii) such other documents,
instruments and records as we deemed necessary or appropriate for purposes of
rendering this option.
In rendering this opinion, we have assumed and relied upon, without
independent investigation, (i) the authenticity, completeness, truth and due
authorization, execution and delivery of all documents submitted to us as
originals, (ii) the genuineness of all signatures on all documents submitted to
us as originals, and (iii) the conformity to the originals of all documents
submitted to us as certified or photostatic copies.
The laws covered by the opinion expressed herein are limited to (a) the
federal statutes, judicial decisions and rules and regulations of the
governmental agencies of the United States of America and (b) the Pennsylvania
Business Corporation Law.
This opinion letter is given only with respect to laws and regulations
presently in effect. We assume no obligation to advise you of any changes in law
or regulation which may hereafter occur, whether the same are retroactively or
prospectively applied, or to update or supplement this letter in any fashion to
reflect any facts or circumstances which hereafter come to our attention.
Based upon, and subject to, the foregoing, we are of the opinion that the
Shares, when issued upon proper exercise of the Options pursuant to and in
accordance with the Plan and the respective Individual Option Agreements, will
be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement.
Furthermore, we hereby consent to the filing of this opinion letter as an
exhibit to any applications for registration, qualification, or exemption, as
the case may be, filed by, or on behalf of, the Company under the securities
laws of the several states and other jurisdictions of the United States relating
to the offering described in the Registration Statement.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
By: /S/ David F. Scranton
----------------------
David F. Scranton
Partner
The Board of Directors
DNB Financial Corporation
We consent to the use of our report incorporated herein by reference.
/s/ KPMG LLP
KPMG LLP
Philadelphia, Pennsylvania
May 14, 1999
1995 STOCK OPTION PLAN
OF
DNB FINANCIAL CORPORATION
(AS AMENDED AND RESTATED, EFFECTIVE
AS OF APRIL 27, 1999)
<PAGE>
TABLE OF CONTENTS
Page
1. Purpose ............................................................A-3
2. Definitions ........................................................A-3
3. Administration .....................................................A-4
4. Maximum Limitations ................................................A-5
5. Conditions of Options ..............................................A-6
6. Exercise of Stock Options ..........................................A-7
7. Transferability ....................................................A-7
8. Adjustment Provisions ..............................................A-7
9. Dissolution, Merger and Consolidation ..............................A-8
10. Effective Date and Conditions Subsequent to Effective Date .........A-8
11. Expiration of Stock Options ........................................A-8
12. Incentive Stock Options ............................................A-8
13. Stock Options for Non-Employee Directors .......................... A-9
14. Miscellaneous ......................................................A-9
<PAGE>
1995 STOCK OPTION PLAN
OF
DNB FINANCIAL CORPORATION
(As amended and restated, effective
as of April 27, 1999)
1. Purpose. The purpose of this Plan is: (i) to provide Employees and
Non-Employee Directors of DNB Financial Corporation (the "Company") and its
wholly owned subsidiary, the Downingtown National Bank (the "Bank"), an
opportunity to acquire a larger personal financial interest in the Company
through common stock ownership, (ii) to provide an incentive for Employees and
Non-Employee Directors to continue to promote the best long term interests of
the Company and its shareholders by creating incremental shareholder value and
enhancing its long-term performance, and (iii) to provide an incentive for
Employees and Non-Employee Directors to associate or remain associated with the
Company. Some or all of the Stock Options granted to Employees (but not
Non-Employee Directors) pursuant to this Plan may, but need not, be structured
to qualify as Incentive Stock Options ( "ISOs").
2. Definitions. The following definitions shall apply for purposes of this
Plan and any agreement relating to a Stock Option:
(a) "Bank" shall mean Downingtown National Bank.
(b) "Board" shall mean the Board of Directors of DNB Financial Corporation.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
(d) "Committee" shall mean the committee of Board members appointed to
administer the Plan pursuant to Section 3(a), below.
(e) "Common Stock" shall mean shares of common stock issued by DNB
Financial Corporation or such class of shares to which such shares are converted
hereafter.
(f) "Company" shall mean DNB Financial Corporation
(g) "Employee" shall mean an individual who is an employee of the Company
or the Bank under general common law principles. An individual who is an
"Employee", as so defined, may also be a member of the Board (but not a
Non-Employee Director).
(h) "Incentive Stock Option" or "ISO" shall mean a Stock Option that
qualifies under section 422 of the Code.
(i) "Non-Employee Director" shall mean a member of the Board who is not an
Employee.
(j) "Non-Qualified Option" shall mean a Stock Option granted under this
Plan which is not an Incentive Stock Option.
(k) "Plan" shall mean the Stock Option Plan of DNB Financial Corporation,
as evidenced hereby, or as amended from time to time.
(l) "Stock Option" shall mean an option issued pursuant to this Plan.
(m) "Termination for Cause" shall mean termination of employment of an
Employee or termination of service as a Non-Employee Director due to conduct
<PAGE>
which would authorize the forfeiture of fringe benefits or other remuneration
under the Employee's written contract of employment with the Company or the
Bank; or, in the absence of a written contract of employment, or in the case of
any Non-Employee Director, (i) willful misconduct materially injurious to the
Company, (ii) dishonesty, including, but not limited to, theft or falsification
of records or the like, (iii) the commission of a crime, or (iv) gross
negligence of the Employee or Non-Employee Director in the performance of his or
her duties.
3. Administration.
(a) Board of Directors. The Plan shall be administered by the Board, which,
to the extent it shall determine, may delegate its powers with respect to the
administration of the Plan (except its powers under Section 14(c)) to a
Committee appointed by the Board and composed of not less than three members of
the Board. If the Board chooses to appoint a Committee, references hereinafter
to the Board (except in Section 14 (c)) shall be deemed to refer to the
Committee.
(b) Powers. Within the limits of the express provisions of the Plan, the
Board shall determine:
(i) the Employees to whom Stock Options hereunder shall be granted,
(ii) the time or times at which such Stock Options shall be granted,
(iii) the amount and form of any Stock Options to Employees, including, but
not limited to, whether any Stock Option is structured to be an ISO, and
(iv) the limitations, restrictions and conditions applicable to any Stock
Option granted to any Employee or Non-Employee Director, including, but not
limited to, whether the right to exercise any Stock Option, in whole or in part,
will be subject to a vesting schedule.
In making such determinations, the Board may take into account the nature
of the services rendered by such Employees, or Non-Employee Directors or classes
thereof, their present and potential contributions to the Company's success and
such other factors as the Board in its discretion shall deem relevant.
(c) Interpretations. Subject to the express provisions of the Plan, the
Board may interpret the Plan, prescribe, amend and rescind rules and regulations
relating to it, determine the terms and provisions of the respective Stock
Options and make all other determinations it deems necessary or advisable for
the administration of the Plan.
(d) Determinations. The determinations of the Board on all matters
regarding the Plan shall be conclusive.
(e) Nonuniform Determinations. The Board's determinations under the Plan,
including without limitation, selection of the individuals to receive Stock
Options, the terms and provisions of Stock Options thereof and the agreements
evidencing the same, need not be uniform and may be made by it selectively among
individuals who receive or are eligible to receive Stock Options under the Plan,
whether or not such individuals are similarly situated.
(f) Determinations With Respect to Stock Options Granted to Employees. All
determinations with respect to the identity of any Employee to whom a Stock
Option shall be granted, the timing or exercise price thereof, or the number of
shares of Common Stock subject thereto, shall be made by a committee comprised
of two or more members of the Board, who need not be the same as the Committee
described in Section 3(a), above, none of whom may be an Employee.
4. Maximum Limitations. The aggregate number of shares of Common Stock
available for grant under the Plan is two hundred fifty-eight thousand, sixteen
(258,016), as of the effective date of this amendment and restated plan, subject
to adjustment pursuant to Section 8, below. Shares of Common Stock issued
pursuant to the Plan may be either authorized but unissued shares or shares now
or hereafter held in the treasury of the Company. In the event that, prior to
the end of the period during which Stock Options may be granted under the Plan,
any Stock Option under the Plan expires unexercised or is terminated,
<PAGE>
surrendered or canceled, without being exercised, in whole or in part, for any
reason, the number of shares theretofore subject to such Stock Option, or the
unexercised, terminated, forfeited or unearned portion thereof, shall be added
to the remaining number of shares of Common Stock available for grant as a Stock
Option under the Plan, including a grant to a former holder of such Stock
Option, upon such terms and conditions as the Board shall determine, which terms
may be more or less favorable than those applicable to such former Stock Option.
5. Conditions of Options. Any Stock Option granted pursuant to this Plan
shall, by its terms, be subject to the following limitations and conditions:
(a) Option Price. The option price for each Stock Option shall be the fair
market value of the number of shares of Common Stock subject thereto at the time
of the grant thereof.
(b) Term of Option. No Stock Option shall be exercisable after the date
which is 10 years from the date it is granted.
(c) Time of Grants. No Stock Option shall be granted more than 10 years
from the earlier of the date of adoption of the Plan by the Board or the date of
shareholder approval hereof; provided, however, that the Plan and all Stock
Options granted prior to such date shall remain in effect and subject to
adjustment and amendment as herein provided until they have been satisfied or
terminated in accordance with their terms.
(d) Expiration of Stock Option. A Stock Option must, by its terms, expire
no later than the date that the employment of the Employee or the service of the
Non-Employee Director with the Company terminates for any reason, except in the
following circumstances:
(i) In the case of an Employee or Non-Employee Director who dies while
employed by or in the service of the Company, his Stock Option may, by its
terms, permit his estate or the person who acquires the right to exercise such
Stock Option upon his or her death by bequest or inheritance to exercise the
Stock Option, in whole or in part, at any time on or before the expiration date
set forth therein; and
(ii) In the case of an Employee or Non-Employee Director whose employment
or service with the Company is terminated for reasons other than pursuant to a
Termination for Cause, his Stock Option may, by its terms, permit him to
exercise the Stock Option, in whole or in part, at any time on or before the
expiration date set forth therein.
6. Exercise of Stock Options.
(a) In General. Stock Options shall be subject to such terms and
conditions, shall be exercisable at such time or times, and shall be evidenced
by such form of written option agreement between the optionee and the Company,
as the Board shall determine; provided that such determinations are not
inconsistent with the other provisions of the Plan, and with Section 422 of the
Code in the case of an ISO.
(b) Manner of Exercise of Options and Payment for Common Stock. Stock
Options may be exercised by an optionee by giving written notice to the
Corporate Secretary of the Company stating the number of shares of Common Stock
with respect to which the Stock Option is being exercised and tendering payment
therefor. At the time that a Stock Option granted under the Plan, or any part
thereof, is exercised, payment for the Common Stock issuable thereupon shall be
made in full in cash or by certified check or, if the Board in its discretion
agrees to accept, in shares of Common Stock of the Company (the number of such
shares paid for each share subject to the Stock Option, or part thereof, being
exercised shall be determined by dividing the option price by the fair market
value per share of the Common Stock on the date of exercise). As soon as
reasonably possible following such exercise, a certificate representing shares
<PAGE>
of Common Stock purchased, registered in the name of the optionee, shall be
delivered to the optionee.
(c) Timing of Exercise. No Stock Option may be exercised during the first
six months of its term except in the case of death of the Employee or
Non-Employee Director to whom it was granted if, in accordance with Section
5(d)(i), above, the Stock Option has not expired upon the Employee's or
Non-Employee Director's death.
7. Transferability. No Stock Option may be transferred, assigned, pledged
or hypothecated (whether by operation of law or otherwise), except as provided
by will or the applicable laws of descent or distribution as described in
Section 5(d)(i), above, or subject to execution, attachment or similar process.
Any attempted assignment, transfer, pledge, hypothecation or other disposition
of a Stock Option, or levy of attachment or similar process upon the Stock
Option not specifically permitted herein shall be null and void and without
effect. A Stock Option may be exercised only by an Employee or Non-Employee
Director during his or her lifetime, or by his or her estate or the person who
acquires the right to exercise such Stock Option upon his or her death by
bequest or inheritance if permitted by Section 5(d)(i), above.
8. Adjustment Provisions. The aggregate number of shares of Common Stock
with respect to which Stock Options may be granted, the aggregate number of
shares of Common Stock subject to each outstanding Stock Option, and the option
price per share of each such Stock Option, may all be appropriately adjusted as
the Board shall determine for any increase or decrease in the number of shares
of issued Common Stock resulting from a division or consolidation of shares,
whether through reorganization, recapitalization, stock split, stock
distribution or combination of shares, or the payment of a share dividend or
other increase or decrease in the number of such shares outstanding effected
without receipt of consideration by the Company.
9. Dissolution, Merger and Consolidation. Upon the dissolution or
liquidation of the Company, or upon a merger or consolidation of the Company in
which the Company is not the surviving corporation, each Stock Option granted
hereunder shall expire as of the effective date of such transaction; provided,
however, that the Board shall give at least 30 days' prior written notice of
such event to each optionee during which time he or she shall have a right to
exercise his or her wholly or partially unexercised Stock Option (without regard
to installment exercise limitations, if any) and, subject to prior expiration
pursuant to the terms thereof, each Stock Option shall be exercisable after
receipt of such written notice and prior to the effective date of such
transaction; provided further, however, that upon a merger or consolidation of
the Company in which the Company is not the surviving corporation, in lieu of
such notice, each such Stock Option shall be converted to an option to acquire
shares of the surviving corporation, the number of which shall be based on the
relative values of the Common Stock and such surviving corporation's common
stock on the date of such merger or consolidation.
10. Effective Date and Conditions Subsequent to Effective Date. The Plan
shall become effective on the date of approval of the Plan by the holders of a
majority of the shares of Common Stock of the Company; provided, however, that
the adoption of the Plan is subject to such shareholder approval within 12
months before or after the date of adoption of the Plan by the Board. The Plan
shall be null and void and of no effect if the foregoing condition is not
fulfilled, and in such event each Stock Option granted hereunder shall,
notwithstanding any of the preceding provisions of the Plan, be null and void
and of no effect.
11. Expiration of Stock Option. Each Stock Option shall, unless sooner
expired pursuant to Section 5(d), above, expire on the expiration date set forth
in the applicable option agreement.
12. Incentive Stock Options. Some or all of the Stock Options granted to
Employees pursuant to this Plan may be options which are intended to be ISOs.
Only those Stock Options which, by their terms, are expressly intended to
qualify as ISOs shall be considered as such. In addition to the other provisions
of this Plan, the provisions of this Section 12 apply to grants of ISOs
hereunder. In the event of a conflict between any provision of this Section 12
and provision of any other Section of this Plan, the provision of this Section
12 shall prevail.
(a) Identity of Optionees. ISOs may be granted only to Employees (and not
Non-Employee Directors).
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(b) More-than-10% Shareholders. No Employee may receive an ISO under the
Plan if such Employee, at the time the Stock Option is granted, owns (as defined
in Section 424(d) of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, or any subsidiary,
unless the option price for such ISO is at least 110% of the fair market value
of the Common Stock subject to such ISO on the date of grant and such ISO is not
exercisable after the date five years from the date such Option is granted.
(c) Limitation on Amounts. The aggregate fair market value (determined with
respect to each ISO as of the date of grant) of the capital stock with respect
to which ISOs are exercisable for the first time by an Employee during any
calendar year (under this Plan or any other plan of the Company or any
subsidiary of the Company) shall not exceed $100,000.
13. Stock Options for Non-Employee Directors. As of June 30, 1999, and June
30 of each year thereafter through June 30, 2004, or until termination of this
Plan, if earlier, the Company shall grant to each Non-Employee director a
Nonqualified Option with respect to one thousand two hundred and sixteen (1,216)
shares of Common Stock, subject to such terms as the Board may determine in
accordance with the terms of the Plan. No other Stock Options shall be granted
to Non-Employee Directors pursuant to this Plan. If the number of shares of
Common Stock remaining for grant under the Plan is not sufficient for each
Non-Employee Director to be granted a Stock Option for one thousand two hundred
and sixteen (1,216) shares on any grant date, then each Non-Employee Director
shall be granted an option for a number of whole shares equal to the number of
shares then remaining available under the Plan, divided by the number of
Non-Employee Directors as of the grant date, disregarding any fractions of a
share.
14. Miscellaneous.
(a) Legal and Other Requirements. The obligation of the Company to sell and
deliver Common Stock under the Plan shall be subject to all applicable laws,
regulations, rules and approvals, including, but not by way of limitation, the
effectiveness of a registration statement under the Securities Act of 1933 if
deemed necessary or appropriate by the Company. Certificates for shares of
Common Stock issued hereunder may be legended as the Board shall deem
appropriate.
(b) No Obligation To Exercise Options. The granting of a Stock Option shall
impose no obligation upon an optionee to exercise such Stock Option.
(c) Termination and Amendment of Plan. The Board, without further action on
the part of the shareholders of the Company, may from time to time alter, amend
or suspend the Plan, or may at any time terminate the Plan, except that it may
not, without the approval of the shareholders of the Company:
(i) Materially increase the total number of shares of Common Stock
available for grant under the Plan except as provided in Section 8, above;
(ii) Materially modify the class of eligible Employees under the Plan;
(iii) Materially increase benefits to any Employee or Non-Employee Director
who is subject to the restrictions of Section 16 of the Securities Exchange Act
of 1934; or
(iv) Effect a change relating to an ISO granted hereunder which is
inconsistent with Section 422 of the Code.
No action taken by the Board under this Section, either with or without the
approval of the shareholders of the Company, may materially and adversely affect
any outstanding Stock Option without the consent of the holder thereof. This
Plan shall not be amended to modify any of the terms of Section 13, above, or to
otherwise modify the terms of the Plan relating to the selection of the
Non-Employee directors to whom Stock Options are to be granted, the timing or
exercise price thereof, or the number of shares of Common Stock subject thereto,
more often then every six months, unless such changes are required to comport
with changes in the Code.
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(d) Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to Stock Options will be used for general
corporate purposes.
(e) Withholding Taxes.
(i) Upon the exercise of any Stock Option, the Company shall have the right
to require the optionee to remit to the Company an amount sufficient to satisfy
all federal, state and local withholding tax requirements (if any) then
applicable prior to the delivery of any certificate or certificates for shares
of Common Stock.
(ii) Upon the disposition of any Common Stock acquired by the exercise of a
Stock Option, the Company shall have the right to require the optionee to remit
to the Company an amount sufficient to satisfy all federal, state and local
withholding tax requirements (if any) then applicable as a condition to the
registration of the transfer of such Common Stock on its books. Whenever under
the Plan payments are to be made by the Company in cash or by check, such
payments shall be net of any amounts sufficient to satisfy all federal, state
and local withholding tax requirements.
(f) Right To Terminate Employment. Nothing in the Plan or any agreement
entered into pursuant to the Plan shall confer upon any Employee or Non-Employee
Director the right to continue in the employment or other service of the
Company, or any subsidiary thereof, or affect any right which the Company or any
subsidiary may have to terminate the employment or service of such Employee or
Non-Employee Director.
(g) Rights as a Shareholder. No optionee shall have any right as a
shareholder with respect to shares of Common Stock subject to a Stock Option
unless and until certificates for such shares are issued to him or her.
(h) Leaves of Absence and Disability. The Board shall be entitled to make
such rules, regulations and determinations as it deems appropriate under the
Plan in respect of any leave of absence taken by or disability of any Employee
or Non-Employee Director. Without limiting the generality of the foregoing, the
Board shall be entitled to determine:
(i) Whether or not any such leave of absence shall constitute a termination
of employment within the meaning of the Plan, and
(ii) The impact, if any, of any such leave of absence on Stock Options
granted under the Plan theretofore made to any Employee or Non- Employee
Director who takes such leave of absence.
(i) Fair Market Value. Whenever the fair market value of Common Stock is to
be determined under the Plan as of a given date, such fair market value shall
be:
(i) If the Common Stock is traded on the over-the-counter market, the
average of the mean between the bid and the asked price for the Common Stock at
the close of trading for the trading day immediately preceding such given date;
(ii) If the Common Stock is listed on a national securities exchange, the
average of the closing prices of the Common Stock on the composite tape for the
trading day immediately preceding such given date; and
<PAGE>
(iii) If the Common Stock is neither traded on the over-the-counter market
nor listed on a national securities exchange, such value as the Board, in good
faith, shall determine.
Notwithstanding any provision of the Plan to the contrary, no determination
made with respect to the fair market value of Common Stock subject to a ISO
shall be inconsistent with Section 422 of the Code.
(j) Notices. Every direction, revocation or notice authorized or required
by the Plan shall be deemed delivered to the Company on the date it is
personally delivered to the Secretary of the Company at its principal executive
offices or three business days after it is sent by registered or certified mail,
postage prepaid, addressed to the Secretary at such offices, and shall be deemed
delivered to an optionee on the date it is personally delivered to him or her or
three business days after it is sent by registered or certified mail, postage
prepaid, addressed to him or her at the last address shown for him or her on the
records of the Company.
(k) Applicable Law. All questions pertaining to the validity, construction
and administration of the Plan and Stock Options granted hereunder shall be
determined in conformity with the laws of the Commonwealth of Pennsylvania, to
the extent not superseded by federal law.
(l) Elimination of Fractional Shares. If under any provision of the Plan
which requires a computation of the number of shares of Common Stock subject to
a Stock Option, the number so computed is not a whole number of shares of Common
Stock, such number of shares of Common Stock shall be rounded down to the next
whole number.
* * * * *
