SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
NET LNNX, INC.
(Name of Issuer)
Common Stock, No Par Value
(Title of Class of Securities)
64107P 10 2
(CUSIP Number)
Ronald P. Perella
162 N.E. Twylite Terrace
Port St. Lucie, FL 34983
(561) 871-9235
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of Reporting Person)
January 31, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d.1(b)(3) or (4), check the following
box [ ] .
Check the following box if a fee is being paid with this statement [ X]. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.
(See Rule 13d-7)
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
<PAGE>
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (However, see
the Notes.)
CUSIP No. 64107P 10 2
(1) Names of Reporting Persons/SS or IRS Identification Nos. of Above
Persons:
Ronald P. Perella
(2) Check the Appropriate Row if a Member of a Group (See Instructions)
(a)
(b)
(3) SEC Use Only
(4) Sources of Funds (See Instructions): OO
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e)
(6) Citizenship or Place of Organization: U.S.
Number of (7) Sole Voting Power: 200,000
Shares Bene-
ficially (8) Shared Voting Power
Owned by
Each Report- (9) Sole Dispositive Power: 200,000
ing Person
With (10) Shared Dispositive Power
(11) Aggregate Amount Beneficially Owned by Each Reporting
Person: 300,000
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
<PAGE>
(13) Percent of Class Represented by Amount in Row (11): 12.16%
(14) Type of Reporting Person (See Instructions): IN
Item 1. Security and Issuer
This statement relates to the Common Stock, no par value ("Common
Stock") and the Option to buy Common Stock ("Option") of Net
Lnnx, Inc. ("Issuer"). The principal executive offices of the
Issuer are presently located at 324 Datura Street, Suite 150, West Palm
Beach, Florida 33401.
Item 2. Identity and Background
The Reporting Person is Ronald P. Perella, 162 N.E. Twylite Terrace, Port
St. Lucie, Florida 34983. On January 31, 1997, Mr. Perella was appointed
Director, Executive Vice President and Secretary of the Issuer.
Ronald P. Perella, during the last five (5) years has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
Ronald P. Perella, during the last five (5) years, has not been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to a
judgement, decree or final order enjoining final violations of, or prohibiting
or mandating activities subject to federal or state securities laws or finding
any violation with respect to such laws.
The above individual is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration
On January 31, 1997, pursuant to a meeting of the Issuer's Board of
Directors, the Reporting Person was granted 200,000 shares of the Issuer's
Common Stock and the Option to buy 100,000 shares of Common Stock at $.875 per
share, which represents the closing price per share on the date the Option was
granted, pursuant to the Issuer's 1996 Stock Plan in lieu of compensation for
serving as Director, Executive Vice President and Secretary of the Issuer and
other services to the Issuer. The Option period is effective from January 31,
1997 to January 31, 1999.
<PAGE>
Item 4. Purpose of Transaction
The purpose of the transaction was to provide the Reporting Person with
Common Stock of the Issuer as compensation for the services described in Item
4 above.
The Reporting Person became a Director, Executive Vice President and
Secretary of the Issuer on January 31, 1997. On behalf of the Issuer, the
Reporting Person is presently seeking candidates for merger with or
acquisition by the Issuer.
The Reporting Person also reserves the right to actively pursue various
other proposals which could relate to or would result in:
a. The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
b. An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
c. A sale or transfer of a material amount of assets of the Issuer or
any of its subsidiaries;
d. Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
e. Any material change in the present capitalization or dividend
policy of the Issuer;
f. Any other material change in the Issuer's business or corporate
structure;
g. Changes in the Issuer's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
h. Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
i. A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Act;
j. Changes in the Issuer's charter, bylaws or instruments
<PAGE>
corresponding thereto or other action which the acquisition of control of the
Issuer by any person; or
k. Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
As of January 31, 1997 the Reporting Person had an interest in the
Securities of the Issuer as follows:
Name: Ronald P. Perella
No. of Shares: 200,000
Voting Power: Sole
Disposition Power: Sole
Aggregate Percentage Beneficially Owned: 12.16%
On January 31, 1997, the Reporting Person was granted 200,000 shares of
the Issuer's Common Stock and 100,000 Options as set forth above in Item 3.
Item 6. Contracts, Arrangements, Understandings or Relationships with respect
to the Securities of the Issuer.
Except as set forth elsewhere in this Schedule 13D, there are no
understandings, contracts or arrangements among or between the Reporting
Person or any other person with respect to the transfer of voting of any
securities of the Issuer, finder's fees, joint ventures, loan or option
agreements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits
1. Net Lnnx, Inc. Incentive Stock Option Agreement under the
1996 Stock Plan Dated January 31, 1997 between Ronald P. Perella
and the Company.
2. Net Lnnx 1996 Stock Plan.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
Dated: March 18, 1997
/s/Ronald P. Perella
Ronald P. Perella
NET LNNX, INC.
INCENTIVE STOCK OPTION AGREEMENT
UNDER THE 1996 STOCK PLAN
THIS AGREEMENT is made as of January 31, 1997, between Net Lnnx, Inc. a
Pennsylvania corporation (the "Company"), and Ronald P. Perella (the
"Optionee").
THE PARTIES AGREE AS FOLLOWS:
1. Option Grant. The Company hereby grants to the Optionee an
option (the "Option") to purchase the number of shares of the Company's common
stock (the "Shares"), for an exercise price per share (the "Option Price") and
based upon a Grant Date, all as set forth below:
Shares under option: 100,000
Option Price per Share: $0.875
Grant Date: January 31, 1997
The Option will be subject to all of the terms and conditions set forth herein
and in the Company's 1996 Stock Plan (the "Plan"), a copy of which is attached
hereto and incorporated by reference. The Option granted hereunder will be an
incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
2. Stockholder Rights. No rights or privileges of a stockholder in
the Company are conferred by reason of the granting of the Option. Optionee
will not become a stockholder in the Company with respect to the Shares unless
and until the Option has been properly exercised and the Option Price fully
paid as to the portion of the Option exercised.
3. Termination. Subject to earlier termination as provided in
the Plan, this Option will expire, unless previously exercised in full, on
January 31, 1999, which date is on or prior to the tenth anniversary of the
Grant Date.
4. Terms of the Plan. The Optionee understands that the Plan
includes important terms and conditions that apply to this Option. Those
terms include (without limitation): important conditions to the right of the
Optionee to exercise the Option; important restrictions on the ability of the
Optionee to transfer the Option or to transfer Shares received upon exercise
of the Option; and early termination of the Option following the occurrence of
certain events, including the Optionee no longer being an employee, director,
consultant or independent contractor to or of the Company or its subsidiaries.
The Optionee acknowledges that he or she has read the Plan, agrees to be bound
by its terms, and makes each of the representations required to be made by the
Optionee under it.
5. Miscellaneous. This Agreement (together with the Plan) sets forth
the complete agreement of the parties concerning the subject matter hereof,
superseding all prior agreements,
<PAGE>
negotiations and understandings. This Agreement will be governed by the
substantive law of the State of Florida, and may be executed in counterparts.
The parties hereby have entered into this Agreement as of the date set
forth above.
NET LNNX, INC.
/S/Ronald W. Hayes, Jr.
By: Ronald W. Hayes, Jr., President
"Optionee"
/s/Ronald P. Perella
Ronald P. Perella
162 N.E. Twylite Terrace
Port St. Lucie, FL 34983
1996 STOCK PLAN
1. Purpose. This 1996 Stock Plan (the "Plan") is intended to provide
incentives: (a) to the officers and other employees of NETLNNX, Inc. (the
"Company"), its parent (if any) and any present or future subsidiaries of the
Company (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" under Section 422(b) of
the Internal Revenue Code of 1986 (the "Code") ("ISO" or ISOs"); (b) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to purchase stock in the
Company pursuant to options granted hereunder which do not qualify as ISOs
("Non-Qualified Option" or "Non-Qualified Options"); (c) to directors,
officers, employees and consultants of the Company and Related Corporations by
providing them with awards of stock in the Company ("Awards"); and (d) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to make direct purchases of
stock in the Company ("Purchases"). Both ISOs and Non-Qualified Options are
referred to hereafter individually as an "Option" and collectively as
"Options". Options, Awards, and authorizations to make Purchases are referred
to hereafter collectively as "Stock Rights". As used herein, the terms
"parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation" respectively, as those terms are defined in Section 425 of the
Code.
2. Administration of the Plan.
A. The Plan shall be administered by either (i) the Board of Directors
of the Company (the "Board"); or (ii) a Stock Plan Committee (the "Committee"),
appointed by the Board, pursuant to the requirements of paragraph 2.D.
herein. Subject to paragraph 2.D. herein and the terms of the Plan, the
Committee, if so appointed, shall have the authority to (i) determine the
employees of the Company and Related Corporations (from among the class of
employees eligible under paragraph 3 to receive ISOs) to whom ISOs may be
granted, and to determine (from among the class of individuals and entities
eligible under paragraph 3 to receive Non-Qualified Options and Awards and to
make Purchases) to whom Non-Qualified Options, Awards and authorizations to
make Purchases may be granted; (ii) determine the time or times at which
Options or Awards may be granted or Purchases made; (iii) determine the option
price of shares subject to each Option, which price shall not be less than the
minimum price specified in paragraph 6, and the purchase price of shares
subject to each Purchases; (iv) determine whether each Option granted shall be
an ISO or a Non-Qualified Option; (v) determine (subject to paragraph 7) the
<PAGE>
time or times when each Option shall become exercisable and the duration of
the exercise period; (vi) determine whether restrictions such as repurchase
options are to be imposed on shares subject to Options, Awards and Purchases
and the nature of such restrictions, if any, and (vii) interpret the Plan and
prescribe and rescind rules and regulations relating to it. All references
in this Plan to the Committee shall mean the Board if no Committee has been
appointed. If the Committee determines to issue a Non-Qualified Option, it
shall take whatever actions it deems necessary, under Section 422A of the Code
and the regulations promulgated thereunder, to ensure that such Option is not
treated as an ISO. The interpretation and construction by the Committee of
any provisions of the Plan or of any Stock Right granted under it shall be
final unless otherwise determined by the Board. The Committee may from time
to time adopt such rules and regulations for carrying out the Plan as it may
deem best. No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Stock Right granted under it.
B. The Committee may select one of its members as its chairman, and shall
hold meetings at such time and places it may determine. Acts by a majority of
the Committee, or actions reduced to or approved in writing by a majority of
the members of the Committee, shall be the valid acts of the Committee. From
time to time the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members of the Committee and thereafter directly administer the Plan.
C. Stock Rights may be granted to members of the Board in accordance with
paragraph 2.D. herein and the provisions of this Plan applicable to other
eligible persons. Members of the Board who are either (i) eligible for Stock
Rights pursuant to the Plan or (ii) have been granted Stock Rights may vote on
any matters affecting the administration of the Plan or the grant of any Stock
Rights pursuant to the Plan.
D. Each transaction, i.e. each grant of Stock Rights to any eligible
participant under the Plan who is an officer or director of the Company, (i)
shall be approved in advance to the granting of such right, by either the full
Board or the Committee of the Board which shall be composed solely of two or
more Non-Employee Directors; (ii) shall be approved in advance to the granting
of such right, or ratified no later than the next annual meeting of
shareholders, by the affirmative votes of the holders of a majority of the
securities of the issuer present, or represented, and entitled to vote at a
meeting duly held in accordance with the applicable laws of the state or other
jurisdiction in which the Company is incorporated; or the written consent of
the holders of a majority of the securities of the issuer entitled to vote; or
(iii) shall be held by the officer or director for a period of six months
following the date of such acquisition, provided that with respect to Options,
if at least six months elapse from the date of acquisition/grant of the Options
to the date of disposition of the Options (other than upon exercise or
conversion) or its underlying equity security. A Non-Employee Director is a
director who is not, at the time of such grant an officer of the Company or any
Related Corporation, or otherwise employed by the Company or any Related
Corporation; does not receive compensation, either directly or indirectly,
from the Corporation or any Related Corporation, for services rendered as a
consultant or in any capacity other than a director, except for an amount that
does not exceed the dollar amount for which disclosure is required pursuant to
Item 404(a) of Regulation S-K promulgated under the Securities Act of 1933, as
amended; does not possess an interest in any other transaction for which
disclosure would be required pursuant to Item 404(a) of Regulation S-K; and is
<PAGE>
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.
3. Eligible Employees and Others. ISOs may be granted to any
employee of the Company or any Related Corporation. Those officers and
directors of the Company who are not employees may not be granted ISOs under
the Plan. Non-Qualified Options, Awards and authorizations to make Purchases
may be granted to any director (whether or not an employee), officer, employee
or consultant of the Company or any Related Corporation. The Committee may
take into consideration a recipient's individual circumstances in determining
whether to grant an ISO, a Non-Qualified Option or an authorization to make a
Purchase. Granting of any Stock Rights to any individual or entity shall
neither entitle that individual or entity to, nor disqualify him from,
participation in any other grant of Stock Rights.
4. Stock. The stock subject to Options, Awards and Purchases shall
be authorized but unissued shares of Common Stock of the Company, no par value
(the "Common Stock"), or shares of Common Stock reacquired by the Company in
any manner. The aggregate number of shares which may be issued pursuant to
the Plan is 1,000,000, subject to adjustment as provided in paragraph 13.
Any such shares may be issued as ISOs, Non-Qualified Options or Awards, or
to persons or entities making Purchases, so long as the number of shares
issued does not exceed such number, as adjusted. If any Option granted under
the Plan shall expire or terminate for any reason without having been
exercised in full or shall cease for any reason to be exercisable in whole
or in part, or if the Company shall reacquire any unvested shares issued
pursuant to Awards or Purchases, the unpurchased shares subject to such
Options and any unvested shares so reacquired by the Company shall again be
available for grants of Stock Rights under the Plan.
5. Granting of Stock Rights. Stock Rights may be granted under the
Plan at any time after January 20, 1996 and prior to January 20, 2005. Any
Stock Right issued pursuant to subsection (iii) of paragraph 2.D. shall be
held for the period of time described in that subsection. The date of grant of
a Stock Right under the Plan will be the date specified by the Committee at
the time it grants the Stock Right; provided, however, that such date shall
not be prior to the date on which the Committee acts to approve the grant.
The Committee shall have the right, with the consent of the optionee, to
convert an ISO granted under the Plan to a Non-Qualified Option pursuant to
paragraph 16. Awards and the price of Purchases shall be at fair market value
as determined by the Board of Directors.
6. Minimum Option Price; ISO Limitations.
A. The price per share specified in the agreement relating to each
Non-Qualified Option granted under the Plan shall in no event be less than the
lesser of (i) the book value per share of Common Stock as of the end of the
fiscal year of the Company immediately preceding the date of such grant, or
(ii) 50 percent of the fair market value per share of Common Stock on the date
of such grant.
<PAGE>
B. The price per share specified in the agreement relating to each ISO
granted under the Plan shall not be less than the fair market value per share
of Common Stock on the date of such grant. In the case of an ISO to be
granted to an employee owning stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company or any
Related Corporation, the price per share specified in the agreement relating
to such ISO shall not be less than 110 percent of the fair market value per
share of Common Stock on the date of the grant and such option is not
exercisable more than five years from the date of its grant.
C. To the extent that the aggregate fair market value (determined at the
time the option is granted) of stock with respect to which options meeting the
requirements of Section 422(b) are exercisable for the first time by any
individual during any calendar year exceeds $100,000, then such options shall
not be treated as incentive stock options.
D. If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this
sentence are available prior to the date such Option is granted and shall mean
(i) the average (on that date) of the high and low prices of the Common Stock
on the principal national securities exchange on which the Common Stock is
traded, if the Common Stock is then traded on a national securities exchange;
or (ii) the last reported sale price (on that date) of the Common Stock on the
NASDAQ National Market List, if the Common Stock is not then traded on a
national securities exchange; or (iii) the closing bid price (or average of
bid prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the NASDAQ
National Market List. However, if the Common Stock is not publicly traded at
the time an Option is granted under the Plan, "fair market value" shall be
deemed by the Committee after taking into consideration all factors which it
deems appropriate, including, without limitation, recent sale and offer prices
of the Common Stock in private transactions negotiated at arm's length.
7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) five years and one day from the date of grant
in the case of Non-Qualified Options, (ii) five years from the date of grant
in the case of ISOs generally, and (iii) five years from the date of grant in
the case of ISOs granted to an employee owning stock possession more than ten
percent of the total combined voting power of all classes of stock of the
Company or any Related Corporation. Subject to earlier termination as
provided in paragraphs 9 and 10, the term of each ISO shall be the term set
forth in the original instrument granting such ISO, except with respect to any
part of such ISO that is converted into a Non-Qualified Option pursuant to
paragraph 16.
8. Exercise of Option. Subject to the provisions of paragraphs 9
through 12, each Option granted under the Plan shallbe exercisable as follows:
<PAGE>
A. The Option shall either be fully exercisable on the date of grant or
shall become exercisable thereafter in such installments as the Committee may
specify.
B. Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified by
the Committee.
C. Each Option or installment may be exercised at any time or from time to
time, in whole or in part, for up to the total number of shares with respect
to which it is then exercisable.
D. The Committee shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Committee shall not
accelerate the exercise date of any installment of any Option granted to any
employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to paragraph 16) if such acceleration would violate the annual
vesting limitation contained in Section 422A(b)(7) of the Code, as described
in paragraph 6(c).
E. With respect to any Options granted to any officer or director of the
Company pursuant to subsection (iii) of paragraph 2.D. herein, at least six
months shall elapse from the date of the acquisition/grant of the Option to
the date of disposition of the Option (other than upon exercise or conversion)
or its underlying equity security.
9. Termination of Employment. If an ISO optionee ceases to be
employed by the Company and all Related Corporations other than by reason of
death or disability as defined in paragraph 10, no further installments of his
ISOs shall become exercisable, and his ISOs shall terminate after the passage
of 60 days from the date of termination of his employment, but in no event
later than on their specified expiration dates, except to the extent that such
ISOs (or unexercised installments thereof) have been converted into
Non-Qualified Options pursuant to paragraph 16. Employment shall be
considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute. A bona fide leave of absence with the written approval
of the Committee shall not be considered an interruption of employment under
the Plan, provided that such written approval contractually obligates the
Company or any Related Corporation to continue the employment of the optionee
after the approved period of absence. ISOs granted under the Plan shall not be
affected by any change of employment within or among the Company and Related
Corporations, so long as the optionee continues to be an employee of the
Company or any Related Corporation. Nothing in the Plan shall be deemed to
give any grantee of any Stock Right the right to be retained in employment or
other service by the Company or any Related Corporation for any period of
time.
<PAGE>
10. Death; Disability.
A. If an ISO optionee ceases to be employed by the Company and all Related
Corporations by reason of his death, any ISO of his may be exercised, to the
extent of the number of shares with respect to which he could have exercised
it on the date of his death, by his estate, personal representative or
beneficiary who has acquired the ISO by will or by the laws of descent and
distribution, at any time prior to the earlier of the ISO's specified
expiration date or 180 days from the date of the optionee's death.
B. If an ISO optionee ceases to be employed by the Company and all Related
Corporations by reason of his disability, he shall have the right to exercise
any ISO held by him on the date of termination of employment, to the extent of
the number of shares with respect to which he could have exercised it on that
date, at any time prior to the earlier of the ISO's specified expiration date
or 180 days from the date of the termination of the optionee's employment.
For the purposes of the Plan, the term "disability" shall mean "permanent and
total disability" as defined in Section 22(e)(3) of the Code or successor
statute.
11. Assignability. No ISO shall be assignable or transferable by the
grantee except by will or by the laws of descent and distribution, and during
the lifetime of the grantee each ISO shall be exercisable only by him. All
other Stock Rights shall be freely transferable subject to the limitations
imposed by subsection (iii) of paragraph 2.D. herein, if applicable.
12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee
may from time to time approve. Such instruments shall conform to the terms
and conditions set forth in paragraphs 6 through 11 hereof and may contain
such other provisions as the Committee deems advisable which are not
inconsistent with the Plan, including restrictions applicable to shares of
Common Stock issuable upon exercise of Options. In granting any Non-Qualified
Option, the Committee may specify that such Non-Qualified Option shall be
subject to the restrictions set forth herein with respect to ISOs, or to such
other termination and cancellation provisions as the Committee may determine.
The Committee may from time to time confer authority and responsibility on one
or more of its own members and/or one or more officers of the Company to
execute and deliver such instruments. The proper officers of the Company are
authorized and directed to take any and all action necessary or advisable from
time to time to carry out the terms of such instruments.
13. Adjustments. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in
the written agreement between the optionee and the Company relating to such
Option:
A. If the shares of Common Stock shall be subdivided or combined into
<PAGE>
a greater or small number of shares of it the Company shall issue any shares
of Common Stock as a stock dividend on its outstanding Common Stock, the number
of shares of Common Stock deliverable upon the exercise of Options shall be
appropriately increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or stock dividend.
B. If the Company is to be consolidated with or acquired by another
entity in a merger, sale of all or substantially all of the Company's
assets or otherwise (an "Acquisition"), the Committee or the Board of
Directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options,
either (i) make appropriate provision for the continuation of such Options
by substituting on an equitable basis for the shares then subject to such
Options the consideration payable with respect to the outstanding shares
of Common Stock in connection with the Acquisition; or (ii) upon written
notice to the optionees, provided that all Options must be exercised, to
the extent then exercisable, within a specified number of days of the date
of such notice, at the end of which period the Options shall terminate; or
(iii) terminate all Options in exchange for a cash payment equal to the
excess of the fair market value of the shares subject to such Options (to
the extent then exercisable) over the exercise price thereof.
C. In the event of a recapitalization or reorganization of the Company
(other than a transaction described in subparagraph B above) pursuant to which
securities of the Company or of another corporation are issued with respect to
the outstanding shares of Common Stock, an optionee upon exercising an Option
shall be entitled to receive for the purchase price paid upon such exercise
the securities he would have received if he had exercised his Option prior to
such recapitalization or reorganization.
D. Notwithstanding the foregoing, any adjustments made pursuant to
subparagraphs A, B, or C with respect to ISOs shall be made only after the
Committee, after consulting with counsel for the Company, determines whether
such adjustments would constitute a "modification" of such ISOs (as that term
is defined in Section 425 of the Code) or would cause any adverse tax
consequences for the holders of such ISOs. If the Committee determines that
such adjustments made with respect to ISOs would constitute a modification of
such ISOs, it may refrain from making such adjustments.
E. In the event of the proposed dissolution or liquidating of the
Company, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other
conditions as shall be determined by the Committee.
F. 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 subject to Options. No adjustments
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shall be made for dividends paid in cash or in property other than securities
of the Company.
G. No fractional shares shall be issued under the Plan and the optionee
shall receive from the Company cash in lieu of such fractional shares.
H. Upon the happening of any of the foregoing events described in
subparagraphs A, B, and C above, the class and aggregate number of shares set
forth in paragraph 6 hereof that are subject to Stock Rights which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments
to be made under this paragraph 13 and, subject to paragraph 2, its
determination shall be conclusive.
If any person or entity owning restricted Common Stock obtained by
exercise or a Stock Right made hereunder receives shares of securities or cash
in connection with a corporate transaction described in subparagraphs A, B, or
C above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee
or the Successor Board.
14. Means of Exercising Stock Rights. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the
Company at its principal office address. Such notice shall identify the Stock
Right being exercised and specify the number of shares to which such Stock
Right is being exercised, accompanied by full payment of the purchase price
therefor either (a) in United States dollars in cash or by check, or (b) at
the discretion of the Committee, through delivery of shares of Common Stock
having a fair market value equal as of the date of the exercise to the cash
exercise price of the Stock Right, or (c) at the discretion of the Committee,
by delivery of the grantee's personal recourse note bearing interest payable
not less than annually at no less than 100% of the lowest applicable Federal
rate, as defined in Section 1274 (d) of the Code, or (a), (b), and (c) above.
If the Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (a), (b), or (c)
of the preceding sentence, such discretion shall be exercised in writing at
the time of the grant of the ISO in question. The holder of a Stock Right
shall not have the rights of a shareholder with respect to the shares covered
by his Stock Right until the date of issuance of a stock certificate to him
for such shares. Except as expressly provided above in paragraph 13 with
respect to changes in capitalization and stock dividends, no adjustment shall
be made for dividends or similar rights for which the record date is before
the date such stock certificate is issued.
15. Term and Amendment of Plan. This Plan was adopted by the Board
on January 20, 1996, and approved by the stockholders of the Company on January
26, 1996, at the Annual Meeting of Stockholders. The Plan was subsequently
amended by the Board on August 30, 1996. The Plan shall expire on January 20,
2005 (except as to Options outstanding on that date). Subject to the
<PAGE>
provisions of paragraph 5 above, Stock Rights may be granted under the Plan
prior to the date of stockholder approval of the Plan. The Board may
terminate or amend the Plan in any respect at any time, except that, without
the approval of the holders of a majority of the outstanding shares of Common
Stock obtained within 12 months before or after the Board adopts a resolution
authorizing any of the following actions: (a) the total number of shares that
may be issued under the Plan may not be increased (except by adjustments
pursuant to paragraph 13); (b) the provisions of paragraph 3 regarding
eligibility for grants of ISOs may not be modified (except by adjustment
pursuant to Paragraph 13); (c) the provisions of paragraph 6 regarding the
exercise price at which shares may be offered pursuant to ISO's (except by
adjustment pursuant to paragraph 13) and (d) the expiration date of the Plan
may not be extended. Except as provided in the fourth sentence of this
paragraph 15, in no event may action of the Board or Stockholders alter or
impair the rights of a grantee, without his consent, under any Stock Right
previously granted to him.
16. Conversion of ISOs into Non-Qualified Options; Termination of
ISOs. The Committee, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's
ISOs (or any installments or portions of installments thereof) that have not
been exercised on the date of conversion into Non-Qualified Options at any
time prior to the expiration of such ISOs, regardless of whether the optionee
is an employee of the Company or a Related Corporation at the time of such
conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such options. At the time of such conversion, the Committee (with the
consent of the Optionee) may impose such conditions on the exercise of the
resulting Non-Qualified Options as the Committee in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any optionee the right to
have such optionee's ISOs converted into Non-Qualified Options, and no such
conversion shall occur until and unless the Committee takes appropriate
action. The Committee, with the consent of the optionee, may also terminate
any portion of any ISO that has not been exercised at the time of such
termination.
17. Application of Funds. The proceeds received by the Company from
the sale of shares pursuant to Options granted and Purchases authorized under
the Plan shall be used for general corporate purposes.
18. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Common Stock under this Plan is subject to the approval
of any governmental authority required in connection with the authorization,
issuance or sale of such shares.
19. Withholding of Additional Income Taxes. Upon the exercise of a
Non-Qualified Option, the grant of an Award, the making of a Purchase of
Common Stock for less than its fair market value, the making of a
Disqualifying Disposition (as defined in paragraph 20) or the vesting of
restricted Common Stock acquired on the exercise of a Stock Right hereunder,
the Company, in accordance with Section 3402(a) of the Code, may require the
optionee, Award recipient or purchaser to pay additional withholding taxes in
respect of the amount that is considered compensation includible in such
person's gross income. The Committee in its discretion may condition (i) the
<PAGE>
exercise of an Option, (ii) the grant of an Award, (iii) the making of a
Purchase of Common Stock for less than its fair market value, or (iv) the
vesting of restricted Common Stock acquired by exercising a Stock Right on the
grantee's payment of such additional withholding taxes.
20. Notice to Company of Disqualifying Disposition. Each employee
who receives an ISO must agree to notify the Company in writing immediately
after the employee makes a Disqualifying Disposition of any Common Stock
acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is
any disposition (including any sale) of such Common Stock before the later of
(a) two years after the date the employee was granted the ISO or (b) one year
after the date the employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.
21. Governing Law: Construction. The validity and construction of
the Plan and the instruments evidencing Stock Rights shall be governed by the
laws of the Commonwealth of Pennsylvania. In construing this Plan, the
singular shall include the plural and the masculine general shall include the
feminine and neuter, unless the context otherwise requires.
