-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CnYtW8nS9eWO4uRDu/+9Dza96vmYJnRXxHAWKOeOAkAxEHTgr/BD7qS2gJtBq2j3 IsSpMa7xPUKyR7OP+BqosA== 0000713671-99-000003.txt : 19990521 0000713671-99-000003.hdr.sgml : 19990521 ACCESSION NUMBER: 0000713671-99-000003 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 REFERENCES 429: 033-93272 FILED AS OF DATE: 19990520 EFFECTIVENESS DATE: 19990520 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DNB FINANCIAL CORP /PA/ CENTRAL INDEX KEY: 0000713671 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 232222567 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-78913 FILM NUMBER: 99631197 BUSINESS ADDRESS: STREET 1: 4 BRANDYWINE AVE CITY: DOWNINGTOWN STATE: PA ZIP: 19335 BUSINESS PHONE: 6102691040 MAIL ADDRESS: STREET 1: 4 BRANDYWINE AVENUE CITY: DOWNINGTOWN STATE: PA ZIP: 19335 S-8 1 As filed with the Securities and Exchange Commission on May 18, 1999. Registration No. 33-93272. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________ FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _______________________________________________________ DNB FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania 23-2222567 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4 BRANDYWINE AVENUE, DOWNINGTOWN, PENNSYLVANIA 19335 _______________________________________________________________ (Address of principal executive offices) (Zip Code) 1995 STOCK OPTION PLAN OF DNB FINANCIAL CORPORATION (as amended and restated, effective as of April 27, 1999) (Full Title of the Plan) Henry F. Thorne, President and Chief Executive Officer DNB FINANCIAL CORPORATION 4 Brandywine Avenue, Downingtown, Pennsylvania 19335 (Name and address of agent for service) (610) 269-1040 (Telephone number, including area code, of agent for service) Copy to: David F. Scranton, Esquire STRADLEY, RONON, STEVENS & YOUNG, LLP 30 Valley Stream Parkway Malvern, Pennsylvania 19355-1481
Calculation of Registration Fee ==================== ======================= ========================= =========================== ===================== Title of Amount to be Proposed maximum Proposed maximum aggregate Amount of securities registered(1) offering price per offering price (3) registration fee to be registered share(2) ==================== ======================= ========================= =========================== ===================== Common Stock (par 100,000 $28.875 $2,887,500 $802.72 value $1 per share) shares ==================== ======================= ========================= =========================== =====================
(1) Represents the number of shares to be issued under the 1995 Stock Option Plan of DNB Financial Corporation (the "Plan") assuming issuance and exercise. (2)The price per share of $28.875 is estimated, in accordance with Rule 457(h)(1) under the Securities Act, solely for the purpose of determining the registration fee and was the average of the bid and asked prices per share of the Common Stock on May 14, 1999. (3)Estimated, in accordance with Rule 457(h)(1) under the Securities Act, solely for the purpose of determining the registration fee. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference. The following documents and information filed by DNB Financial Corporation (the "Company" or "Registrant") with the Securities and Exchange Commission (the "Commission") are, as of their respective dates, incorporated into this Registration Statement by reference: (a) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998; (b) the Company's Quarterly Report on Form 10Q for the fiscal quarter ended March 31, 1999; (c) the description of the Company's securities as contained in the Company's registration on Form 8-A as filed with the Commission on April 4, 1988, and as contained Articles of Incorporation filed on March 31, 1989, attached as Exhibit 3.1 to Form 10-K for the fiscal year ended December 31, 1988 (No. 0-16667), Amended Articles of Incorporation filed on May 2, 1990, at Item 7C to Form 8-K, date of report, April 26, 1990 (No. 0-16667), and Amended Articles of Incorporation of the Registrant effective May 18, 1998, attached as Exhibit 3.5 to Form 10-K for the fiscal year ended December 31, 1998 (No. 0-16667), each hereby incorporated by reference. The class of securities to be offered pursuant to this S-8 registration statement is Common Stock of the par value of $1.00 per share, of which the Company has authority to issue ten million (10,000,000) shares. The holders of such shares of voting stock of the Company do not have the right to cumulative voting. In each election of Directors every shareholder is entitled to one vote for each Director to be elected, for each share of stock having the right to vote in such election registered in his or her or its name. In addition, the shares when issued will be fully paid and non-assessable. All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing of a post-effective amendment which indicates that all shares of Common Stock offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this Registration Statement and to be a part thereof from the date of filing of such documents. Item 4. Description of Securities. Not applicable. Item 5. Interests of Named Experts and Counsel. None. Item 6. Indemnification of Directors and Officers. Sections 1741 and 1747 of the Pennsylvania Business Corporation Act, as amended (the "Act"), provides for indemnification of, and insurance for any person who is or was a representative of the Company and specifically empowers the Company to indemnify, subject to the standards therein prescribed, any person who is or was a representative of the Company in connection with any action, suit or proceeding brought or threatened by reason of the fact that he is or was a representative of the Company. Articles 23 and 24 of the Company's Bylaws require the Company to indemnify each of the Company's directors and officers in such capacity in which any such director or officer acts for or on behalf of the Company including as an employee or agent. The Bylaws provide that the Company will indemnify any officer or director who was or is a party to, or is threatened to be made a party to, or who is called to be a witness in connection with, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that such person is or was an officer or director of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of a corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In addition, the Company will indemnify any officer or director who was or is a party to, or is threatened to be made a party to, or who is called as a witness in connection with, any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, and/or employee or agent of a corporation, partnership, joint venture, trust or other enterprise against amounts paid in settlement and expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of, or serving as a witness in, such action or suit if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company. No indemnification will be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for misconduct in the performance of his duty to the Company. The Bylaws permit the payment of expenses incurred by an officer or director in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding. As provided in the Bylaws, the Company may purchase and maintain insurance on behalf of any person who is or was an officer or director of the Company, or is or was serving at the request of the Company as an officer or director of a corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such. The Company will not indemnify any officer or director in any case where the act or failure to act giving rise to the claim for indemnification constituted willful misconduct or recklessness. The Bylaws also provide that a director of the Company will not be personally liable for monetary damages as such for any action taken or for any failure to take any action, unless: (a) the director has breached or failed to perform the duties of his office, and (b) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness. The Bylaws exclude: (a) the responsibility or liability of a director pursuant to a criminal statute, or (b) the liability of a director for the payment of taxes pursuant to local, state or federal law. Item 7. Exemption from Registration Claimed. Not applicable. Item 8. Exhibits. See the Exhibit Index attached to this Registration Statement. Item 9. Undertakings. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To the extent required by Item 512 of Regulation S-K, to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To the extent required by Item 512 of Regulation S-K, to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment hereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be an initial bona fide offering thereof; and (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy or expressed in the Act and will be governed by the final adjudication of such issue. EXHIBIT INDEX Exhibit Page (3) (a) Articles of Incorporation: Articles of Incorporation filed on March 31, 1989, attached as Exhibit 3.1 to Form 10-K for the fiscal year ended December 31, 1988 (No. 0-16667), Amended Articles of Incorporation filed on May 2, 1990, at Item 7C to Form 8-K, date of report, April 26, 1990 (No. 0-16667), and Amended Articles of Incorporation of the Registrant effective May 18, 1998, attached as Exhibit 3.5 to Form 10-K for the fiscal year ended December 31, 1998 (No. 0-16667), each hereby incorporated by reference. (b) Bylaws. Amended By-laws of the Registrant filed on January 8, 1990, at Item 7C to Form 8-K, date of report, January 3, 1990 (No. 0-16667), and Amended by-laws of the Registrant filed on July 20, 1990, at Item 7C to Form 8-K, date of report July 18, 1990 (No. 0-16667) each hereby incorporated by reference. (4) 1995 Stock Option Plan of DNB Financial Corporation (as amended and restated, effective April 27, 1999) (5) Opinion of Stradley, Ronon, Stevens & Young, LLP (15) Not applicable. (23) Consents. (a) Consent of Stradley,Ronon,Stevens & Young, LLP (included in Exhibit 5). (b) Consent of KPMG LLP Certified Public Accountants. (24) Not applicable. (28) Not applicable. (99) None. SIGNATURES The Registrant. Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Downingtown, Commonwealth of Pennsylvania, on May 14, 1999. DNB FINANCIAL CORPORATION (Registrant) By: /S/ Henry F. Thorne Henry F. Thorne, President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated. Signature Date /S/ Henry F. Thorne May 14, 1999 - ----------------------------------------------------- Henry F. Thorne, President, Chief Executive Officer and Director /S/ Bruce E. Moroney May 14, 1999 - ----------------------------------------------------- Bruce E. Moroney, Chief Financial Officer (Principal Accounting Officer) /S/ Robert J. Charles May 14, 1999 - ----------------------------------------------------- Robert J. Charles Chairman of the Board /S/ Vernon J. Jameson May 14, 1999 - ----------------------------------------------------- Vernon J. Jameson Vice-Chairman of the Board /S/ James H. Thornton May 14, 1999 - ----------------------------------------------------- James H. Thornton, Director /S/ William S. Latoff May 14, 1999 - ----------------------------------------------------- William S. Latoff, Director /S/ Joseph G. Riper May 14, 1999 - ----------------------------------------------------- Joseph G. Riper, Director /S/ Louis N. Teti May 14, 1999 - ----------------------------------------------------- Louis N. Teti, Director EX-5 2 - -------------------------------------------------------------------------------- STRADLEY, RONAN, STEVENS & YOUNG, LLP ATTORNEYS AT LAW David F. Scranton (610) 640-5806 dscranton@stradley.com Great Valley Corporate Center Philadelphia, Pennsylvania 30 Valley Stream Parkway Cherry Hill, New Jersey Malvern, Pennsylvania 19355-1481 Wilmington, Delaware A Pennsylvania Limited Liability Partnership - -------------------------------------------------------------------------------- May 13, 1999 DNB Financial Corporation 4 Brandywine Avenue Downingtown, PA 19335 Re: REGISTRATION STATEMENT ON FORM S-8 WITH RESPECT TO THE 1995 STOCK OPTION PLAN OF DNB FINANCIAL CORPORATION Dear Sirs: We have acted as counsel for DNB Financial Corporation (the "Company") in connection with the preparation and filing with the Securities and Exchange Commission of a registration statement on Form S-8 (the "Registration Statement"), for the purpose of registering under the Securities Act of 1933, as amended, 100,000 additional shares (the "Shares") of the common stock of the Company, par value $1.00 per share (the "Common Stock"). The Shares are issuable upon the exercise of stock options (the "Options") to be granted pursuant to the Company's 1995 Stock Option Plan, as amended and restated (the "Plan") and individual option agreements, consistent with the terms of the Plan, to be entered into hereafter upon approval by the Company's board of directors with certain employees and directors of the Company (the "Individual Option Agreements"). In our capacity as counsel, we have been requested to render the opinions set forth in this letter and, in connection therewith, we have reviewed the following documents: (i) the Registration Statement, (ii) the Plan, (iii) the Company's Articles of Incorporation, as amended, certified as true and correct by the Secretary of the Company, (iv) certain minutes of meetings of the Board of Directors and shareholders of the Company, certified as true and correct by the Secretary of the Company, (v) Bylaws of the Company, as amended, certified as true and correct by the Secretary of the Company, (vi) a Certificate of the Secretary of the Company dated May 12, 1999, and (vii) such other documents, instruments and records as we deemed necessary or appropriate for purposes of rendering this option. In rendering this opinion, we have assumed and relied upon, without independent investigation, (i) the authenticity, completeness, truth and due authorization, execution and delivery of all documents submitted to us as originals, (ii) the genuineness of all signatures on all documents submitted to us as originals, and (iii) the conformity to the originals of all documents submitted to us as certified or photostatic copies. The laws covered by the opinion expressed herein are limited to (a) the federal statutes, judicial decisions and rules and regulations of the governmental agencies of the United States of America and (b) the Pennsylvania Business Corporation Law. This opinion letter is given only with respect to laws and regulations presently in effect. We assume no obligation to advise you of any changes in law or regulation which may hereafter occur, whether the same are retroactively or prospectively applied, or to update or supplement this letter in any fashion to reflect any facts or circumstances which hereafter come to our attention. Based upon, and subject to, the foregoing, we are of the opinion that the Shares, when issued upon proper exercise of the Options pursuant to and in accordance with the Plan and the respective Individual Option Agreements, will be validly issued, fully paid and nonassessable. We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement. Furthermore, we hereby consent to the filing of this opinion letter as an exhibit to any applications for registration, qualification, or exemption, as the case may be, filed by, or on behalf of, the Company under the securities laws of the several states and other jurisdictions of the United States relating to the offering described in the Registration Statement. Very truly yours, STRADLEY, RONON, STEVENS & YOUNG, LLP By: /S/ David F. Scranton ---------------------- David F. Scranton Partner EX-23 3 The Board of Directors DNB Financial Corporation We consent to the use of our report incorporated herein by reference. /s/ KPMG LLP KPMG LLP Philadelphia, Pennsylvania May 14, 1999 EX-4 4 1995 STOCK OPTION PLAN OF DNB FINANCIAL CORPORATION (AS AMENDED AND RESTATED, EFFECTIVE AS OF APRIL 27, 1999) TABLE OF CONTENTS Page 1. Purpose ............................................................A-3 2. Definitions ........................................................A-3 3. Administration .....................................................A-4 4. Maximum Limitations ................................................A-5 5. Conditions of Options ..............................................A-6 6. Exercise of Stock Options ..........................................A-7 7. Transferability ....................................................A-7 8. Adjustment Provisions ..............................................A-7 9. Dissolution, Merger and Consolidation ..............................A-8 10. Effective Date and Conditions Subsequent to Effective Date .........A-8 11. Expiration of Stock Options ........................................A-8 12. Incentive Stock Options ............................................A-8 13. Stock Options for Non-Employee Directors .......................... A-9 14. Miscellaneous ......................................................A-9 1995 STOCK OPTION PLAN OF DNB FINANCIAL CORPORATION (As amended and restated, effective as of April 27, 1999) 1. Purpose. The purpose of this Plan is: (i) to provide Employees and Non-Employee Directors of DNB Financial Corporation (the "Company") and its wholly owned subsidiary, the Downingtown National Bank (the "Bank"), an opportunity to acquire a larger personal financial interest in the Company through common stock ownership, (ii) to provide an incentive for Employees and Non-Employee Directors to continue to promote the best long term interests of the Company and its shareholders by creating incremental shareholder value and enhancing its long-term performance, and (iii) to provide an incentive for Employees and Non-Employee Directors to associate or remain associated with the Company. Some or all of the Stock Options granted to Employees (but not Non-Employee Directors) pursuant to this Plan may, but need not, be structured to qualify as Incentive Stock Options ( "ISOs"). 2. Definitions. The following definitions shall apply for purposes of this Plan and any agreement relating to a Stock Option: (a) "Bank" shall mean Downingtown National Bank. (b) "Board" shall mean the Board of Directors of DNB Financial Corporation. (c) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and the rulings issued thereunder. (d) "Committee" shall mean the committee of Board members appointed to administer the Plan pursuant to Section 3(a), below. (e) "Common Stock" shall mean shares of common stock issued by DNB Financial Corporation or such class of shares to which such shares are converted hereafter. (f) "Company" shall mean DNB Financial Corporation (g) "Employee" shall mean an individual who is an employee of the Company or the Bank under general common law principles. An individual who is an "Employee", as so defined, may also be a member of the Board (but not a Non-Employee Director). (h) "Incentive Stock Option" or "ISO" shall mean a Stock Option that qualifies under section 422 of the Code. (i) "Non-Employee Director" shall mean a member of the Board who is not an Employee. (j) "Non-Qualified Option" shall mean a Stock Option granted under this Plan which is not an Incentive Stock Option. (k) "Plan" shall mean the Stock Option Plan of DNB Financial Corporation, as evidenced hereby, or as amended from time to time. (l) "Stock Option" shall mean an option issued pursuant to this Plan. (m) "Termination for Cause" shall mean termination of employment of an Employee or termination of service as a Non-Employee Director due to conduct which would authorize the forfeiture of fringe benefits or other remuneration under the Employee's written contract of employment with the Company or the Bank; or, in the absence of a written contract of employment, or in the case of any Non-Employee Director, (i) willful misconduct materially injurious to the Company, (ii) dishonesty, including, but not limited to, theft or falsification of records or the like, (iii) the commission of a crime, or (iv) gross negligence of the Employee or Non-Employee Director in the performance of his or her duties. 3. Administration. (a) Board of Directors. The Plan shall be administered by the Board, which, to the extent it shall determine, may delegate its powers with respect to the administration of the Plan (except its powers under Section 14(c)) to a Committee appointed by the Board and composed of not less than three members of the Board. If the Board chooses to appoint a Committee, references hereinafter to the Board (except in Section 14 (c)) shall be deemed to refer to the Committee. (b) Powers. Within the limits of the express provisions of the Plan, the Board shall determine: (i) the Employees to whom Stock Options hereunder shall be granted, (ii) the time or times at which such Stock Options shall be granted, (iii) the amount and form of any Stock Options to Employees, including, but not limited to, whether any Stock Option is structured to be an ISO, and (iv) the limitations, restrictions and conditions applicable to any Stock Option granted to any Employee or Non-Employee Director, including, but not limited to, whether the right to exercise any Stock Option, in whole or in part, will be subject to a vesting schedule. In making such determinations, the Board may take into account the nature of the services rendered by such Employees, or Non-Employee Directors or classes thereof, their present and potential contributions to the Company's success and such other factors as the Board in its discretion shall deem relevant. (c) Interpretations. Subject to the express provisions of the Plan, the Board may interpret the Plan, prescribe, amend and rescind rules and regulations relating to it, determine the terms and provisions of the respective Stock Options and make all other determinations it deems necessary or advisable for the administration of the Plan. (d) Determinations. The determinations of the Board on all matters regarding the Plan shall be conclusive. (e) Nonuniform Determinations. The Board's determinations under the Plan, including without limitation, selection of the individuals to receive Stock Options, the terms and provisions of Stock Options thereof and the agreements evidencing the same, need not be uniform and may be made by it selectively among individuals who receive or are eligible to receive Stock Options under the Plan, whether or not such individuals are similarly situated. (f) Determinations With Respect to Stock Options Granted to Employees. All determinations with respect to the identity of any Employee to whom a Stock Option shall be granted, the timing or exercise price thereof, or the number of shares of Common Stock subject thereto, shall be made by a committee comprised of two or more members of the Board, who need not be the same as the Committee described in Section 3(a), above, none of whom may be an Employee. 4. Maximum Limitations. The aggregate number of shares of Common Stock available for grant under the Plan is two hundred fifty-eight thousand, sixteen (258,016), as of the effective date of this amendment and restated plan, subject to adjustment pursuant to Section 8, below. Shares of Common Stock issued pursuant to the Plan may be either authorized but unissued shares or shares now or hereafter held in the treasury of the Company. In the event that, prior to the end of the period during which Stock Options may be granted under the Plan, any Stock Option under the Plan expires unexercised or is terminated, surrendered or canceled, without being exercised, in whole or in part, for any reason, the number of shares theretofore subject to such Stock Option, or the unexercised, terminated, forfeited or unearned portion thereof, shall be added to the remaining number of shares of Common Stock available for grant as a Stock Option under the Plan, including a grant to a former holder of such Stock Option, upon such terms and conditions as the Board shall determine, which terms may be more or less favorable than those applicable to such former Stock Option. 5. Conditions of Options. Any Stock Option granted pursuant to this Plan shall, by its terms, be subject to the following limitations and conditions: (a) Option Price. The option price for each Stock Option shall be the fair market value of the number of shares of Common Stock subject thereto at the time of the grant thereof. (b) Term of Option. No Stock Option shall be exercisable after the date which is 10 years from the date it is granted. (c) Time of Grants. No Stock Option shall be granted more than 10 years from the earlier of the date of adoption of the Plan by the Board or the date of shareholder approval hereof; provided, however, that the Plan and all Stock Options granted prior to such date shall remain in effect and subject to adjustment and amendment as herein provided until they have been satisfied or terminated in accordance with their terms. (d) Expiration of Stock Option. A Stock Option must, by its terms, expire no later than the date that the employment of the Employee or the service of the Non-Employee Director with the Company terminates for any reason, except in the following circumstances: (i) In the case of an Employee or Non-Employee Director who dies while employed by or in the service of the Company, his Stock Option may, by its terms, permit his estate or the person who acquires the right to exercise such Stock Option upon his or her death by bequest or inheritance to exercise the Stock Option, in whole or in part, at any time on or before the expiration date set forth therein; and (ii) In the case of an Employee or Non-Employee Director whose employment or service with the Company is terminated for reasons other than pursuant to a Termination for Cause, his Stock Option may, by its terms, permit him to exercise the Stock Option, in whole or in part, at any time on or before the expiration date set forth therein. 6. Exercise of Stock Options. (a) In General. Stock Options shall be subject to such terms and conditions, shall be exercisable at such time or times, and shall be evidenced by such form of written option agreement between the optionee and the Company, as the Board shall determine; provided that such determinations are not inconsistent with the other provisions of the Plan, and with Section 422 of the Code in the case of an ISO. (b) Manner of Exercise of Options and Payment for Common Stock. Stock Options may be exercised by an optionee by giving written notice to the Corporate Secretary of the Company stating the number of shares of Common Stock with respect to which the Stock Option is being exercised and tendering payment therefor. At the time that a Stock Option granted under the Plan, or any part thereof, is exercised, payment for the Common Stock issuable thereupon shall be made in full in cash or by certified check or, if the Board in its discretion agrees to accept, in shares of Common Stock of the Company (the number of such shares paid for each share subject to the Stock Option, or part thereof, being exercised shall be determined by dividing the option price by the fair market value per share of the Common Stock on the date of exercise). As soon as reasonably possible following such exercise, a certificate representing shares of Common Stock purchased, registered in the name of the optionee, shall be delivered to the optionee. (c) Timing of Exercise. No Stock Option may be exercised during the first six months of its term except in the case of death of the Employee or Non-Employee Director to whom it was granted if, in accordance with Section 5(d)(i), above, the Stock Option has not expired upon the Employee's or Non-Employee Director's death. 7. Transferability. No Stock Option may be transferred, assigned, pledged or hypothecated (whether by operation of law or otherwise), except as provided by will or the applicable laws of descent or distribution as described in Section 5(d)(i), above, or subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition of a Stock Option, or levy of attachment or similar process upon the Stock Option not specifically permitted herein shall be null and void and without effect. A Stock Option may be exercised only by an Employee or Non-Employee Director during his or her lifetime, or by his or her estate or the person who acquires the right to exercise such Stock Option upon his or her death by bequest or inheritance if permitted by Section 5(d)(i), above. 8. Adjustment Provisions. The aggregate number of shares of Common Stock with respect to which Stock Options may be granted, the aggregate number of shares of Common Stock subject to each outstanding Stock Option, and the option price per share of each such Stock Option, may all be appropriately adjusted as the Board shall determine for any increase or decrease in the number of shares of issued Common Stock resulting from a division or consolidation of shares, whether through reorganization, recapitalization, stock split, stock distribution or combination of shares, or the payment of a share dividend or other increase or decrease in the number of such shares outstanding effected without receipt of consideration by the Company. 9. Dissolution, Merger and Consolidation. Upon the dissolution or liquidation of the Company, or upon a merger or consolidation of the Company in which the Company is not the surviving corporation, each Stock Option granted hereunder shall expire as of the effective date of such transaction; provided, however, that the Board shall give at least 30 days' prior written notice of such event to each optionee during which time he or she shall have a right to exercise his or her wholly or partially unexercised Stock Option (without regard to installment exercise limitations, if any) and, subject to prior expiration pursuant to the terms thereof, each Stock Option shall be exercisable after receipt of such written notice and prior to the effective date of such transaction; provided further, however, that upon a merger or consolidation of the Company in which the Company is not the surviving corporation, in lieu of such notice, each such Stock Option shall be converted to an option to acquire shares of the surviving corporation, the number of which shall be based on the relative values of the Common Stock and such surviving corporation's common stock on the date of such merger or consolidation. 10. Effective Date and Conditions Subsequent to Effective Date. The Plan shall become effective on the date of approval of the Plan by the holders of a majority of the shares of Common Stock of the Company; provided, however, that the adoption of the Plan is subject to such shareholder approval within 12 months before or after the date of adoption of the Plan by the Board. The Plan shall be null and void and of no effect if the foregoing condition is not fulfilled, and in such event each Stock Option granted hereunder shall, notwithstanding any of the preceding provisions of the Plan, be null and void and of no effect. 11. Expiration of Stock Option. Each Stock Option shall, unless sooner expired pursuant to Section 5(d), above, expire on the expiration date set forth in the applicable option agreement. 12. Incentive Stock Options. Some or all of the Stock Options granted to Employees pursuant to this Plan may be options which are intended to be ISOs. Only those Stock Options which, by their terms, are expressly intended to qualify as ISOs shall be considered as such. In addition to the other provisions of this Plan, the provisions of this Section 12 apply to grants of ISOs hereunder. In the event of a conflict between any provision of this Section 12 and provision of any other Section of this Plan, the provision of this Section 12 shall prevail. (a) Identity of Optionees. ISOs may be granted only to Employees (and not Non-Employee Directors). (b) More-than-10% Shareholders. No Employee may receive an ISO under the Plan if such Employee, at the time the Stock Option is granted, owns (as defined in Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, or any subsidiary, unless the option price for such ISO is at least 110% of the fair market value of the Common Stock subject to such ISO on the date of grant and such ISO is not exercisable after the date five years from the date such Option is granted. (c) Limitation on Amounts. The aggregate fair market value (determined with respect to each ISO as of the date of grant) of the capital stock with respect to which ISOs are exercisable for the first time by an Employee during any calendar year (under this Plan or any other plan of the Company or any subsidiary of the Company) shall not exceed $100,000. 13. Stock Options for Non-Employee Directors. As of June 30, 1999, and June 30 of each year thereafter through June 30, 2004, or until termination of this Plan, if earlier, the Company shall grant to each Non-Employee director a Nonqualified Option with respect to one thousand two hundred and sixteen (1,216) shares of Common Stock, subject to such terms as the Board may determine in accordance with the terms of the Plan. No other Stock Options shall be granted to Non-Employee Directors pursuant to this Plan. If the number of shares of Common Stock remaining for grant under the Plan is not sufficient for each Non-Employee Director to be granted a Stock Option for one thousand two hundred and sixteen (1,216) shares on any grant date, then each Non-Employee Director shall be granted an option for a number of whole shares equal to the number of shares then remaining available under the Plan, divided by the number of Non-Employee Directors as of the grant date, disregarding any fractions of a share. 14. Miscellaneous. (a) Legal and Other Requirements. The obligation of the Company to sell and deliver Common Stock under the Plan shall be subject to all applicable laws, regulations, rules and approvals, including, but not by way of limitation, the effectiveness of a registration statement under the Securities Act of 1933 if deemed necessary or appropriate by the Company. Certificates for shares of Common Stock issued hereunder may be legended as the Board shall deem appropriate. (b) No Obligation To Exercise Options. The granting of a Stock Option shall impose no obligation upon an optionee to exercise such Stock Option. (c) Termination and Amendment of Plan. The Board, without further action on the part of the shareholders of the Company, may from time to time alter, amend or suspend the Plan, or may at any time terminate the Plan, except that it may not, without the approval of the shareholders of the Company: (i) Materially increase the total number of shares of Common Stock available for grant under the Plan except as provided in Section 8, above; (ii) Materially modify the class of eligible Employees under the Plan; (iii) Materially increase benefits to any Employee or Non-Employee Director who is subject to the restrictions of Section 16 of the Securities Exchange Act of 1934; or (iv) Effect a change relating to an ISO granted hereunder which is inconsistent with Section 422 of the Code. No action taken by the Board under this Section, either with or without the approval of the shareholders of the Company, may materially and adversely affect any outstanding Stock Option without the consent of the holder thereof. This Plan shall not be amended to modify any of the terms of Section 13, above, or to otherwise modify the terms of the Plan relating to the selection of the Non-Employee directors to whom Stock Options are to be granted, the timing or exercise price thereof, or the number of shares of Common Stock subject thereto, more often then every six months, unless such changes are required to comport with changes in the Code. (d) Application of Funds. The proceeds received by the Company from the sale of Common Stock pursuant to Stock Options will be used for general corporate purposes. (e) Withholding Taxes. (i) Upon the exercise of any Stock Option, the Company shall have the right to require the optionee to remit to the Company an amount sufficient to satisfy all federal, state and local withholding tax requirements (if any) then applicable prior to the delivery of any certificate or certificates for shares of Common Stock. (ii) Upon the disposition of any Common Stock acquired by the exercise of a Stock Option, the Company shall have the right to require the optionee to remit to the Company an amount sufficient to satisfy all federal, state and local withholding tax requirements (if any) then applicable as a condition to the registration of the transfer of such Common Stock on its books. Whenever under the Plan payments are to be made by the Company in cash or by check, such payments shall be net of any amounts sufficient to satisfy all federal, state and local withholding tax requirements. (f) Right To Terminate Employment. Nothing in the Plan or any agreement entered into pursuant to the Plan shall confer upon any Employee or Non-Employee Director the right to continue in the employment or other service of the Company, or any subsidiary thereof, or affect any right which the Company or any subsidiary may have to terminate the employment or service of such Employee or Non-Employee Director. (g) Rights as a Shareholder. No optionee shall have any right as a shareholder with respect to shares of Common Stock subject to a Stock Option unless and until certificates for such shares are issued to him or her. (h) Leaves of Absence and Disability. The Board shall be entitled to make such rules, regulations and determinations as it deems appropriate under the Plan in respect of any leave of absence taken by or disability of any Employee or Non-Employee Director. Without limiting the generality of the foregoing, the Board shall be entitled to determine: (i) Whether or not any such leave of absence shall constitute a termination of employment within the meaning of the Plan, and (ii) The impact, if any, of any such leave of absence on Stock Options granted under the Plan theretofore made to any Employee or Non- Employee Director who takes such leave of absence. (i) Fair Market Value. Whenever the fair market value of Common Stock is to be determined under the Plan as of a given date, such fair market value shall be: (i) If the Common Stock is traded on the over-the-counter market, the average of the mean between the bid and the asked price for the Common Stock at the close of trading for the trading day immediately preceding such given date; (ii) If the Common Stock is listed on a national securities exchange, the average of the closing prices of the Common Stock on the composite tape for the trading day immediately preceding such given date; and (iii) If the Common Stock is neither traded on the over-the-counter market nor listed on a national securities exchange, such value as the Board, in good faith, shall determine. Notwithstanding any provision of the Plan to the contrary, no determination made with respect to the fair market value of Common Stock subject to a ISO shall be inconsistent with Section 422 of the Code. (j) Notices. Every direction, revocation or notice authorized or required by the Plan shall be deemed delivered to the Company on the date it is personally delivered to the Secretary of the Company at its principal executive offices or three business days after it is sent by registered or certified mail, postage prepaid, addressed to the Secretary at such offices, and shall be deemed delivered to an optionee on the date it is personally delivered to him or her or three business days after it is sent by registered or certified mail, postage prepaid, addressed to him or her at the last address shown for him or her on the records of the Company. (k) Applicable Law. All questions pertaining to the validity, construction and administration of the Plan and Stock Options granted hereunder shall be determined in conformity with the laws of the Commonwealth of Pennsylvania, to the extent not superseded by federal law. (l) Elimination of Fractional Shares. If under any provision of the Plan which requires a computation of the number of shares of Common Stock subject to a Stock Option, the number so computed is not a whole number of shares of Common Stock, such number of shares of Common Stock shall be rounded down to the next whole number. * * * * * -----END PRIVACY-ENHANCED MESSAGE-----