SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Confidential, For Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
NET LNNX, INC.
(Name of Registrant as Specified in Its Charter)
(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:
(2) Aggregate number of securities to which transaction
applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
NET LNNX, INC.
7700 N.W. 37th AVENUE
MIAMI, FLORIDA 33147
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON JUNE 25, 1999
The Annual Meeting of Shareholders of Net Lnnx, Inc. (the
"Company") will be held on June 25, 1999 at 7700 N.W. 37th Avenue,
Miami, FL 33147 at 10:00 a.m., local time, to consider and act
upon the following matters:
1. To approve and adopt an Agreement and Plan of Merger
providing for the merger of the Company into our wholly-owned
subsidiary, PrintOnTheNet.com, Inc. ("POTN") for the purpose of
changing the Company's state of incorporation from Pennsylvania to
Delaware (the "Reincorporation"), and in connection with the
Reincorporation approve and increase in the Company's authorized
capital stock from 25,000,000 shares to 50,000,000 shares
consisting of 40,000,000 shares of common stock, $.001 par value,
and 10,000,000 shares of preferred stock, $.001 par value;
2. To approve and adopt the Company's 1999 Stock Incentive
Plan;
3. To elect four directors to serve for the ensuing year;
4. To ratify the selection by the Board of Directors of
Berkowitz Dick Pollack & Brant as the Company's independent
accountants for the current fiscal year; and
5. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Shareholders of record at the close of business on May 31,
1999 will be entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof. The stock transfer books of
the Company will remain open following the record date.
All shareholders are cordially invited to attend the Annual
Meeting.
By Order of the Board of Directors,
Benjamin Rogatinsky
Chief Executive Officer
Miami, Florida
June ___, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN
THE ENCLOSED ENVELOPE IN ORDER TO ENSURE REPRESENTATION OF YOUR
SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY IS MAILED IN THE
UNITED STATES.
<PAGE> 1
NET LNNX, INC.
7700 N.W. 37th AVENUE
MIAMI, FLORIDA 33147
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
Dated: June ___, 1999
This Proxy Statement has been prepared and is furnished by
the Board of Directors of Net Lnnx, Inc. (the "Company") in
connection with the solicitation of proxies for the Annual Meeting
of Shareholders of the Company to be held on June 25, 1999, and at
any adjournment thereof, for the purposes set forth in the
accompanying Notice of Meeting.
It is anticipated that this Proxy Statement and the
accompanying form of proxy will be mailed to shareholders on or
about June 10, 1999. The Company's Annual Report, including
audited financial statements for the fiscal year ended December
31, 1998, is being mailed or delivered concurrently with this
Proxy Statement. The Annual Report is not to be regarded as proxy
soliciting material.
Only shareholders of record of the Company's common stock, no
par value (the "Common Stock"), at the close of business on May
31, 1999, are entitled to vote at the Annual Meeting. On that
date, there were 19,134,102 issued and outstanding shares of
Common Stock entitled to vote on each matter to be presented at
the meeting.
Shares represented by a properly executed proxy received in
time to permit its use at the Annual Meeting or any adjournment
thereof will be voted in accordance with the instructions
indicated therein. If no instructions are indicated, the shares
represented by the proxy will be voted:
* for the approval and adoption of the Agreement and Plan
of Merger resulting in the Reincorporation of the
Company;
* for the approval and adoption of the 1999 Stock Incentive
Plan;
* for the election of all nominees for director;
* for the ratification of the appointment of Berkowitz Dick
Pollack & Brant as the independent certified public
accountants of the Company for the fiscal year ending
December 31, 1999; and
* in the discretion of the proxy holders as to any other
matter which may properly come before the Annual Meeting.
A shareholder who has given a proxy may revoke it at any time
before it is voted at the Annual Meeting by giving written notice
of revocation to the Secretary of the Company, by submitting a
proxy bearing a later date, or by attending the Annual Meeting and
voting in person.
The expense of soliciting proxies will be borne by the
Company. Proxies will be solicited principally by mail, but
directors, officers and regular employees of the Company may
solicit proxies personally, by telephone or by facsimile
transmission. The Company will reimburse custodians, nominees or
other persons for their out-of-pocket expenses in sending proxy
material to beneficial owners.
<PAGE> 2
Each share of Common Stock entitles the holder thereof to
cast one vote on each matter to be voted upon at the 1999 Annual
Meeting. A majority of the outstanding shares will constitute a
quorum at the meeting. Abstentions and broker non-votes are
counted only for purposes of electing directors in accordance with
Proposal Three. None of the actions to be voted upon at the 1999
Annual Meeting shall create dissenters' rights under the
Pennsylvania General Corporation Law.
You are requested, regardless of the number of shares you
hold, to sign the proxy and return it promptly in the enclosed
envelope.
CERTAIN INFORMATION WITH RESPECT TO DIRECTORS
AND EXECUTIVE OFFICERS
The Board of Directors of the Company did not hold a meeting
during the fiscal year ended December 31, 1998. The Board
currently does not have a standing Audit Committee, Compensation
Committee, or Nominating Committee.
There are four members of the Company's Board of Directors.
The four persons have been nominated by the Board of Directors to
serve as directors for the next year. All are currently Directors
of the Company. Three are the Company's executive officers in
addition to their serving as Directors of the Company. Set forth
below are the names, ages as of May 1, 1999, and business
experience of all four:
Benjamin Rogatinsky 31 CEO and Chairman of the Board
of Directors
Samuel Rogatinsky 29 President, Chief Operating
Officer and Director
Paul Lambert 31 Chief Financial Officer and
Director
William R. Colucci 59 Director
Benjamin Rogatinsky has been the Chief Executive Officer and
Chairman of the Board of Directors of the Company since March
1999. From 1996 to date, Mr. Rogatinsky has been the President of
National Lithographers and Publishers, Inc., a commercial printing
company. From 1997 to date, Mr. Rogatinsky has also been
employed as the President of PrintAmerica Management Company, Inc.
Benjamin Rogatinsky is the brother of Samuel Rogatinsky. Mr.
Rogatinsky practiced certified public accounting from 1993 to
1996.
Samuel Rogatinsky has been the President, Chief Operating
Officer and a Director of the Company since March 1999. From 1996
to date, Mr. Rogatinsky has served as the Vice President of
National Lithographers and Publishers, Inc., a commercial printing
company. From 1997 to date, Mr. Rogatinsky has also been the Vice
President of PrintAmerica Management Company, Inc. Samuel
Rogatinsky is the brother of Benjamin Rogatinsky. Mr. Rogatinsky
was an attorney in private practice from 1994 to 1996.
Mr. Lambert has been the Chief Financial Officer and a
Director of the Company since March 1999. For the past five
years, Mr. Lambert has also served as the President of Lambert
Advisors, a management consulting company.
Mr. Colucci has been a Director of the Company since
September, 1997. Mr. Colucci is also presently a consultant with
a privately held management firm known as Harbor Town Management
Group, Inc., a Florida corporation, which provides investment
banking and business consulting services. From June 1996 to May
1997, Mr. Colucci served as Chief Operating Officer and SEC
Compliance officer for Physicians Laser Services, Inc., a publicly
<PAGE> 3
traded Delaware corporation. From April 1991 to May 1996, Mr.
Colucci served as a senior partner of Decision Dynamics, Inc., a
private business and real estate consulting firm.
DIRECTORS' COMPENSATION
All directors hold office until the next annual meeting of
shareholders and the election and qualification of their
successors. Each person who serves as a director of the Company is
reimbursed up to $500 for travel expenses if the director must
travel to South Florida and is required to return to South Florida
to attend an emergency director's meeting.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares, based on
information obtained from the persons named below, of the Common
Stock and the Preferred Stock of the Company beneficially owned as
of May 31, 1999 by:
* owners of more than 5% of the Company's Common Stock;
and
* all officers and directors of the Company individually
and as a group.
<TABLE>
<CAPTION>
Name & Address of Amount & Nature Percent of Amount and Nature Percent of Class
Beneficial Owner(1) of Beneficial Class(3) of Beneficial Assuming Conversion
Owner(2) Ownership Assuming of Preferred Stock
Conversion of into Common Stock
Preferred Stock
into Common Stock(4)
<S> <C> <C> <C> <C>
Benjamin Rogatinsky 7,837,500 40.96% 11,260,825 42.75%
Samuel Rogatinsky 7,837,500 40.96% 11,260,825 42.75%
Paul Lambert 825,000 4.31% 1,185,350 4.50%
William R. Colucci(5) 197,500 1.20% 197,500 *%
All officers and
directors as a
group (4 persons)(5) 16,697,500 87.27% 23,902,000 90.75%
* Less than 1%
</TABLE>
(1) The address of each of the persons listed above is care of
the Company.
(2) Unless otherwise noted, the Company believes that all persons
named in the table have sole voting and investment power with
respect to all shares of stock beneficially owned by them.
(3) Based upon 19,134,102 shares of Common Stock outstanding as
of May 31, 1999.
(4) Includes 1,000,000 shares of Preferred Stock that are
convertible into 7,207,000 shares of Common Stock.
(5) Includes the right to purchase up to 75,000 shares of the
Company's Common Stock at any date prior to November 25,
1999.
<PAGE> 5
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors, officers and persons who own more than
10% of the Common Stock of the Company ("Reporting Persons") to
file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Reporting Persons are
required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) reports they
file. Based solely upon a review of (i) copies of section 16(a)
filings received by the Company during or with respect to the 1998
fiscal year and (ii) certain written representations of its
officers and directors with respect to the filing of annual
reports of changes in beneficial ownership, the Company believes
that each filing required to be made pursuant to Section 16(a) of
the Exchange Act during the 1998 fiscal year has been filed in a
timely manner, except as follows:
Ronald W. Hayes, Jr., a former officer, director and
beneficial owner of more than 10% of the Company's common stock in
July, 1998, failed to timely file a required Form 4 for July 1998
with respect to one transaction. William R. Colucci, a director,
failed to timely file a required Form 4 for July 1998 with respect
to one transaction. To the best knowledge of the Company, Robert
& Cyndee Hackney, JTWROS, beneficial owners of more than 10% of
the Company's common stock during 1998, were delinquent with
their Exchange Act Section 16(a) reporting requirements during the
most recent fiscal year.
<PAGE> 6
COMPENSATION OF EXECUTIVE OFFICERS
Other than indicated in the following table, no compensation
has been paid or accrued for the benefit of any executive officer
or directors of the Company during the fiscal year ended December
31, 1998.
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------------------------------- ------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Annual Restricted Securities All Other
Name & Compen- Stock Underlying LTIP Compen-
Position Year Salary($) Bonus($) sation Award(s) Options/ Payouts sation
($) Sars(#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald W. Hayes, 1998 10,200(1) -0- -0- -0- -0- -0- 20,000(2)
Jr. Director,
Chairman of the
Board and
President
William R. Colucci 1998 $33,391(3) -0- -0- -0- -0- -0- 5,000(4)
Director
</TABLE>
Notes to table:
(1) In July 1998, Ronald W. Hayes, Jr. was granted 30,000 shares
of common stock of the Company as compensation for serving as
the Company's Chairman of the Board of Directors and
President. The per share closing market price of the
Company's common stock on July 14, 1998, the date of the
grant, was $.034.
(2) As part of his compensation for serving as a director of the
Company during 1997, Ronald W. Hayes, Jr. was awarded options
to purchase 100,000 shares of the Company's common stock at
a price of $0.875 per share exercisable, in whole or in part,
at any time on or before January 31, 1999. On January 1,
1998, in connection with the terms of a contemplated merger
which never occurred, the Company redeemed all such 100,000
options at a per option price of $0.20 or $20,000 in the
aggregate, and such options were canceled. The per share
closing market price of the Company's common stock on
December 31, 1997 was $0.25.
<PAGE> 7
(3) In July 1998, William R. Colucci was granted 98,209 shares of
common stock of the Company (an aggregate value of $33,391)
as compensation for serving as a director and officer of the
Company. The per share closing market price of the Company's
common stock on July 14, 1998, the date of the grant, was
$0.34.
(4) As part of his compensation for serving as a director of the
Company during 1997, William R. Colucci was awarded options
to purchase 100,000 shares of the Company's common stock at
a price of $0.687 per share. On January 1, 1998, in
connection with the terms of a contemplated merger which
never occurred, the Company redeemed 25,000 options at a per
option price of $0.20 or $5,000 in the aggregate, and such
redeemed options were canceled. The per share closing market
price of the Company's common stock on December 31, 1997 was
$0.25.
The Company has no bonus or incentive plans in effect, nor
are there any understandings in place concerning additional
compensation to the Company's officers and directors, other than
the proposed 1999 Stock Incentive Plan (See Proposal Two).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except for the issuance of the Company's shares of Common and
Preferred Stock in the acquisition of PrintOnTheNet.com, Inc.,
since 1997, no director or executive officer of the Company, any
nominee to election as a director, or any person known to the
Company to own of record or beneficially more than 5% of the
Company's Common Stock or any member of the immediate family of
any of the foregoing persons had, or will have, any direct or
material interest in any transaction or series of similar
transactions to which the Company or any of its subsidiaries, was
or is to be a party, in which the amount involved exceeds $60,000.
On March 11, 1999, the Company acquired all of the common
stock of PrintOnTheNet.com, Inc. The acquisition was accomplished
by merging PrintOnTheNet.com, Inc. with a wholly owned subsidiary
of Net Lnnx. PrintOnTheNet.com, Inc. then became a wholly owned
subsidiary of Net Lnnx. Shareholders of PrintOnTheNet.com, Inc.
received 16,500,000 shares of common stock of Net Lnnx and
1,000,000 shares of preferred stock of Net Lnnx convertible into
an additional 7,207,000 shares of common stock in exchange for
their PrintOnTheNet.com, Inc.. stock. As a result,
PrintOnTheNet.com, Inc. shareholders now own approximately 90% of
the common stock of Net Lnnx assuming the shares of Preferred
Stock are converted into shares of Net Lnnx Common Stock.
Immediately following the acquisition, all but one of the members
of Net Lnnx Board of Directors resigned. William R. Colucci
continued to serve as a Director of Net Lnnx and the former
shareholders of PrintOnTheNet.com, Inc., Benjamin Rogatinsky,
Samuel Rogatinsky, and Paul Lambert, were elected to the Board to
fill the vacancies created by the resignations.
PROPOSAL ONE
APPROVAL OF THE REINCORPORATION OF THE COMPANY
INTO THE STATE OF DELAWARE
The Board of Directors has unanimously approved a proposal to
change the Company's state of incorporation from Pennsylvania to
Delaware (the "Reincorporation"). The Board of Directors believes
this change to be in the best interests of the Company and its
shareholders for several reasons.
* The Reincorporation will allow the Company the increased
flexibility and predictability afforded by Delaware law.
* Reincorporation will enhance the Company's ability to
attract and retain qualified members of the Company's Board of
Directors as well as encourage directors to continue to make
independent decisions in good faith on behalf of the Company.
<PAGE> 8
* Reincorporation will enable the Board to more fully
consider any proposed takeover attempt and to better negotiate
terms that maximize the benefit to the Company and its
shareholders.
Predictability of Delaware Law. For many years Delaware has
followed a policy of encouraging incorporation in that state. As
part of that policy, Delaware has adopted comprehensive corporate
laws that are revised regularly to meet changing business
circumstances. The Delaware legislature is particularly sensitive
to issues regarding corporate law and is especially responsive to
developments in modern corporate law. The Delaware courts have
developed considerable expertise in dealing with corporate issues
as well as a substantial body of case law construing Delaware's
corporate law. As a result of these factors, it is anticipated
that Delaware law will provide greater predictability in the
Company's legal affairs than is presently available under
Pennsylvania law.
Ability to Attract and Retain Directors. In 1986, Delaware
amended its corporate law to allow corporations to limit the
personal monetary liability of its directors for their conduct as
directors under certain circumstances. The directors have elected
to adopt such a provision in the Restated Certificate of
Incorporation that would govern the Company after the
Reincorporation. Delaware law does not permit a Delaware
corporation to limit or eliminate the liability of its directors
for breaches of their fiduciary duty of loyalty, intentional
misconduct, bad faith conduct, unlawful distributions or any
transaction from which the director derives an improper personal
benefit. The Board of Directors believes that Delaware
incorporation, and the provisions of the Delaware Certificate of
Incorporation, will enhance the Company's ability to recruit and
retain directors in the future. However, the shareholders should
be aware that such a provision inures to the benefit of the
directors, and the interest of the Board of Directors in
recommending the Reincorporation may therefore be in conflict with
the interests of the shareholders. See "Limitations on Director
Liability" and "Indemnification of Officers and Directors" below
for a more complete discussion of these issues.
Hostile Takeovers. Delaware law permits the Company to take
protective measures in order to deter hostile takeover attempts.
A hostile takeover attempt may have a positive or a negative
effect on the Company and its shareholders, depending on the
circumstances surrounding a particular takeover attempt. Takeover
attempts that have not been negotiated or approved by the board of
directors of a corporation can seriously disrupt the business and
management of a corporation and generally present to the
shareholders the risk of terms which may be less than favorable to
all of the shareholders than would be available in a board
approved transaction. Board approved transactions may be
carefully planned and undertaken at an opportune time in order to
obtain maximum value for the corporation and all of its
shareholders with due consideration to matters such as the
recognition or postponement of gain or loss for tax purposes, the
management and business of the acquiring corporation and maximum
strategic deployment of corporate assets.
The Board of Directors recognizes that hostile takeover
attempts do not always have the unfavorable consequences or
effects described above and may frequently be beneficial to the
shareholders, providing all of the shareholders with considerable
value for their shares. However, the Board of Directors believes
that the potential disadvantages of unapproved takeover attempts
are sufficiently great that prudent steps may in the future be
required to reduce the likelihood of such takeover attempts, in
the best interests of the Company and its shareholders.
Shareholders should recognize that one of the effects of the
Reincorporation may be to discourage a future attempt to acquire
control of the Company which is not presented to and approved by
the Board of Directors, but which a substantial number and perhaps
even a majority of the Company's shareholders might believe to be
in their best interests or in which shareholders might receive a
substantial premium for their shares over the current market
prices. As a result, shareholders that might desire to
participate in such a transaction may not have an opportunity to
do so.
<PAGE> 9
METHOD OF REINCORPORATION
The proposed Reincorporation would be accomplished by merging
the Company into our sole wholly-owned Delaware subsidiary,
PrintOnTheNet.com, Inc., pursuant to an Agreement and Plan of
Merger, a copy of which is attached as Exhibit A to this Proxy
Statement. Upon the effective date of the merger, the Delaware
corporation's name will be PrintOnTheNet.com, Inc. The
Reincorporation will not result in any change in the Company's
business, assets or liabilities, will not cause its corporate
headquarters to be moved and will not result in any relocation of
management or other employees.
On the effective date of the proposed Reincorporation, each
outstanding share of the Company's common stock will automatically
convert into one share of common stock of the Delaware corporation
and each outstanding share of the Company's preferred stock will
automatically convert into 7.207 shares of common stock of the
Delaware corporation having the same rights, and shareholders of
the Company will automatically become shareholders of the Delaware
corporation. On the effective date of the Reincorporation, the
number of outstanding shares of common stock of the Delaware
corporation will be equal to the number of shares of common stock
of the Company outstanding immediately prior to the effective date
of the Reincorporation assuming the conversion of the preferred
stock into shares of common stock. In addition, each outstanding
option or right to acquire shares of common stock of the Company
will be converted into an option or right to acquire an equal
number of shares of common stock of the Delaware corporation,
under the same terms and conditions as the original options or
rights. The Company's 1999 Stock Incentive Plan (if approved by
the shareholders at the Annual Meeting) will be adopted and
continued by the Delaware corporation following the
Reincorporation. Shareholders should recognize that approval of
the proposed Reincorporation will constitute approval of the
adoption and assumption of that plan by the Delaware corporation.
No action need be taken by shareholders to exchange their
stock certificates; this will be accomplished at the time of the
next transfer by the shareholder. Certificates for shares in the
Company will automatically represent an equal number of shares in
the Delaware corporation upon completion of the merger.
It is anticipated that the Reincorporation, if approved by
the shareholders, would be completed as soon thereafter as
practicable. However, the Reincorporation may be abandoned or the
Agreement and Plan may be amended (with certain exceptions),
either before or after shareholder approval has been obtained, if
in the opinion of the Board of Directors, circumstances arise that
make such action advisable; provided, that any amendment that
would effect a material change from the charter provisions
discussed in this Proxy Statement would require further approval
by the holders of a majority of the outstanding shares of the
common stock.
SIGNIFICANT CHANGES CAUSED BY REINCORPORATION
In general, the Company's corporate affairs are presently
governed by the corporate law of Pennsylvania, the Company's state
of incorporation, the Company's Articles of Incorporation (the
"Pennsylvania Articles") and by the Company's Bylaws, as amended
(the "Pennsylvania Bylaws"), which have been adopted pursuant to
Pennsylvania law. The Pennsylvania Articles and Pennsylvania
Bylaws are available for inspection during business hours at the
principal executive offices of the Company. In addition, copies
may be obtained by writing to the Company at 7700 N.W. 37th Avenue,
Miami, FL 33417, Attention: Benjamin Rogatinsky.
If the Reincorporation proposal is adopted, the Company will
merge into PrintOnTheNet.com, Inc., and its business will be
continued by PrintOnTheNet.com, Inc. a Delaware corporation.
Following the merger, issues of corporate governance and control
would be controlled by Delaware, rather than Pennsylvania law.
<PAGE> 10
The Pennsylvania Articles and Pennsylvania Bylaws, will, in
effect, be replaced by the Restated Certificate of Incorporation
of PrintOnTheNet.com, Inc. (the "Delaware Certificate") and the
bylaws of PrintOnTheNet.com, Inc. (the "Delaware Bylaws"), copies
of which are attached as Exhibits B and C to this Proxy Statement.
Limitations On Director Liability. The Delaware Certificate
eliminates the liability of directors to the fullest extent
permissible under Delaware law, as such law exists currently or as
it may be amended in the future. Under Delaware law, a
corporation may not eliminate or limit director monetary liability
for:
* breaches of the director's duty of loyalty to the
corporation or its shareholders;
* acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law;
* the payment of unlawful dividends or unlawful stock
repurchases or redemptions; or
* transactions in which the director received an improper
personal benefit. A limitation of liability provision
also may not limit director's liability for violation of,
or otherwise relieve the Delaware corporation or its
directors from the necessity of complying with, federal or
state securities laws or affect the availability of non-
monetary remedies such as injunctive relief or rescission.
The proposed Reincorporation and associated measures are
designed to shield a director from suits by the Delaware
corporation or its shareholders for monetary damages for
negligence or gross negligence by the director in failing to
satisfy the director's duty of care. As a result, an action for
monetary damages against a director predicated on a breach of the
duty of care would be available only if the Delaware corporation
or its shareholders were able to establish that the director was
disloyal in his conduct, failed to act in good faith, engaged in
intentional misconduct, knowingly violated the law, derived an
improper personal benefit or approved an illegal dividend or stock
repurchase. Consequently, the effect of such measures may be to
limit or eliminate an effective remedy which might otherwise be
available to a shareholder who is dissatisfied with the Board of
Directors' decisions. Although an aggrieved shareholder could sue
to enjoin or rescind an action taken or proposed by the Board of
Directors, such remedies may not be timely or adequate to prevent
or redress injury in all cases.
The Company believes that directors are motivated to exercise
due care in managing the Company's affairs primarily by concern
for the best interests of the Company and its shareholders rather
than by the fear of potential monetary damage awards. As a
result, the Company believes that the Reincorporation proposal
should sustain the Board of Directors' continued high standard of
corporate governance without any decrease in accountability by
directors to the Company and its shareholders. The Company also
believes that failure to limit director liability as permitted by
Delaware law may discourage highly qualified candidates from
becoming directors of the Company.
Indemnification of Officers and Directors. Delaware law
permits indemnification of officers and directors against
liability incurred in third-party actions if the indemnitee acted
in good faith and he or she reasonably believed the acts were in
or at least not opposed to the best interests of the Company.
Delaware law states that the indemnification provided by statute
shall not be deemed exclusive of any other rights under any bylaw,
agreement, vote of shareholders or disinterested directors or
otherwise. As a result, under Delaware law, the Delaware
corporation is permitted to indemnify its directors and officers
within the limits established by law and public policy, pursuant
to an express contract, bylaw provision, shareholder vote, vote of
disinterested directors or otherwise, any or all of which provide
broad indemnification rights.
The Board of Directors has recognized in considering this
Reincorporation proposal that the individual directors have a
personal interest in obtaining the application of Delaware law to
such indemnity and limitation of liability issues affecting them
<PAGE> 11
and the Company in the event such issues arise from a potential
future case. The Board of Directors also recognizes that the
application of Delaware law, to the extent that any director or
officer is actually indemnified, would result in expense to the
Company. The Board of Directors believes, however, that the
overall effect of Reincorporation is to provide a corporate legal
environment that enhances the Company's ability to attract and
retain high quality outside directors and thus benefits the
interests of the Company and its shareholders.
Anti-Takeover Measures. Delaware law has been widely viewed
to permit a corporation greater flexibility in governing its
internal affairs and its relationships with shareholders and other
parties than do the laws of many other states. In particular,
Delaware law permits a corporation to adopt a number of measures
designed to reduce a corporation's vulnerability to hostile
takeover attempts. The Board of Directors has not adopted or
proposed other permitted anti-takeover measures at this time.
However, there can be no assurance that the Board of Directors
will not adopt such measures in the future.
In addition to permitted anti-takeover measures, for certain
corporations, Section 203 of the Delaware General Corporation Law
("Section 203") limits the ability of a potential acquirer to
conduct a hostile takeover, as more fully described below.
Section 203 only applies to Delaware corporations which have a
class of voting stock that is (i) listed on a national securities
exchange, (ii) authorized for quotation on the Nasdaq Stock Market
or (iii) held of record by more than 2,000 shareholders. While
the Company does not currently meet any of these tests, the
Company may in the future meet one of the tests and become subject
to Section 203.
Under Section 203, certain "business combinations" by
Delaware corporations with "interested stockholders" are subject
to a three-year moratorium unless specified conditions are met.
Section 203 prohibits a Delaware corporation from engaging in a
"business combination" with an "interested shareholder" for three
years following the date that such person becomes an interested
stockholder.
With certain exceptions, an interested stockholder is a
person or group who or which owns 15% or more of the corporation's
outstanding voting stock (including any rights to acquire stock
pursuant to an option, warrant, agreement, arrangement or
understanding, or upon the exercise of conversion or exchange
rights, and stock with respect to which the person has voting
rights only), or is an affiliate or associate of the corporation
and was the owner of 15% or more of such voting stock at any time
within the previous three years. For purposes of Section 203, the
term "business combination" is defined broadly to include mergers
with or caused by the interested stockholder; sales or other
dispositions to the interested stockholder (except proportionately
with the corporation's other stockholders) of assets of the
corporation or a subsidiary equal to ten percent or more of the
aggregate market value of the corporation's consolidated assets or
its outstanding stock; the issuance or transfer by the corporation
or a subsidiary of stock of the corporation or such subsidiary to
the interested stockholder (except for transfers in a conversion
or exchange or a pro rata distribution or certain other
transactions, none of which increase the interested stockholder's
proportionate ownership of any class or series of the
corporation's or such subsidiary's stock); or receipt by the
interested stockholder (except proportionately as a stockholder),
directly or indirectly, of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the
corporation or a subsidiary.
The three year moratorium imposed on business combinations by
Section 203 does not apply if: (i) prior to the date on which such
stockholder becomes an interested stockholder the board of
directors approves either the business combination or the
transaction which resulted in the person becoming an interested
stockholder; (ii) the interested stockholder owns 85% of the
corporation's voting stock upon consummation of the transaction
which made him or her an interested stockholder (excluding from
the 85% calculation shares owned by directors who are also
officers of the target corporation and shares held by employee
stock plans which do not permit employees to decide confidentially
whether to accept a tender or exchange offer); or (iii) on or
after the date such person becomes an interested stockholder, the
board approves the business combination and it is also approved at
<PAGE> 12
a stockholder meeting by sixty-six and two-thirds percent (66
2/3%) of the voting stock not owned by the interested stockholder.
A Delaware corporation may elect not to be governed by
Section 203 by a provision in its original certificate of
incorporation or an amendment thereto or to the bylaws, which
amendment must be approved by majority stockholder vote and may
not be further amended by the board of directors.
PrintOnTheNet.com, Inc.. does not intend to elect not to be
governed by Section 203.
The constitutionality of Section 203 is challenged from time
to time in lawsuits arising out of ongoing takeover disputes, and
it is not yet clear whether and to what extent its
constitutionality will be upheld by the courts. The Company
believes that so long as the constitutionality of Section 203 is
upheld, Section 203 will encourage any potential acquirer to
negotiate with PrintOnTheNet.com, Inc.'s Board of Directors.
Section 203 also has the effect of limiting the ability of a
potential Delaware acquirer to make a two-tiered bid for the
Delaware corporation in which all stockholders would not be
treated equally. Shareholders should note that the application of
Section 203 to the Delaware corporation will confer upon the Board
the power to reject a proposed business combination, even though
a potential acquirer may be offering a substantial premium for
PrintOnTheNet.com, Inc.'s shares over the then current market
price (assuming the stock is then publicly traded).
There can be no assurance that the Board of Directors would
not adopt any further anti-takeover measures available under
Delaware law. Moreover, the availability of such measures under
Delaware law, whether or not implemented, may have the effect of
discouraging a future takeover attempt which a majority of
PrintOnTheNet.com, Inc.'s shareholders may deem to be in their
best interests or in which shareholders may receive a premium for
their shares over then current market prices. As a result,
shareholders who might desire to participate in such transactions
may not have the opportunity to do so. Shareholders should
recognize that, if adopted, the effect of such measures, along
with the possibility of discouraging takeover attempts, may be to
limit in certain respects the rights of shareholders of
PrintOnTheNet.com, Inc.. compared with the rights of shareholders
of the Company.
The Board of Directors recognizes that hostile takeover
attempts do not always have the unfavorable consequences or
effects described above and may frequently be beneficial to the
shareholders, providing all of the shareholders with considerable
value for their shares. However, the Board of Directors believes
that the potential disadvantages of unapproved takeover attempts
(such as disruption of the Company's business and the possibility
of terms which may be less than favorable to all of the
shareholders than would be available in a board-approved
transaction) are sufficiently great such that prudent steps to
reduce the likelihood of such takeover attempts and to enable the
Board of Directors to fully consider the proposed takeover attempt
and actively negotiate its terms are in the best interests of the
corporation and its shareholders.
The Delaware Certificate would increase the number of shares
of common stock the Company is authorized to issue from 25,000,000
shares to 50,000,000 shares consisting of 40,000,000 shares of
common stock, $.001 par value, and 10,000,000 shares of preferred
stock, $.001 par value. The additional 40,000,000 shares of
common stock would be a part of the existing class of common stock
and, if and when issued, would have the same rights and privileges
as the shares of common stock presently issued and outstanding.
At May 31, 1999, 19, 134,102 shares of common stock were
outstanding. The Board of Directors believes it is desirable to
increase the number of shares of common stock the Company is
authorized to issue to provide the Company with adequate
flexibility in the future. The Company has no present
commitments, agreements, or intent to issue additional shares of
common stock, other than with respect to currently reserved
shares, in connection with transactions in the ordinary course of
the Company's business, or shares which may be issued under the
Company's proposed 1999 Stock Incentive Plan (See Proposal Two).
<PAGE> 13
The Board believes it is prudent for the Company to have this
flexibility. The holders of the Company's common stock are not
entitled to preemptive rights. Accordingly, the issuance of
additional shares of common stock might dilute, under certain
circumstances, the ownership and voting rights of shareholders.
The proposed increase in the number of shares of common stock the
Company is authorized to issue is not intended to inhibit a change
in control of the Company. The availability for issuance of
additional shares of common stock could discourage, or make more
difficult, efforts to obtain control of the Company. For example,
the issuance of shares of common stock in a public or private
sale, merger, or similar transaction would increase the number of
outstanding shares, thereby possibly diluting the interest of a
party attempting to obtain control of the Company. The Company is
not aware of any pending or threatened efforts to acquire control
of the Company.
EFFECT OF AUTHORIZATION OF PREFERRED STOCK
The Board of Directors also believes it is advisable to
authorize the issuance up to 10,000,000 shares of preferred stock,
par value $.001 per share. The additional preferred stock would
be available to the Company for issuance in one or more series as
determined in the future by the Board of Directors. The Board
would be empowered to fix, among other things, the designation of
and number of shares to comprise each series and the relative
rights, preferences and privileges of shares of each series,
including the dividends payable thereon, voting rights, conversion
rights, the price and terms on which shares may be redeemed, the
amounts payable upon such shares in the event of voluntary of
involuntary liquidation and any sinking fund provisions for
redemption or purchases of such shares. The authorized shares of
preferred stock would provide the Company with additional
flexibility concerning possible future acquisitions and financing
and enable it to quickly capitalize on company opportunities.
In casting votes on this Proposal, stockholders should be
aware that the Board of Directors, without further stockholder
approval, may issue preferred stock with voting or conversion
rights which could adversely affect the voting power of the
holders of the common stock, or which could be used as a defensive
measure in connection with an attempted hostile takeover of the
Company. Such shares could be privately placed with purchasers
who might align themselves with the Board of Directors in opposing
a hostile takeover bid. In addition, the Board could authorize
holders of series of preferred stock to vote as a class, either
separately or with the holders of common stock, or any merger,
sale or exchange of assets by the Company or any other
extraordinary corporate transaction. The Board could also issue
preferred stock having terms that could discourage an acquisition
attempt or other transaction that some stockholders might believe
to be in their best interest or in which stockholders might
receive premium for their stock over the then current market price
of such stock. The Company, however, has no plans or arrangement
to issue any shares of preferred stock.
The affirmative vote of a majority of the shares of common
stock of the Company outstanding as of the Record Date will be
required to approve this Proposal.
Messrs. Ben Rogatinsky, Sam Rogatinsky and Paul Lambert have
indicated they intend to vote for Proposal One.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
REINCORPORATION OF THE COMPANY IN DELAWARE
<PAGE> 14
PROPOSAL TWO
APPROVAL OF THE 1999 STOCK INCENTIVE PLAN
The Board of Directors believes that attracting and retaining
highly qualified key employees and directors is essential to the
Company's growth and success. The Board of Directors also
believes that important advantages to the Company are gained by a
comprehensive compensation program that includes different types
of incentives for motivating such individuals and rewards for
outstanding service. Stock options will be an important element
of the Company's compensation program because stock options enable
employees and directors to acquire or increase their proprietary
interest in the Company promoting a close identity of interests
between such individuals and the Company's shareholders. Stock
options also provide to employees and directors an increased
incentive to expend their maximum efforts for the success of the
Company's business.
On May ___, 1999 the Board of Directors adopted, subject to
stockholder approval, the PrintOnTheNet.com, Inc. 1999 Stock
Incentive Plan. In authorizing grants of options, the 1999 Stock
Incentive Plan is intended to give the Company greater flexibility
to respond to rapidly changing business, economic and regulatory
requirements and conditions. In addition, such flexibility will
enhance the ability of the Company to closely link compensation to
performance. The 1999 Stock Incentive Plan will not become
effective unless approved by the holders of a majority of the
shares of common stock present or represented and voting thereon
at the Annual Meeting.
The following discussion of the material features of the 1999
Stock Incentive Plan is qualified by reference to the text of the
1999 Stock Incentive Plan which is set forth in Exhibit D hereto.
Administration. The Stock Incentive Plan shall be
administered by the Board, or in the Board's sole discretion by
the Compensation Committee of the Board (the "Committee," and with
the Board "the Administrator") or such other committee as may be
specified by the Board to perform the functions and duties of the
Committee under the Stock Incentive Plan. Subject to the
provisions of the Stock Incentive Plan, the Administrator shall
determine, from those eligible to be Participants, the persons to
be granted stock options, stock appreciation rights and restricted
stock, the amount of stock or rights to be optioned or granted to
each such person, and the terms and conditions of any stock
option, stock appreciation rights and restricted stock. Subject
to the provisions of the Stock Incentive Plan, the Administrator
is authorized to interpret the Stock Incentive Plan, to make,
amend and rescind rules and regulations relating to the Stock
Incentive Plan and to make all the determinations necessary or
advisable for the Stock Incentive Plan's administration.
Participants. The Participants in the Stock Incentive Plan
are those employees, consultants and advisors of the Company who
in the judgment of the Administrator are or will become
responsible for the direction and financial success of the
Company. Employees include officers and directors who are also
employees of the Company.
Shares Subject to Plan. The maximum number of shares with
respect to which stock options or stock appreciation rights may be
granted or which may be awarded as restricted stock under the
Stock Incentive Plan is 4,000,000 shares of Common Stock. Shares
covered by expired or terminated stock options or stock
appreciation rights or forfeited restricted stock awards will
again become available for grant or award under the Stock
Incentive Plan. The number of shares subject to each outstanding
stock option, stock appreciation right or restricted stock award,
the option price with respect to outstanding stock options, the
grant value with respect to outstanding stock appreciation rights
and the aggregate number of shares remaining available under the
Stock Incentive Plan will be subject to such adjustment as the
Administrator, in its discretion, deems appropriate to reflect
such events as stock dividends, stock splits, recapitalizations,
mergers, consolidations or reorganizations of, or by, the Company.
<PAGE> 15
Stock Options and Stock Appreciation Rights. Subject to the
terms of the Stock Incentive Plan, the Administrator may grant to
Participants either Incentive Options meeting the definition of an
incentive stock option under Section 422 of the Code or
Nonqualified Options not meeting such definition, or any
combination thereof. The exercise price for an Incentive Option
may not be less than 100% of the fair market value of the stock on
the date of grant; however, the exercise price for an Incentive
Option granted to an employee who owns more than 10% of the voting
stock of the Company or any subsidiary may not be less than 110%
of the fair market value of the stock on the date of grant.
Subject to the terms of the Stock Incentive Plan, the
Administrator may grant stock appreciation rights to Participants
either in conjunction with, or independently of, any stock
options. Stock appreciation rights may be granted in conjunction
with stock options as an alternative right or as an additional
right. Upon exercise of a stock appreciation right, a Participant
will generally be entitled to receive an amount equal to the
difference between the fair market value of the shares at the time
of grant and the fair market value of the shares at the time of
exercise. This amount may be payable in cash, shares of Common
Stock or a promissory note from the Participant, or any
combination thereof, as determined in the discretion of the
Administrator.
The exercise period for stock options and stock appreciation
rights will be determined by the Administrator, but no stock
option or stock appreciation right may be exercisable prior to the
expiration of six months from the date of grant or after 10 years
from the date of grant, subject to certain conditions and
limitations.
Incentive options and related stock appreciation rights are
not transferable by a Participant other than by will or by the
laws of descent and distribution, and incentive options and
related stock appreciation rights are exercisable, during the
lifetime of the Participant, only by the Participant.
If the employment or consultancy of a Participant by the
Company terminates, the Administrator may, in its discretion,
permit the exercise of stock options and stock appreciation rights
granted to such Participant (i) for a period not to exceed three
months following termination of employment with respect to
Incentive Options or related stock appreciation rights if
termination of employment is not due to death or permanent
disability of the Participant, (ii) for a period not to exceed one
year following termination of employment with respect to Incentive
Options or related stock appreciation rights if termination of
employment is due to the death or permanent disability of the
Participant, and (iii) for a period not to extend beyond the
expiration date with respect to Nonqualified Options or related or
independently granted stock appreciation rights.
Restricted Stock Awards. Subject to the terms of the Stock
Incentive Plan, the Administrator may award shares of restricted
stock to Participants. All shares of restricted stock will be
subject to the following terms and conditions, among others: (i)
at the time of each award of restricted shares, a restricted
period of no less than six months and no greater than five years,
will be established for the shares. The restricted period may
differ among Participants and may have different expiration dates
with respect to portions of shares covered by the same award; (ii)
shares of restricted stock awarded to Participants may not be
sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered during the restricted period applicable to such shares.
Except for such restrictions on transfer, a Participant will have
all of the rights of a shareholder in respect to restricted shares
awarded to him or her including the right to receive any dividends
on, and the right to vote, the shares; and (iii) if a Participant
ceases to be an employee or consultant of the Company for any
reason other than death or permanent disability, all shares
theretofore awarded to the Participant which are still subject to
the restrictions imposed by provision (ii) above will upon such
termination of employment or consultancy be forfeited and
transferred back to the Company. If such employment or consultancy
is terminated by action of the Company without cause or by
agreement between the Company and the Participant, the
Administrator may, in its discretion, release some or all of the
<PAGE> 17
shares from the restrictions; (iv) if a Participant ceases to be
an employee or consultant of the Company by reason of death or
permanent disability, the restrictions will lapse with respect to
shares then subject to such restrictions, unless otherwise
determined by the Administrator.
Termination, Duration and Amendments of Plan. The Stock
Incentive Plan may be abandoned or terminated at any time by the
Board. Unless sooner terminated, the Stock Incentive Plan will
terminate on the date ten years after its adoption by the Board.
The termination of the Stock Incentive Plan will not affect the
validity of any stock option, stock appreciation right or
restricted stock outstanding on the date of termination.
For the purpose of conforming to any changes in applicable
law or governmental regulation, or for any other lawful purpose,
the Board will have the right, with or without approval of the
shareholders of the Company, to amend or revise the terms of the
Stock Incentive Plan at any time; however, no such amendment or
revision will, without the consent of the holder thereof, change
the stock option price (other than anti-dilution adjustments) or
alter or impair any stock option, stock appreciation right or
restricted stock which has been previously granted or awarded
under the Stock Incentive Plan.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
ADOPTION OF THE 1999 STOCK INCENTIVE PLAN
PROPOSAL THREE
ELECTION OF DIRECTORS
The persons named in the accompanying form of proxy intend to
vote all valid proxies received in favor of the election of each
of the persons named below as nominees for director unless
authority is withheld. Directors elected at the Annual Meeting
will serve until the next Annual Meeting of Shareholders and until
their successors are elected and qualified, subject to the
election and qualification of their successors and to their
earlier death, resignation or removal. If any nominee is unable
or unwilling to serve, the persons named in the accompanying form
of proxy can vote for substitute nominees. Management does not
anticipate that this will happen. Each director shall be elected
by a plurality of the votes cast.
NOMINEES FOR DIRECTOR
The Company's Board of Directors consists of four persons.
The following four persons have been nominated by the Board of
Directors to fill such positions. All are currently Directors of
the Company. Three are the Company's executive officers in
addition to their positions as Directors of the Company. Set
forth below are the names, ages as of May 31, 1999, and positions
currently held of all four:
NAME AGE POSITION
Benjamin Rogatinsky 31 CEO and Chairman of the
Board of Directors
Samuel Rogatinsky 29 President, Chief Operating
Officer and Director
Paul Lambert 31 Chief Financial Officer
and Director
William R. Colucci 59 Director
<PAGE> 17
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" ALL NOMINEES FOR DIRECTOR.
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Berkowitz
Dick Pollack & Brant to continue as independent certified public
accountants for the Company for the fiscal year ending December
31, 1999. Berkowitz Dick Pollack & Brant has been acting as
independent certified public accountants of the Company since
March 25, 1999. Unless otherwise indicated, properly executed
proxies will be voted for the ratification of the appointment of
Berkowitz Dick Pollack & Brant, independent certified public
accountants, to audit the books and accounts of the Company for
the fiscal year ending December 31, 1999.
Representatives of Berkowitz Dick Pollack & Brant are
expected to be present at the Annual Meeting, will be given an
opportunity to make a statement if they desire to do so, and will
also be available to respond to appropriate questions from
shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF
BERKOWITZ DICK POLLACK & BRANT AS INDEPENDENT PUBLIC ACCOUNTANTS
FOR THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
SHAREHOLDER PROPOSALS
Shareholders who intend to submit proposals to the Company's
shareholders at the 2000 Annual Meeting of Shareholders must
submit such proposals to the Company no later than January 30,
2000 in order to be considered for inclusion in the Proxy
Statement and Proxy to be distributed by the Board of Directors in
connection with that meeting. Shareholder proposals should be
submitted to Benjamin Rogatinsky, Chief Executive Officer,
PrintOnTheNet.com, Inc., 7700 N.W. 37th Avenue, Miami, Florida
33147.
ADDITIONAL INFORMATION
The Board of Directors is not aware of any matters to be
presented at the meeting other than the matters described herein
and does not intend to bring any other matters before the meeting.
However, if any other matters should come before the meeting, or
any adjournment thereof, the persons soliciting the proxies will
have discretionary authority to vote all proxies in accordance
with their best judgment.
If you do not plan to attend the meeting, in order that your
shares may be represented and in order to assure the required
quorum, please sign, date and return your proxy promptly. In the
event you are able to attend the meeting, at your request, the
Company will cancel any proxy executed by you.
FINANCIAL MATTERS
Detailed financial information of the Company for the fiscal
year ended December 31, 1998 is included in the Company's Annual
Report to Stockholders, a copy of which is enclosed herewith.
<PAGE> 18
REPORT TO STOCKHOLDERS
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1998 AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, INCLUDING FINANCIAL STATEMENTS AND
SCHEDULES THERETO, WILL BE FURNISHED WITHOUT CHARGE TO ANY
SHAREHOLDER UPON WRITTEN REQUEST TO THE COMPANY AT
PrintOnTheNet.com, Inc., 7700 N.W. 37th AVENUE, MIAMI, FLORIDA 33147,
ATTENTION: CHIEF EXECUTIVE OFFICER.
EXPENSES OF SOLICITATION
The Company will bear the cost of soliciting proxies from its
shareholders and will enlist the help of banks and brokerage
houses in soliciting proxies from their customers. The Company
will reimburse these institutions for out-of-pocket expenses
incurred thereby. In addition to being solicited through the
mails, proxies may also be solicited personally or by telephone by
the directors, officers and employees of the Company.
Kindly date, sign and return the enclosed proxy card.
By Order of the Board of Directors
/s/ Benjamin Rogantinsky
BENJAMIN ROGATINSKY
Chairman and Chief Executive Officer
<PAGE> 19
NET LNNX, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 25, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY
The undersigned, revoking all prior proxies, hereby
appoint(s) Benjamin Rogatinsky and Samuel Rogatinsky, and each of
them, with full power of substitution, as proxies to represent and
vote, as designated herein, all shares of stock of NET LNNX, INC.
(the "Company"), which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Shareholders of the
Company to be held on June 25, 1999 at 7700 N.W. 37th Avenue,
Miami, FL 33147 at 10:00 a.m. local time, and at any adjournment
thereof (the "Meeting").
In their discretion, the proxies are authorized to vote upon
such other matters as may properly come before the meeting or any
adjournment thereof.
This proxy, when properly executed, will be voted in the
manner directed herein by the undersigned stockholder. If no
direction is given, this proxy will be voted FOR all proposals.
Attendance of the undersigned at the meeting or at any adjournment
thereof, will not be deemed to revoke this proxy unless the
undersigned shall revoke this proxy in writing or shall deliver a
subsequently dated proxy to the Chief Executive Officer of the
Company or shall vote in person at the Meeting.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE.
1. To approve and adopt the Agreement and Plan of Merger
resulting in the Reincorporation of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To approve and adopt the Company's 1999 Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To elect the following four (4) directors (except as marked
below) for the ensuing year.
NOMINEES: Benjamin Rogatinsky; Samuel Rogatinsky; Paul
Lambert; and William R. Colucci.
[ ] FOR all nominees (except as marked below)
[ ] WITHHOLD authority to vote for all nominees
For all nominees except the following nominee(s):
_____________________________________________________________________
(CONTINUED AND TO BE SIGNED, ON REVERSE SIDE)
<PAGE> 20
4. To ratify the selection by the Board of Directors of
Berkowitz Dick Pollack & Brant as the Company's independent
accountants for the fiscal year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: _______________ , 1999
____________________________
Signature
____________________________
Print name
____________________________
Signature if held jointly
____________________________
Print name
Please sign exactly as name appears hereon. If the stock is
registered in the names of two or more persons, each should sign.
Executors, administrators, trustees, guardians, attorneys and
corporate officers should add their titles.
<PAGE> 21
EXHIBIT "A"
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
NET LNNX, INC.
(a Pennsylvania corporation)
AND
PRINTONTHENET.COM,INC.
(a Delaware corporation)
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as
of the __th day of May, 1999 by and between Net Lnnx, Inc., a
business corporation organized under the laws of the State of
Pennsylvania, and PrintOnTheNet.Com, Inc., a corporation organized
under the laws of the State of Delaware. The Agreement and Plan
was adopted on May __, 1999 by resolution of the Board of
Directors of Net Lnnx, Inc., a Pennsylvania corporation, and
adopted on May __, 1999 by resolution of the Board of Directors of
PrintOnTheNet.Com, Inc., a Delaware corporation. The names of the
corporations planning to merge are Net Lnnx, Inc., a Pennsylvania
corporation, and PrintOnTheNet.Com, Inc., a Delaware corporation.
The name of the surviving corporation into which Net Lnnx, Inc.,
a Pennsylvania corporation, plans to merge is PrintOnTheNet.Com,
Inc., a Delaware corporation.
1. Net Lnnx, Inc., a Pennsylvania corporation, and
PrintOnTheNet.Com, Inc., a Delaware corporation, shall, pursuant
to the provisions of the Business Corporation Law of the State of
Pennsylvania Act and the provisions of the General Corporation Law
of the State of Delaware, be merged with and into a single
corporation, to wit, PrintOnTheNet.Com, Inc., a Delaware
corporation, which shall be the surviving corporation upon the
effective time and date of the merger and which is sometimes
hereinafter referred to as the "surviving corporation", and which
shall continue to exist as surviving corporation under its present
name, PrintOnTheNet.Com, Inc. pursuant to the provisions of the
General Corporation Law of the State of Delaware. The separate
existence of Net Lnnx, Inc., a Pennsylvania corporation, which is
sometimes hereinafter referred to as the "disappearing
corporation", shall cease at the effective time and date of the
merger in accordance with the provisions of the Business
Corporation Law of the State of Pennsylvania.
2. The Certificate of Incorporation of the surviving
corporation at the effective time and date of the merger in the
State of Delaware shall be the Certificate of Incorporation of
said surviving corporation and said Certificate of Incorporation
shall continue in full force and effect until amended and changed
in the manner prescribed by the provisions of the General
Corporation Law of the State of Delaware.
3. The Bylaws of the surviving corporation at the effective
time and date of the merger in the State of Delaware shall be the
Bylaws of said surviving corporation and will continue in full
force and effect until changed, altered, or amended as therein
provided and in the manner prescribed by the provisions of the
<PAGE> A-1
General Corporation Law of the State of Delaware.
4. The directors and officers in office of the surviving
corporation at the effective time and date of the merger in the
State of Delaware shall be the first members of the Board of
Directors and the first officers of the surviving corporation, all
of whom shall hold their directorships and offices until the
election and qualification of their respective successors or until
their tenure is otherwise terminated in accordance with the Bylaws
of the surviving corporation.
5. Each issued share of common stock of the disappearing
corporation and each right to purchase a share of common stock in
the disappearing corporation immediately prior to the effective
time and date of the merger shall, at the effective time and date
of the merger, be converted into one share of common stock of the
surviving corporation or the right to purchase one share of common
stock of the surviving corporation on the same terms and
conditions. Each issued share of preferred stock of the
disappearing corporation and each right to purchase a share of
preferred stock in the disappearing corporation immediately prior
to the effective time and date of the merger shall, at the
effective time and date of the merger, be converted into 7.207
shares of common stock of the surviving corporation or the right
to purchase 7.207 shares of common stock of the surviving
corporation on the same terms and conditions. The issued shares
of the surviving corporation shall not be converted or exchanged
in any manner and each said share which is issued at the effective
time and date of the merger shall be returned and cancelled by the
surviving corporation and shall be of no value.
6. The Agreement and Plan of Merger has been submitted to
the shareholders of the disappearing corporation for their
approval in the manner prescribed by the provisions of the
Business Corporation Law of the State of Pennsylvania, and the
merger of the disappearing corporation with and into the surviving
corporation has been authorized in the manner prescribed by the
General Corporation Law of the State of Delaware.
7. The disappearing corporation and the surviving
corporation hereby stipulate that they will cause to be executed
and filed and/or recorded any document or documents prescribed by
the laws of the State of Pennsylvania and of the State of
Delaware, and that they will cause to be performed all necessary
acts therein and elsewhere to effectuate the merger.
8. The Board of Directors and the proper officers of the
disappearing corporation and the surviving corporation,
respectively, are hereby authorized, empowered, and directed to do
any and all acts and things, and to make, execute, deliver, file,
and/or record any and all instruments, papers, and documents which
shall be or become necessary, proper, or convenient to carry out
<PAGE> A-2
or put into effect any of the provisions of this Plan and
Agreement of Merger or of the merger herein provided for.
9. The merger shall become effective on the time and date
on which the Articles of Merger have been filed with the
Department of State of the State of Pennsylvania and the
Certificate of Merger has been filed with the Secretary of State
of the State of Delaware.
IN WITNESS WHEREOF, this Plan and Agreement of Merger is
hereby executed upon behalf of the disappearing corporation and
the surviving corporation.
NET LNNX, INC., a Pennsylvania
corporation
By:
Ben Rogatinsky, Chairman and
CEO
PRINTONTHENET.COM, INC., a Delaware
corporation
By:
Ben Rogatinsky, Chairman and CEO
<PAGE> A-3
EXHIBIT "B"
RESTATED CERTIFICATE OF INCORPORATION
OF
PRINTONTHENET.COM, INC.
It is hereby certified that:
1. The present name of the corporation (hereinafter called
the "Corporation") is PrintOnTheNet.Com, Inc., which is the name
under which the Corporation was originally incorporated; and the
date of filing the original Certificate of Incorporation of the
Corporation with the Secretary of State of the State of Delaware
is January 27, 1999.
2. The Certificate of Incorporation of the Corporation is
hereby amended in its entirety and replaced by substituting in
lieu thereof the Restated Certificate of Incorporation hereinafter
provided for.
3. The provisions of the Certificate of Incorporation of
the Corporation as herein amended, are hereby restated and
integrated in the single instrument which is hereinafter set
forth, and which is entitled the Restated Certificate of
Incorporation of PrintOnTheNet.Com, Inc., without any further
amendments other than the amendments herein certified.
4. The amendments and the restatement of the Certificate of
Incorporation herein certified have been duly adopted by the
stockholders in accordance with the provisions of Sections 228,
242, and 245 of the General Corporation Law of the State of
Delaware.
<PAGE> B-1
5. The Certificate of Incorporation of the Corporation, as
amended and restated herein, shall read as follows:
ARTICLE FIRST
NAME
The name of the corporation (hereinafter called the
"Corporation") is PrintOnTheNet.Com, Inc.
ARTICLE SECOND
REGISTERED OFFICE
The address of the registered office of the Corporation in
the State of Delaware is 1013 Centre Road, Wilmington, DE, 19805,
County of New Castle. The name of the registered agent of the
Corporation at such address is Corporation Service Company.
ARTICLE THIRD
PURPOSE
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
ARTICLE FOURTH
CAPITAL STOCK
The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is 50,000,000
shares, consisting of:
(a) 40,000,000 shares of common stock (the "Common Stock"),
par value $.001 per share;
(b) 10,000,000 shares of preferred stock (the "Preferred
Stock"), par value $.001 per share.
<PAGE> B-2
The designations, powers, preferences and relative
participating, optional or other special rights, and the
qualifications, limitations and restrictions thereof in respect of
the Preferred Stock and the Common Stock are as follows:
A. COMMON STOCK
1. Voting.Except as otherwise expressly provided by law,
and subject to the voting rights provided to the holders of
Preferred Stock by this Certificate of Incorporation, the Common
Stock shall have exclusive voting rights on all matters requiring
a vote of stockholders, voting together with the holders of
Preferred Stock, as one class.
2. Other Rights. Each share of Common Stock issued and
outstanding shall be identical in all respects one with the other,
and no dividends shall be paid on any shares of Common Stock
unless the same is paid on all shares of Common Stock outstanding
at the time of such payment. Except for and subject to those
rights expressly granted to the holders of the Preferred Stock, or
except as may be provided by the laws of the State of Delaware,
the holders of Common Stock shall have exclusively all other
rights of stockholders.
B. PREFERRED STOCK
1. Issuance.The Preferred Stock may be issued from time to
time in one or more series. Subject to the limitations set forth
herein and any limitations prescribed by law, the Board of
Directors is expressly authorized, prior to issuance of any series
of Preferred Stock, to fix by resolution or resolutions providing
for the issue of any series the number of shares included in such
series and the designations, relative powers, preferences and
rights, and the qualifications, limitations or restrictions of
such series. Pursuant to the foregoing general authority vested
in the Board of Directors, but not in limitation of the powers
conferred on the Board of Directors thereby and by the General
Corporation Law of the State of Delaware, the Board of Directors
is expressly authorized to determine with respect to each series
of Preferred Stock:
(a) the designation or designations of such series and
the number of shares (which number from time to time may be
decreased by the Board of Directors, but not below the number of
such shares then outstanding, or may be increased by the Board of
Directors unless otherwise provided in creating such series)
constituting such series;
(b) the rate or amount and times at which, and the
preferences and conditions under which, dividends shall be payable
on shares of such series, the status of such dividends as
cumulative or noncumulative, the date or dates from which
dividends, if cumulative, shall accumulate, and the status of such
<PAGE> B-3
shares as participating or nonparticipating after the payment of
dividends as to which such shares are entitled to any preference;
(c) the rights and preferences, if any, of the holders
of shares of such series upon the liquidation, dissolution or
winding up of the affairs of, or upon any distribution of the
assets of, the corporation, which amount may vary depending upon
whether such liquidation, dissolution or winding up is voluntary
or involuntary and, if voluntary, may vary at different dates, and
the status of the shares of such series as participating or
nonparticipating after the satisfaction of any such rights and
preferences;
(d) the full or limited voting rights, if any, to be
provided for shares of such series, in addition to the voting
rights provided by law;
(e) the times, terms and conditions, if any, upon which
shares of such series shall be subject to redemption, including
the amount the holders of shares of such series shall be entitled
to receive upon redemption (which amount may vary under different
conditions or at different redemption dates) and the amount,
terms, conditions and manner of operation of any purchase,
retirement or sinking fund to be provided for the shares of such
series;
(f) the rights, if any, of holders of shares of such
series to convert such shares into, or to exchange such shares
for, shares of any other class or classes or of any other series
of the same class, the prices or rates of conversion or exchange,
and adjustments thereto, and any other terms and conditions
applicable to such conversion or exchange;
(g) the limitations, if any, applicable while such
series is outstanding on the payment of dividends or making of
distributions on, or the acquisition or redemption of, Common
Stock or any other class of shares ranking junior, either as to
dividends or upon liquidation, to the shares of such series;
(h) the conditions or restrictions, if any, upon the
issue of any additional shares (including additional shares of
such series or any other series or of any other class) ranking on
a parity with or prior to the shares of such series either as to
dividends or upon liquidation; and
(i) any other relative powers, preferences and
participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of shares of
such series; in each case, so far as not inconsistent with the
provisions of this Certificate of Incorporation or the General
Corporation Law of the State of Delaware as then in effect.
<PAGE> B-4
ARTICLE SIXTH
DURATION
The Corporation shall have perpetual existence.
ARTICLE SEVENTH
POWERS OF BOARD OF DIRECTORS
For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation
and regulation of the powers of the Corporation and of its
directors and stockholders, it is further provided:
(a) In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of
Directors is expressly authorized and empowered:
(i) to make, alter, amend or repeal the By-laws in any
manner not inconsistent with the laws of the State of
Delaware or this Certificate of Incorporation;
(ii) without the assent or vote of the stockholders, to
authorize and issue securities and obligations of the
Corporation, secured or unsecured, and to include
therein such provisions as to redemption, conversion or
other terms thereof as the Board of Directors in its
sole discretion may determine, and to authorize the
mortgaging or pledging, as security therefor, of any
property of the corporation, real or personal, including
after-acquired property;
(iii) to determine whether any, and if any, what
part, of the net profits of the Corporation or of its
surplus shall be declared in dividends and paid to the
stockholders, and to direct and determine the use and
disposition of any such net profits or such surplus; and
(iv) to fix from time to time the amount of net profits
of the Corporation or of its surplus to be reserved as
working capital or for any other lawful purpose.
<PAGE> B-5
In addition to the powers and authorities
herein or by statute expressly conferred upon it, the
Board of Directors may exercise all such powers and do
all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the
provisions of the laws of the State of Delaware, of this
Certificate of Incorporation and of the By-laws of the
Corporation.
(b) Any director or any officer elected or appointed by the
stockholders or by the Board of Directors may be removed at
any time in such manner as shall be provided in the By-laws
of the Corporation.
(c) From time to time any of the provisions of this
Certificate of Incorporation may be altered, amended or
repealed, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or
inserted, in the manner and at the time prescribed by said
laws, and all rights at any time conferred upon the
stockholders of the Corporation by this Certificate of
Incorporation are granted subject to the provisions of this
paragraph (c).
ARTICLE EIGHTH
LIMITATION ON LIABILITY
A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (iii) pursuant to Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit. If the
Delaware General Corporation Law is amended after the date of
incorporation of the Corporation to authorize corporate action
further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by
the Delaware General Corporation Law, as so amended. No amendment
to or repeal or modification of this Article Eighth shall apply to
or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or
omissions of such director prior to such amendment, repeal, or
modification.
<PAGE> B-6
ARTICLE NINTH
INDEMNIFICATION
The Corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented,
indemnify any and all persons whom it shall have the power to
indemnify under said Section from and against any and all of the
expenses, liabilities, or other matters referred to in or covered
by said Section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those
indemnified may be entitled under any Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to
action in such person's official capacity and as to action in
another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and
administrators of such person."
Signed on this 27 day of May, 1999.
/s/Benjamin Rogatinsky
Benjamin Rogatinsky, Chairman and
CEO
<PAGE> B-7
EXHIBIT "C"
BYLAWS
OF
PRINTONTHENET.COM, INC.
(a Delaware corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates
representing stock in the corporation shall be signed by, or in
the name of, the corporation by the Chairman or Vice-Chairman of
the Board of Directors, if any, or by the President or a Vice-
President and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the corporation. Any or
all the signatures on any such certificate may be a facsimile.
In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued by
the corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue
more than one class of stock or more than one series of any class
of stock, and whenever the corporation shall issue any shares of
its stock as partly paid stock, the certificates representing
shares of any such class or series or of any such partly paid
stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or
registration of transfer of any shares of stock of any class or
series shall be noted conspicuously on the certificate
representing such shares.
The corporation may issue a new certificate of stock or
uncertificated shares in place of any certificate theretofore
issued by it, alleged to have been lost, stolen, or destroyed,
and the Board of Directors may require the owner of the lost,
stolen, or destroyed certificate, or his legal representative, to
give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on
account of the alleged loss, theft, or destruction of any such
certificate or the issuance of any such new certificate or
uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions
imposed by the General Corporation Law, the Board of Directors of
the corporation may provide by resolution or resolutions that
some or all of any or all classes or series of the stock of the
corporation shall be uncertificated shares. Within a reasonable
<PAGE> C-1
time after the issuance or transfer of any uncertificated shares,
the corporation shall send to the registered owner thereof any
written notice prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but
shall not be required to, issue fractions of a share. If the
corporation does not issue fractions of a share, it shall (1)
arrange for the disposition of fractional interests by those
entitled thereto, (2) pay in cash the fair value of fractions of
a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in
registered form (either represented by a certificate or
uncertificated) or bearer form (represented by a certificate)
which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share or an uncertificated
fractional share shall, but scrip or warrants shall not unless
otherwise provided therein, entitle the holder to exercise voting
rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation.
The Board of Directors may cause scrip or warrants to be issued
subject to the conditions that they shall become void if not
exchanged for certificates representing the full shares or
uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are
exchangeable may be sold by the corporation and the proceeds
thereof distributed to the holders of scrip or warrants, or
subject to any other conditions which the Board of Directors may
impose.
4. STOCK TRANSFERS. Upon compliance with provisions
restricting the transfer or registration of transfer of shares of
stock, if any, transfers or registration of transfers of shares
of stock of the corporation shall be made only on the stock
ledger of the corporation by the registered holder thereof, or by
his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the corporation or with
a transfer agent or a registrar, if any, and, in the case of
shares represented by certificates, on surrender of the
certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the
corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment
thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed
by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a
new record date for the adjourned meeting. In order that the
corporation may determine the stockholders entitled to consent to
<PAGE> C-2
corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which date shall not be
more than ten days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. If
no record date has been fixed by the Board of Directors, the
record date for determining the stockholders entitled to consent
to corporate action in writing without a meeting, when no prior
action by the Board of Directors is required by the General
Corporation Law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's
registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed
by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record
date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the
close of business on the day on which the Board of Directors
adopts the resolution taking such prior action. In order that the
corporation may determine the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in
respect of any change, conversion, or exchange of stock, or for
the purpose of any other lawful action, the Board of Directors
may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to
such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of
the right to notice of a meeting of stockholders or a waiver
thereof or to participate or vote thereat or to consent or
dissent in writing in lieu of a meeting, as the case may be, the
term "share" or "shares" or "share of stock" or "shares of stock"
or "stockholder" or "stockholders" refers to an outstanding share
or shares of stock and to a holder or holders of record of
outstanding shares of stock when the corporation is authorized to
issue only one class of shares of stock, and said reference is
also intended to include any outstanding share or shares of stock
and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of
incorporation confers such rights where there are two or more
classes or series of shares of stock or upon which or upon whom
the General Corporation Law confers such rights notwithstanding
that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are
limited or denied such rights thereunder; provided, however, that
no such right shall vest in the event of an increase or a
decrease in the authorized number of shares of stock of any class
or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any
provision of law may otherwise require.
<PAGE> C-3
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the
date and at the time fixed, from time to time, by the directors,
provided, that the first annual meeting shall be held on a date
within thirteen months after the organization of the corporation,
and each successive annual meeting shall be held on a date within
thirteen months after the date of the preceding annual meeting.
A special meeting shall be held on the date and at the time fixed
by the directors.
- PLACE. Annual meetings and special meetings shall
be held at such place, within or without the State of Delaware,
as the directors may, from time to time, fix. Whenever the
directors shall fail to fix such place, the meeting shall be held
at the registered office of the corporation in the State of
Delaware.
- CALL. Annual meetings and special meetings may be
called by the directors or by any officer instructed by the
directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all
meetings shall be given, stating the place, date, and hour of the
meeting and stating the place within the city or other
municipality or community at which the list of stockholders of
the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of
directors and for the transaction of other business which may
properly come before the meeting, and shall (if any other action
which could be taken at a special meeting is to be taken at such
annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or
purposes for which the meeting is called. The notice of any
meeting shall also include, or be accompanied by, any additional
statements, information, or documents prescribed by the General
Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be
given, personally or by mail, not less than ten days nor more
than sixty days before the date of the meeting, unless the lapse
of the prescribed period of time shall have been waived, and
directed to each stockholder at his record address or at such
other address which he may have furnished by request in writing
to the Secretary of the corporation. Notice by mail shall be
deemed to be given when deposited, with postage thereon prepaid,
in the United States Mail. If a meeting is adjourned to another
time, not more than thirty days hence, and/or to another place,
and if an announcement of the adjourned time and/or place is made
at the meeting, it shall not be necessary to give notice of the
adjourned meeting unless the directors, after adjournment, fix a
new record date for the adjourned meeting. Notice need not be
given to any stockholder who submits a written waiver of notice
signed by him before or after the time stated therein.
Attendance of a stockholder at a meeting of stockholders shall
constitute a waiver of notice of such meeting, except when the
stockholder attends the meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the
<PAGE> C-4
purpose of, any regular or special meeting of the stockholders
need be specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of
the stock ledger of the corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete
list of the stockholders, arranged in alphabetical order, and
showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a
place within the city or other municipality or community where
the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where
the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list
required by this section or the books of the corporation, or to
vote at any meeting of stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders
shall be presided over by one of the following officers in the
order of seniority and if present and acting - the Chairman of
the Board, if any, the Vice-Chairman of the Board, if any, the
President, a Vice-President, or, if none of the foregoing is in
office and present and acting, by a chairman to be chosen by the
stockholders. The Secretary of the corporation, or in his
absence, an Assistant Secretary, shall act as secretary of every
meeting, but if neither the Secretary nor an Assistant Secretary
is present the Chairman of the meeting shall appoint a secretary
of the meeting.
- PROXY REPRESENTATION. Every stockholder may
authorize another person or persons to act for him by proxy in
all matters in which a stockholder is entitled to participate,
whether by waiving notice of any meeting, voting or participating
at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-
in-fact. No proxy shall be voted or acted upon after three years
from its date unless such proxy provides for a longer period. A
duly executed proxy shall be irrevocable if it states that it is
irrevocable and, if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A
proxy may be made irrevocable regardless of whether the interest
with which it is coupled is an interest in the stock itself or an
interest in the corporation generally.
- INSPECTORS. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of
election to act at the meeting or any adjournment thereof. If an
inspector or inspectors are not appointed, the person presiding
at the meeting may, but need not, appoint one or more inspectors.
In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by
the directors in advance of the meeting or at the meeting by the
<PAGE> C-5
person presiding thereat. Each inspector, if any, before
entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspectors at such
meeting with strict impartiality and according to the best of his
ability. The inspectors, if any, shall determine the number of
shares of stock outstanding and the voting power of each, the
shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive
votes, ballots, or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count
and tabulate all votes, ballots, or consents, determine the
result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person
presiding at the meeting, the inspector or inspectors, if any,
shall make a report in writing of any challenge, question, or
matter determined by him or them and execute a certificate of any
fact found by him or them. Except as otherwise required by
subsection (e) of Section 231 of the General Corporation Law, the
provisions of that Section shall not apply to the corporation.
- QUORUM. The holders of a majority of the
outstanding shares of stock shall constitute a quorum at a
meeting of stockholders for the transaction of any business. The
stockholders present may adjourn the meeting despite the absence
of a quorum.
- VOTING. Each share of stock shall entitle the
holders thereof to one vote. Directors shall be elected by a
plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the
election of directors. Any other action shall be authorized by a
majority of the votes cast except where the General Corporation
Law prescribes a different percentage of votes and/or a different
exercise of voting power, and except as may be otherwise
prescribed by the provisions of the certificate of incorporation
and these Bylaws. In the election of directors, and for any
other action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action
required by the General Corporation Law to be taken at any annual
or special meeting of stockholders, or any action which may be
taken at any annual or special meeting of stockholders, may be
taken without a meeting, without prior notice and without a vote,
if a consent in writing, setting forth the action so taken, shall
be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice
of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those
stockholders who have not consented in writing. Action taken
pursuant to this paragraph shall be subject to the provisions of
Section 228 of the General Corporation Law.
<PAGE> C-6
ARTICLE II
DIRECTORS
9. FUNCTIONS AND DEFINITION. The business and affairs of
the corporation shall be managed by or under the direction of the
Board of Directors of the corporation. The Board of Directors
shall have the authority to fix the compensation of the members
thereof. The use of the phrase "whole board" herein refers to
the total number of directors which the corporation would have if
there were no vacancies.
10. QUALIFICATIONS AND NUMBER. A director need not be a
stockholder, a citizen of the United States, or a resident of the
State of Delaware. The initial Board of Directors shall consist
of three (3) persons. Thereafter the number of directors
constituting the whole board shall be at least one. Subject to
the foregoing limitation and except for the first Board of
Directors, such number may be fixed from time to time by action
of the stockholders or of the directors, or, if the number is not
fixed, the number shall be one (1). The number of directors may
be increased or decreased by action of the stockholders or of the
directors.
11. ELECTION AND TERM. The first Board of Directors,
unless the members thereof shall have been named in the
certificate of incorporation, shall be elected by the
incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or
removal. Any director may resign at any time upon written notice
to the corporation. Thereafter, directors who are elected at an
annual meeting of stockholders, and directors who are elected in
the interim to fill vacancies and newly created directorships,
shall hold office until the next annual meeting of stockholders
and until their successors are elected and qualified or until
their earlier resignation or removal. Except as the General
Corporation Law may otherwise require, in the interim between
annual meetings of stockholders or of special meetings of
stockholders called for the election of directors and/or for the
removal of one or more directors and for the filling of any
vacancy in that connection, newly created directorships and any
vacancies in the Board of Directors, including unfilled vacancies
resulting from the removal of directors for cause or without
cause, may be filled by the vote of a majority of the remaining
directors then in office, although less than a quorum, or by the
sole remaining director.
12. MEETINGS.
- TIME. Meetings shall be held at such time as the
Board shall fix, except that the first meeting of a newly elected
Board shall be held as soon after its election as the directors
may conveniently assemble.
- PLACE. Meetings shall be held at such place
within or without the State of Delaware as shall be fixed by the
Board.
- CALL. No call shall be required for regular
meetings for which the time and place have been fixed. Special
meetings may be called by or at the direction of the Chairman of
the Board, if any, the Vice-Chairman of the Board, if any, of the
President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No
notice shall be required for regular meetings for which the time
and place have been fixed. Written, oral, or any other mode of
notice of the time and place shall be given for special meetings
in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any
<PAGE> C-8
member of a committee of directors who submits a written waiver
of notice signed by him before or after the time stated therein.
Attendance of any such person at a meeting shall constitute a
waiver of notice of such meeting, except when he attends a
meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any regular or special
meeting of the directors need be specified in any written waiver
of notice.
- QUORUM AND ACTION. A majority of the whole Board
shall constitute a quorum except when a vacancy or vacancies
prevents such majority, whereupon a majority of the directors in
office shall constitute a quorum, provided, that such majority
shall constitute at least one-third of the whole Board. A
majority of the directors present, whether or not a quorum is
present, may adjourn a meeting to another time and place. Except
as herein otherwise provided, and except as otherwise provided by
the General Corporation Law, the vote of the majority of the
directors present at a meeting at which a quorum is present shall
be the act of the Board. The quorum and voting provisions herein
stated shall not be construed as conflicting with any provisions
of the General Corporation Law and these Bylaws which govern a
meeting of directors held to fill vacancies and newly created
directorships in the Board or action of disinterested directors.
Any member or members of the Board of Directors or
of any committee designated by the Board, may participate in a
meeting of the Board, or any such committee, as the case may be,
by means of conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the
Board, if any and if present and acting, shall preside at all
meetings. Otherwise, the Vice-Chairman of the Board, if any and
if present and acting, or the President, if present and acting,
or any other director chosen by the Board, shall preside.
13. REMOVAL OF DIRECTORS. Except as may otherwise be
provided by the General Corporation Law, any director or the
entire Board of Directors may be removed, with or without cause,
by the holders of a majority of the shares then entitled to vote
at an election of directors.
14. COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the
directors of the corporation. The Board may designate one or
more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of any member of
any such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether
<PAGE> C-9
or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in
the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board,
shall have and may exercise the powers and authority of the Board
of Directors in the management of the business and affairs of the
corporation with the exception of any authority the delegation of
which is prohibited by Section 141 of the General Corporation
Law, and may authorize the seal of the corporation to be affixed
to all papers which may require it.
15. WRITTEN ACTION. Any action required or permitted to be
taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting if all members of the
Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes
of proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a
President, a Chief Executive Officer, a Chief Financial Officer,
and, if deemed necessary, expedient, or desirable by the Board of
Directors, a Chairman of the Board, and such other officers with
such titles as the resolution of the Board of Directors choosing
them shall designate. Except as may otherwise be provided in the
resolution of the Board of Directors choosing him, no officer
other than the Chairman or Vice-Chairman of the Board, if any,
need be a director. Any number of offices may be held by the
same person, as the directors may determine.
Unless otherwise provided in the resolution choosing him,
each officer shall be chosen for a term which shall continue
until the meeting of the Board of Directors following the next
annual meeting of stockholders and until his successor shall have
been chosen and qualified.
All officers of the corporation shall have such authority
and perform such duties in the management and operation of the
corporation as shall be prescribed in the resolutions of the
Board of Directors designating and choosing such officers and
prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office
except to the extent that such resolutions may be inconsistent
therewith. The proper officer of the corporation shall record
all of the proceedings of all meetings and actions in writing of
stockholders, directors, and committees of directors, and shall
exercise such additional authority and perform such additional
duties as the Board shall assign to him. Any officer may be
removed, with or without cause, by the Board of Directors. Any
vacancy in any office may be filled by the Board of Directors.
<PAGE> C-10
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of
Directors shall prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall
be subject to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of
incorporation and the provisions of the General Corporation Law,
the power to amend, alter, or repeal these Bylaws and to adopt
new Bylaws may be exercised by the Board of Directors or by the
stockholders.
<PAGE> C-11
EXHIBIT "D"
PRINTONTHENET.COM, INC.
1999 STOCK INCENTIVE PLAN
1. DEFINITIONS: As used herein, the following definitions
shall apply:
(a) "Administrator" shall mean the Board of Directors or the
Committee if the Board of Directors, in its sole discretion,
designates the Committee to administer the Plan.
(b) "Board of Directors" shall mean the Board of Directors
of the Corporation.
(c) "Committee" shall mean the Compensation Committee
designated by the Board of Directors of the Corporation, or
such other committee as shall be specified by the Board of
Directors to perform the functions and duties of the
Committee under the Plan; provided, however, that the
Committee shall comply with the requirements of (i) Rule 16b-
3 of the Rules and Regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and (ii)
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder.
(d) "Corporation" shall mean PrintOnTheNet.Com, Inc., a
Delaware corporation, or any successor thereof.
(e) "Discretion" shall mean in the sole discretion of the
Administrator, with no requirement whatsoever that the
Administrator follow past practices, act in a manner
consistent with past practices, or treat a key employee,
consultant or advisor in a manner consistent with the
treatment afforded other key employees, consultants or
advisors with respect to the Plan.
(f) "Incentive Option" shall mean an option to purchase
Common Stock of the Corporation which meets the requirements
set forth in the Plan and also meets the definition of an
incentive stock option within the meaning of Section 422 of
the Code; provided, however, that Incentive Options may only
be granted to persons who are employees of the Corporation or
of a subsidiary corporation in which the Corporation owns,
directly or indirectly, 50% or more of the combined voting
power of all classes of stock of the subsidiary corporation.
The stock option agreement for an Incentive Option shall
state that the option is intended to be an Incentive Option.
(g) "Nonqualified Option" shall mean an option to purchase
Common Stock of the Corporation which meets the requirements
set forth in the Plan but does not meet the definition of an
incentive stock option within the meaning of Section 422 of
the Code. The stock option agreement for a Nonqualified
Option shall state that the option is intended to be a
Nonqualified Option.
(h) "Participant" shall mean any individual designated by
the Administrator under Paragraph 6 for participation in the
Plan.
<PAGE> D-1
(i) "Plan" shall mean this PrintOnTheNet.Com, Inc. 1999
Stock Incentive Plan.
(j) "Restricted stock award" shall mean a grant of Common
Stock of the Corporation which is subject to forfeiture,
restrictions against transfer, and such other terms and
conditions determined by the Administrator, as provided in
Paragraph 18.
(k) "Stock appreciation right" shall mean a right to receive
the appreciation in value, or a portion of the appreciation
in value, of a specified number of shares of the Common
Stock of the Corporation, as provided in Paragraph 12.
(l) "Subsidiary" shall mean any corporation or similar
entity in which the Corporation owns, directly or indirectly,
stock or other equity interest ("Stock") possessing more than
25% of the combined voting power of all classes of Stock;
provided, however, that an Incentive Option may be granted to
an employee of a Subsidiary only if the Subsidiary is a
corporation and the Corporation owns, directly or indirectly,
50% or more of the total combined voting power of all classes
of Stock of the Subsidiary.
2. PURPOSE OF PLAN: The purpose of the Plan is to provide
employees (including officers and directors who are also
employees), consultants and advisors of the Corporation and its
Subsidiaries with an increased incentive to make significant and
extraordinary contributions to the long-term performance and
growth of the Corporation and its Subsidiaries, to join the
interests of employees, consultants and advisors with the
interests of the shareholders of the Corporation, and to
facilitate attracting and retaining employees, consultants and
advisors of exceptional ability.
3. ADMINISTRATION: The Plan shall be administered by the
Administrator. Subject to the provisions of the Plan, the
Administrator shall determine, from those eligible to be
Participants under the Plan, the persons to be granted stock
options, stock appreciation rights and restricted stock, the
amount of stock or rights to be optioned or granted to each such
person, and the terms and conditions of any stock options, stock
appreciation rights and restricted stock. Subject to the
provisions of the Plan, the Administrator is authorized to
interpret the Plan, to make, amend and rescind rules and
regulations relating to the Plan and to make all other
determinations necessary or advisable for the Plan's
administration. Interpretation and construction of any provision
of the Plan by the Administrator shall, unless otherwise
determined by the Board of Directors in cases where the Committee
is the Administrator, be final and conclusive. A majority of the
Administrator shall constitute a quorum, and the acts approved by
a majority of the members present at any meeting at which a quorum
is present, or acts approved in writing by a majority of the
Administrator, shall be the acts of the Administrator.
4. INDEMNIFICATION OF THE BOARD OF DIRECTORS AND COMMITTEE
MEMBERS: In addition to such other rights of indemnification as
they may have, the members of the Board of Directors and the
Committee shall be indemnified by the Corporation in connection
with any claim, action, suit or proceeding relating to any action
taken or failure to act under or in connection with the Plan or
any option, stock appreciation right or restricted stock granted
hereunder to the full extent provided for under the Corporation's
Bylaws with respect to indemnification of directors of the
Corporation.
5. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN: The maximum
number of shares with respect to which stock options or stock
appreciation rights may be granted or which may be awarded as
<PAGE> D-2
restricted stock under the Plan shall be 4,000,000 shares in the
aggregate of Common Stock of the Corporation. The number of shares
with respect to which a stock appreciation right is granted, but
not the number of shares which the Corporation delivers or could
deliver to a Participant upon exercise of a stock appreciation
right, shall be charged against the aggregate number of shares
remaining available under the Plan; provided, however, that in the
case of a stock appreciation right granted in conjunction with a
stock option under circumstances in which the exercise of the
stock appreciation right results in termination of the stock
option and vice versa, only the number of shares subject to the
stock option shall be charged against the aggregate number of
shares remaining available under the Plan. If a stock option or
stock appreciation right expires or terminates for any reason
(other than termination as a result of the exercise of a related
right) without having been fully exercised, or if shares of
restricted stock are forfeited, the number of shares with respect
to which the stock option or stock appreciation right was not
exercised at the time of its expiration or termination, and the
number of forfeited shares of restricted stock, shall again become
available for the grant of stock options or stock appreciation
rights, or the award of restricted stock, under the Plan, unless
the Plan shall have been terminated.
The number of shares subject to each outstanding stock
option, stock appreciation right or restricted stock award, the
option price with respect to outstanding stock options, the grant
value with respect to outstanding stock appreciation rights and
the aggregate number of shares remaining available under the Plan
shall be subject to such adjustment as the Administrator, in its
Discretion, deems appropriate to reflect such events as stock
dividends, stock splits, recapitalizations, mergers,
consolidations or reorganizations of or by the Corporation;
provided, however, that no fractional shares shall be issued
pursuant to the Plan, no rights may be granted under the Plan with
respect to fractional shares, and any fractional shares resulting
from such adjustments shall be eliminated from any outstanding
stock option, stock appreciation right, or restricted stock award.
6. PARTICIPANTS: The Administrator shall determine and
designate from time to time, in its Discretion, those employees,
consultants or advisors of the Corporation or any Subsidiary to
receive stock options, stock appreciation rights, or restricted
stock who, in the judgment of the Administrator, are or will
become responsible for the direction and financial success of the
Corporation or any Subsidiary; provided, however, that Incentive
Options may be granted only to persons who are employees of the
Corporation or a Subsidiary, and in the case of a Subsidiary only
if (i) the Corporation owns, directly or indirectly, 50% or more
of the total combined voting power of all classes of Stock of the
Subsidiary and (ii) the Subsidiary is a corporation. For the
purposes of the Plan, eligible employees shall include officers
and directors who are also employees of the Corporation or any
Subsidiary.
7. WRITTEN AGREEMENT: Each stock option, stock
appreciation right and restricted stock award shall be evidenced
by a written agreement (each a "Corporation-Participant
Agreement") containing such provisions as may be approved by the
Administrator. Each such Corporation-Participant Agreement shall
constitute a binding contract between the Corporation and the
Participant and every Participant, upon acceptance of such
Agreement, shall be bound by the terms and restrictions of the
Plan and of such Agreement. The terms of each such Corporation-
Participant Agreement shall be in accordance with the Plan, but
each Agreement may include such additional provisions and
restrictions determined by the Administrator, in its Discretion,
provided that such additional provisions and restrictions are not
inconsistent with the terms of the Plan.
8. ALLOTMENT OF SHARES: Subject to the terms of the Plan,
the Administrator shall determine and fix, in its Discretion, the
number of shares of Common Stock with respect to which a
<PAGE> D-3
Participant may be granted stock options and stock appreciation
rights and the number of shares of restricted stock which a
Participant may be awarded.
9. STOCK OPTIONS: Subject to the terms of the Plan, the
Administrator, in its Discretion, may grant to Participants either
Incentive Options or Nonqualified Options or any combination
thereof. Each option granted under the Plan shall designate the
number of shares covered thereby, if any, with respect to which
the option is an Incentive Option, and the number of shares
covered thereby, if any, with respect to which the option is a
Nonqualified Option.
10. STOCK OPTION PRICE: Subject to the rules set forth in
this Paragraph 10, at the time any stock option is granted, the
Administrator, in its Discretion, shall establish the price per
share for which the shares covered by the option may be purchased.
With respect to an Incentive Option, such option price shall not
be less than 100% of the fair market value of the stock on the
date on which such option is granted; provided, however, that with
respect to an Incentive Option granted to an employee who at the
time of the grant owns (after applying the attribution rules of
Section 424(d) of the Code) more than 10% of the total combined
voting stock of the Corporation or of any parent or subsidiary,
the option price shall not be less than 110% of the fair market
value of the stock on the date such option is granted. Fair
market value of a share shall be determined by the Administrator
and may be determined by taking the mean between the highest and
lowest quoted selling prices of the Corporation's Common Stock on
any exchange or other market on which the shares of Common Stock
of the Corporation shall be traded on such date, or if there are
no sales on such date, on the next following day on which there
are sales. The option price shall be subject to adjustment in
accordance with the provisions of paragraph 5 of the Plan.
11. PAYMENT OF STOCK OPTION PRICE: To exercise in whole or
in part any stock option granted hereunder, payment of the option
price in full in cash or, with the consent of the Administrator,
in Common Stock of the Corporation or by a promissory note payable
to the order of the Corporation in a form acceptable to the
Administrator, shall be made by the Participant for all shares so
purchased. Such payment may, with the consent of the
Administrator, also consist of a cash down payment and delivery of
such promissory note in the amount of the unpaid exercise price.
In the Discretion of and subject to such conditions as may be
established by the Administrator, payment of the option price may
also be made by the Corporation retaining from the shares to be
delivered upon exercise of the stock option that number of shares
having a fair market value on the date of exercise equal to the
option price of the number of shares with respect to which the
Participant exercises the stock option. Such payment may also be
made in such other manner as the Administrator determines is
appropriate, in its Discretion. No Participant shall have any of
the rights of a shareholder of the Corporation under any stock
option until the actual issuance of shares to said Participant,
and prior to such issuance no adjustment shall be made for
dividends, distributions or other rights in respect of such
shares, except as provided in Paragraph 5.
12. STOCK APPRECIATION RIGHTS: Subject to the terms of the
Plan, the Administrator may grant stock appreciation rights to
Participants either in conjunction with, or independently of, any
stock options granted under the Plan. A stock appreciation right
granted in conjunction with a stock option may be an alternative
right wherein the exercise of the stock option terminates the
stock appreciation right to the extent of the number of shares
purchased upon exercise of the stock option and, correspondingly,
the exercise of the stock appreciation right terminates the stock
option to the extent of the number of shares with respect to which
<PAGE> D-4
the stock appreciation right is exercised. Alternatively, a stock
appreciation right granted in conjunction with a stock option may
be an additional right wherein both the stock appreciation right
and the stock option may be exercised. A stock appreciation right
may not be granted in conjunction with an Incentive Option under
circumstances in which the exercise of the stock appreciation
right affects the right to exercise the Incentive Option or vice
versa, unless the stock appreciation right, by its terms, meets
all of the following requirements:
(a) the stock appreciation right will expire no later
than the Incentive Option;
(b) the stock appreciation right may be for no more
than the difference between the option price of the
Incentive Option and the fair market value of the shares
subject to the Incentive Option at the time the stock
appreciation right is exercised;
(c) the stock appreciation right is transferable only
when the Incentive Option is transferable, and under the
same conditions;
(d) the stock appreciation right may be exercised only
when the Incentive Option is eligible to be exercised;
and
(e) the stock appreciation right may be exercised only
when the fair market value of the shares subject to the
Incentive Option exceeds the option price of the
Incentive Option.
Upon exercise of a stock appreciation right, a Participant
shall be entitled to receive, without payment to the Corporation
(except for applicable withholding taxes), an amount equal to the
excess of or, in the Discretion of the Administrator if provided
in the Corporation-Participant Agreement, a portion of the excess
of (i) the then aggregate fair market value of the number of
shares with respect to which the Participant exercises the stock
appreciation right, over (ii) the aggregate fair market value of
such number of shares at the time the stock appreciation right was
granted. This amount shall be payable by the Corporation, in the
Discretion of the Administrator, in cash or in shares of Common
Stock of the Corporation or any combination thereof.
13. GRANTING AND EXERCISING OF STOCK OPTIONS AND STOCK
APPRECIATION RIGHTS: Subject to the provisions of this Paragraph
13, each stock option and stock appreciation right granted
hereunder shall be exercisable at any such time or times or in any
such installments as may be determined by the Administrator at the
time of the grants; provided, however, no stock option or stock
appreciation right may be exercisable prior to the expiration of
six months from the date of grant unless the Participant dies or
becomes disabled prior thereto. In addition, the aggregate fair
market value (determined at the time the option is granted) of the
Common Stock with respect to which Incentive Options are
exercisable for the first time by a Participant during any
calendar year under any plan maintained by the Corporation (or any
parent or subsidiary corporation of the Corporation) shall not
exceed $100,000.
A Participant may exercise a stock option or stock
appreciation right, if then exercisable, in whole or in part by
delivery to the Corporation of written notice of the exercise, in
such form as the Administrator may prescribe, accompanied, in the
case of a stock option, by (i) payment for the shares with respect
to which the stock option is exercised in accordance with
Paragraph 11, or (ii) in the Discretion of the Administrator,
irrevocable instructions to a stock broker to promptly deliver to
<PAGE> 5
the Corporation full payment for the shares with respect to which
the stock option is exercised from the proceeds of the stock
broker's sale of or loan against the shares. Except as provided
in Paragraph 17 or as provided in any applicable Corporation-
Participant Agreement, stock options and stock appreciation rights
granted to a Participant may be exercised only while the
Participant is an employee or consultant of the Corporation or a
Subsidiary.
Successive stock options and stock appreciation rights may be
granted to the same Participant, whether or not the stock
option(s) and stock appreciation right(s) previously granted to
such Participant remain unexercised. A Participant may exercise
a stock option or a stock appreciation right, if then exercisable,
notwithstanding that stock options and stock appreciation rights
previously granted to such Participant remain unexercised.
14. NON-TRANSFERABILITY OF INCENTIVE STOCK OPTIONS: No
Incentive Stock Option granted under the Plan to a Participant
shall be transferable by such Participant otherwise than by will
or by the laws of descent and distribution, and Incentive Stock
Options shall be exercisable, during the lifetime of the
Participant, only by the Participant.
15. TERM OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS:
If not sooner terminated, each stock option and stock appreciation
right granted hereunder shall expire not more than 10 years from
the date of the granting thereof; provided, however, that with
respect to an Incentive Option or a related stock appreciation
right granted to a Participant who, at the time of the grant, owns
(after applying the attribution rules of Section 424(d) of the
Code) more than 10% of the total combined voting stock of all
classes of stock of the Corporation or of any parent or
subsidiary, such option and stock appreciation right shall expire
not more than five (5) years after the date of granting thereof.
16. CONTINUATION OF EMPLOYMENT: The Administrator may
require, in its Discretion, that any Participant under the Plan to
whom a stock option or stock appreciation right shall be granted
shall agree in writing as a condition of the granting of such
stock option or stock appreciation right to remain in the employ
of the Corporation or a Subsidiary as an employee, consultant or
advisor for a designed minimum period from the date of the
granting of such stock option or stock appreciation right as shall
be fixed by the Administrator.
17. TERMINATION OF EMPLOYMENT: If the employment or
consultancy of a Participant by the Corporation or a Subsidiary
shall terminate, the Administrator may, in its Discretion, permit
the exercise of stock options and stock appreciation rights
granted to such Participant (i) for a period not to exceed three
months following termination of employment with respect to
Incentive Options or related stock appreciation rights if
termination of employment is not due to death or permanent
disability of the Participant, (ii) for a period not to exceed one
year following termination of employment with respect to Incentive
Options or related stock appreciation rights if termination of
employment is due to the death or permanent disability of the
Participant, and (iii) for a period not to extend beyond the
expiration date with respect to Nonqualified Options or related or
independently granted stock appreciation rights. In no event,
however, shall a stock option or stock appreciation right be
exercisable subsequent to its expiration date and, furthermore,
unless the Administrator in its Discretion determine otherwise, a
stock option or stock appreciation right may only be exercised
after termination of a Participant's employment or consultancy to
the extent exercisable on the date of such termination or to the
extent exercisable as a result of the reason for such termination.
The period of time, if any, a Participant shall have to exercise
stock options or stock appreciation rights upon termination of
<PAGE> D-6
employment or consultancy shall be set forth in the Corporation-
Participant Agreement, subject to extension of such time period by
the Administrator in its Discretion.
18. RESTRICTED STOCK AWARDS: Subject to the terms of the
Plan, the Administrator may award shares of restricted stock to
Participants. All shares of restricted stock granted to
Participants under the Plan shall be subject to the following
terms and conditions (and to such other terms and conditions
prescribed by the Administrator):
(a) At the time of each award of restricted shares,
there shall be established for the shares a restricted
period, which shall be no less than six months and no greater
than five years. Such restricted period may differ among
Participants and may have different expiration dates with
respect to portions of shares covered by the same award.
(b) Shares of restricted stock awarded to Participants
may not be sold, assigned, transferred, pledged, hypothecated
or otherwise encumbered during the restricted period
applicable to such shares. Except for such restrictions on
transfer, a Participant shall have all of the rights of a
shareholder in respect of restricted shares awarded to him or
her including, but not limited to, the right to receive any
dividends on, and the right to vote, the shares.
(c) If the employment of a Participant as an employee,
consultant or advisor of the Corporation or a Subsidiary
terminates for any reason (voluntary or involuntary, and with
or without cause) other than death or permanent disability,
all shares theretofore awarded to the Participant which are
still subject to the restrictions imposed by Paragraph 18(b)
shall upon such termination of employment be forfeited and
transferred back to the Corporation, without payment of any
consideration by the Corporation. In the event such
employment is terminated by action of the Corporation or a
Subsidiary without cause or by agreement between the
Corporation or a Subsidiary and the Participant, however, the
Administrator may, in its Discretion, release some or all of
the shares from the restrictions.
(d) If the employment of a Participant as an employee,
consultant or advisor of the Corporation or a Subsidiary
terminates by reason of death or permanent disability, the
restrictions imposed by Paragraph 18(b) shall lapse with
respect to shares then subject to such restrictions, unless
otherwise determined by the Administrator.
(e) Stock certificates shall be issued in respect of
shares of restricted stock awarded hereunder and shall be
registered in the name of the Participant. Such certificates
shall be deposited with the Corporation or its designee,
together with a stock power endorsed in blank, and, in the
Discretion of the Administrator, a legend shall be placed
upon such certificates reflecting that the shares represented
thereby are subject to restrictions against transfer and
forfeiture.
(f) At the expiration of the restricted period
applicable to the shares, the Corporation shall deliver to
the Participant or the legal representative of the
Participant's estate the stock certificates deposited with it
or its designee and as to which the restricted period has
expired. If a legend has been placed on such certificates,
the Corporation shall cause such certificates to be reissued
without the legend.
<PAGE> D-7
In the case of events such as stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations of
or by the Corporation, any stock, securities or other property
which a Participant receives or is entitled to receive by reason
of his or her ownership of restricted shares shall, unless
otherwise determined by the Administrator, be subject to the same
restrictions applicable to the restricted shares and shall be
deposited with the Corporation or its designee.
19. INVESTMENT PURPOSE: If the Administrator in its
Discretion determines that as a matter of law such procedure is or
may be desirable, it may require a Participant, upon any
acquisition of Common Stock hereunder (whether by reason of the
exercise of stock options or stock appreciation rights or the
award of restricted stock) and as a condition to the Corporation's
obligation to issue or deliver certificates representing such
shares, to execute and deliver to the Corporation a written
statement, in form satisfactory to the Administrator, representing
and warranting that the Participant's acquisition of shares of
stock shall be for such person's own account, for investment and
not with a view to the resale or distribution thereof and that any
subsequent offer for sale or sale of any such shares shall be made
either pursuant to (a) a registration statement on an appropriate
form under the Securities Act of 1933, as amended (the "Securities
Act"), which registration statement has become effective and is
current with respect to the shares being offered and sold, or (b)
a specific exemption from the registration requirements of the
Securities Act, but in claiming such exemption the Participant
shall, prior to any offer for sale or sale of such shares, obtain
a favorable written opinion from counsel for or approved by the
Corporation as to the availability of such exemption. The
Corporation may endorse an appropriate legend referring to the
foregoing restriction upon the certificate or certificates
representing any shares issued or transferred to a Participant
under the Plan.
20. RIGHTS TO CONTINUED EMPLOYMENT: Nothing contained in
the Plan or in any stock option, stock appreciation right or
restricted stock granted or awarded pursuant to the Plan, nor any
action taken by the Administrator hereunder, shall confer upon any
Participant any right with respect to continuation of employment
as an employee, consultant or advisor of the Corporation or a
Subsidiary nor interfere in any way with the right of the
Corporation or a Subsidiary to terminate such person's employment
at any time.
21. WITHHOLDING PAYMENTS: If upon the exercise of a
Nonqualified Option or stock appreciation right, or upon the award
of restricted stock or the expiration of restrictions applicable
to restricted stock, or upon a disqualifying disposition (within
the meaning of Section 422 of the Code) of shares acquired upon
exercise of an Incentive Option, there shall be payable by the
Corporation or a Subsidiary any amount for income tax withholding,
in the Administrator's Discretion, either the Corporation shall
appropriately reduce the amount of Common Stock or cash to be
delivered or paid to the Participant or the Participant shall pay
such amount to the Corporation or Subsidiary to reimburse it for
such income tax withholding. The Administrator may, in its
Discretion, permit Participants to satisfy such withholding
obligations, in whole or in part, by electing to have the amount
of Common Stock delivered or deliverable by the Corporation upon
exercise of a stock option or stock appreciation right or upon
award of restricted stock appropriately reduced, or by electing to
tender Common Stock back to the Corporation subsequent to exercise
of a stock option or stock appreciation right or award of
restricted stock, to reimburse the Corporation or a Subsidiary for
such income tax withholding (any such election being irrevocable),
subject to such rules and regulations as the Administrator may
adopt, including such rules as it determines appropriate with
respect to Participants subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to effect such tax withholding in compliance
with the Rules established by the Securities and Exchange
<PAGE> D-8
Commission (the "Commission") under Section 16 to the Exchange Act
and the positions of the staff of the Commission thereunder
expressed in no-action letters exempting such tax withholding from
liability under Section 16(b) of the Exchange Act. The
Administrator may make such other arrangements with respect to
income tax withholding as it shall determine.
22. EFFECTIVENESS OF PLAN: The Plan shall be effective on
the date the Board of Directors of the Corporation adopts the
Plan, provided that the shareholders of the Corporation approve
the Plan within 12 months of its adoption by the Board of
Directors. Stock options, stock appreciation rights and
restricted stock may be granted or awarded prior to shareholder
approval of the Plan, but each such stock option, stock
appreciation right or restricted stock grant or award shall be
subject to shareholder approval of the Plan. No stock option or
stock appreciation right may be exercised prior to shareholder
approval, and any restricted stock awarded is subject to
forfeiture if such shareholder approval is not obtained.
23. TERMINATION, DURATION AND AMENDMENTS OF PLAN: The Plan
may be abandoned or terminated at any time by the Board of
Directors of the Corporation. Unless sooner terminated, the Plan
shall terminate on the date ten years after its adoption by the
Board of Directors, and no stock options, stock appreciation
rights or restricted stock may be granted or awarded thereafter.
The termination of the Plan shall not affect the validity of any
stock option, stock appreciation right or restricted stock
outstanding on the date of termination.
For the purpose of conforming to any changes in applicable
law or governmental regulations, or for any other lawful purpose,
the Board of Directors shall have the right, with or without
approval of the shareholders of the Corporation, to amend or
revise the terms of the Plan at any time, however, no such
amendment or revision will, without the consent of the holder
thereof, change the stock option price (other than anti-dilution
adjustment) or alter or impair any stock option, stock
appreciation right or restricted stock which has been previously
granted or awarded under the Plan.
As adopted by the Board of Directors on May __, 1999.
