<PAGE>
As filed with the Securities and Exchange Commission on May 15, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-----------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------
TELESPECTRUM WORLDWIDE INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2845501
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
443 South Gulph Road
King of Prussia, PA 19406
(Address of principal executive offices) (Zip Code)
TELESPECTRUM WORLDWIDE INC.
1996 EQUITY COMPENSATION PLAN AS AMENDED
(Full title of the plan)
MR. RICHARD C. SCHWENK, JR.
Senior Vice President and Chief Financial Officer
TeleSpectrum Worldwide Inc.
443 South Gulph Road
King of Prussia, PA 19406
(Name and address of agent for service)
(610) 878-7400
(Telephone number, including area code, of agent for service)
-----------------------
Copy of all communications to:
STEPHEN M. GOODMAN, ESQ.
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
(215) 963-5086
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================
Proposed maximum Proposed maximum
Title of securities Amount to be offering price aggregate Amount of
to be registered registered per share (2) offering price (1) registration fee
===================================================================================================================
<S> <C> <C> <C> <C>
Common Stock,
without par value 2,700,000 shares $10.6875 $28,856,250 $8,512.59
===================================================================================================================
</TABLE>
(1) This registration statement covers shares of Common Stock of TeleSpectrum
Worldwide Inc., which may be offered or sold pursuant to the 1996 Equity
Compensation Plan (the "Plan"). The contents of an earlier registration
statement (Registration No. 333-20493) covering 2,300,000 shares of Common
Stock under the Plan are incorporated by reference in this Registration
Statement. Pursuant to Rule 457(h)(2), no separate registration fee is
required with respect to the interests in the plan. This registration
statement also relates to an indeterminate number of shares of Common Stock
that may be issued upon stock splits, stock dividends or similar
transactions in accordance with Rule 416.
(2) Estimated pursuant to paragraphs (c) and (h) of Rule 457 solely for the
purpose of calculating the registration fee, based upon the average of the
reported high and low sales prices for a share of Common Stock on May 14,
1998, as reported on the Nasdaq National Market.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
---------------------------------------
The following documents, as filed by the Registrant with the
Securities and Exchange Commission (the "Commission"), are incorporated by
reference in this Registration Statement:
(a) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998
(b) The Registrant's Definitive Proxy Statement for the Registrant's
Annual Meeting of Stockholders;
(c) The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997;
(d) The Registrant's Current Report on Form 8-K filed on March 24,
1998
(e) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997;
(f) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997;
(g) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997; and
(h) The Registrant's Registration Statement on Form S-8
(Registration No. 333-20493).
All documents filed by the Registrant pursuant to Section 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Registration
Statement and prior to the filing of a post-effective amendment to this
Registration Statement which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes hereof to the extent that a statement
contained herein (or in any other subsequently filed document which also is
incorporated by reference herein) modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed to constitute a part
hereof except as so modified or superseded.
Item 8. Exhibits.
--------
The following is a list of exhibits filed as part of this
Registration Statement.
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------ -------
<S> <C>
5.1 Opinion of Morgan, Lewis & Bockius LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Morgan, Lewis & Bockius LLP (included within Exhibit 5.1).
24.1 Powers of Attorney (included as part of the signature page of this Registration
Statement).
99.1 1996 Equity Compensation Plan, as amended
</TABLE>
S-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant 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 King of Prussia, Pennsylvania on May 15, 1998.
TELESPECTRUM WORLDWIDE INC.
By: /s/ Keith E. Alessi
--------------------------
Keith E. Alessi
Chairman of the Board,
Chief Executive Officer (Principal Executive Officer),
Director and President
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
directors and officers of the Registrant hereby constitutes and appoints Richard
C. Schwenk, Jr. his true and lawful attorney-in-fact and agent, for him and in
his name, place and stead, in any and all capacities, to sign one or more
amendments to this Registration Statement on Form S-8 under the Securities Act
of 1933, including post-effective amendments and other related documents, and to
file the same with the Securities and Exchange Commission under said Act, hereby
granting power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully as to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Keith E. Alessi Chairman of the Board, Chief May 15, 1998
- --------------------------- Executive Officer (Principal
Keith E. Alessi Executive Officer), Director
and President
May 15, 1998
/s/ Richard C. Schwenk, Jr. Senior Vice President and
- --------------------------- Chief Financial Officer (Principal
Richard C. Schwenk, Jr. Financial and Accounting Officer)
/s/ J. Brian O'Neill Director May 15, 1998
- ---------------------------
J. Brian O'Neill
/s/ William F. Rhatigan Director May 15, 1998
- ---------------------------
William F. Rhatigan
/s/ Richard W. Virtue Director May 15, 1998
- ---------------------------
Richard W. Virtue
Director May 15, 1998
/s/ Kevin E. Walsh
- ---------------------------
Kevin E. Walsh
/s/ Joseph V. DelRaso Director May 15, 1998
- ---------------------------
Joseph V. DelRaso
</TABLE>
S-1
<PAGE>
EXHIBIT 5.1
OPINION OF MORGAN, LEWIS & BOCKIUS LLP
May 15, 1998
TeleSpectrum Worldwide Inc.
443 South Gulph Road
King of Prussia, PA 19406
Ladies and Gentlemen:
We have acted as counsel to TeleSpectrum Worldwide Inc., a Delaware corporation
(the "Company"), in connection with the registration of up to an additional
2,700,000 shares (the "Shares") of its Common Stock, $.01 par value (the "Common
Stock"), on a registration statement on Form S-8 (the "Registration Statement")
filed pursuant to the Securities Act of 1933, as amended (the "Act"). The
Shares will be issued pursuant to the Company's 1996 Equity Compensation Plan,
as amended (the "Plan").
We have examined the Registration Statement and such corporate records,
documents, statutes and decisions as we have deemed relevant in rendering this
opinion.
Based on the foregoing, it is our opinion that the Shares will be, when issued
in accordance with the terms of the Plan, validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act or the rules or regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Morgan Lewis & Bockius LLP
S-2
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 23, 1998
(except with respect to the matter discussed in Note 10, as to which the date is
April 14, 1998) included in TeleSpectrum Worldwide Inc.'s Form 10-K for the year
ended December 31, 1997 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.
May 15, 1998
<PAGE>
EXHIBIT 99.1
1996 EQUITY COMPENSATION PLAN
S-2
<PAGE>
EXHIBIT 99.1
TELESPECTRUM WORLDWIDE INC.
1996 EQUITY COMPENSATION PLAN
-----------------------------
The purpose of the Telespectrum Worldwide Inc. 1996 Equity Compensation
Plan (the "Plan") is to provide (i) designated key employees (including
employees who are also officers or directors) of Telespectrum Worldwide Inc.
(the "Company") and its subsidiaries, (ii) independent contractors and
consultants who perform valuable services for the Company or its subsidiaries
and (iii) non-employee members of the Board of Directors of the Company (the
"Board") with the opportunity to receive grants of incentive stock options,
nonqualified stock options, stock appreciation rights, restricted stock and
performance units. The Company believes that the Plan will cause the
participants to contribute materially to the growth of the Company, thereby
benefitting the Company's shareholders, and will align the economic interests of
the participants with those of the shareholders.
1. Administration
--------------
(a) The Plan shall be administered and interpreted by a committee (the
"Committee"), which shall consist of not less than two persons appointed by the
Board. Prior to the Effective Date specified in Section 22(b), the Board may
exercise any power or authority of the Committee under the Plan and, in such
case, any reference to the Committee hereunder shall be deemed to include the
Board as a whole.
On and after the Effective Date set forth in Section 22(b), the Committee
shall consist of two or more persons appointed by the Board, all of whom shall
be "non-employee directors" as defined under Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act") and "outside directors" as defined
under section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") and related Treasury regulations.
(b) Except as provided in Section 6, the Committee shall have the sole
authority to (i) determine the individuals to whom grants shall be made under
the Plan, (ii) determine the type, size and terms of the grants to be made to
each such individual, (iii) determine the time when the grants will be made and
the duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability and (iv) deal
with any other matters arising under the Plan.
(c) The Committee shall have full power and authority to administer and
interpret the Plan, to make factual determinations and to adopt or amend such
rules, regulations, agreements and instruments for implementing the Plan and for
the conduct of its business as it deems necessary or advisable, in its sole
discretion. The Committee's interpretations of the Plan and all determinations
made by the Committee pursuant to the powers vested in it hereunder shall be
conclusive and binding on all persons having any interest in the Plan or
1
<PAGE>
in any awards granted hereunder. All powers of the Committee shall be executed
in its sole discretion, in the best interest of the Company, not as a fiduciary,
and in keeping with the objectives of the Plan and need not be uniform as to
similarly situated individuals.
2. Grants
------
Awards under the Plan may consist of grants of incentive stock options as
described in Section 5 ("Incentive Stock Options"), nonqualified stock options
as described in Section 5 and Section 6 ("Nonqualified Stock Options")(Incentive
Stock Options and Nonqualified Stock Options are collectively referred to as
"Options"), restricted stock as described in Section 7 (Restricted Stock"),
stock appreciation rights as described in Section 8 ("SARs"), and performance
units as described in Section 9 ("Performance Units") (hereinafter collectively
referred to as "Grants"). All Grants shall be subject to the terms and
conditions set forth herein and to such other terms and conditions consistent
with this Plan as the Committee deems appropriate and as are specified in
writing by the Committee to the individual in a grant instrument (the "Grant
Instrument") or an amendment to the Grant Instrument. The Committee shall
approve the form and provisions of each Grant Instrument. Grants under a
particular Section of the Plan need not be uniform as among the grantees.
3. Shares Subject to the Plan
--------------------------
(a) Subject to the adjustment specified below, the aggregate number of
shares of common stock of the Company ("Company Stock") that may be issued under
the Plan is 5,000,000 shares, and the maximum aggregate number of shares of
Company Stock that shall be subject to Grants made under the Plan to any
individual during any calendar year shall be 500,000 shares. The shares may be
authorized but unissued shares of Company Stock or reacquired shares of Company
Stock, including shares purchased by the Company on the open market for purposes
of the Plan. If and to the extent Options or SARs granted under the Plan
terminate, expire, or are cancelled, forfeited, exchanged or surrendered without
having been exercised or if any shares of Restricted Stock or Performance Units
are forfeited, the shares subject to such Grants shall again be available for
purposes of the Plan.
(b) If there is any change in the number or kind of shares of Company
Stock outstanding (i) by reason of a stock dividend, spin off, recapitalization,
stock split, or combination or exchange of shares, (ii) by reason of a merger,
reorganization or consolidation in which the Company is the surviving
corporation, (iii) by reason of a reclassification or change in par value, or
(iv) by reason of any other extraordinary or unusual event affecting the
outstanding Company Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the maximum number of shares of Company Stock that
any individual participating in the Plan may be granted in any year, the number
of shares covered by outstanding Grants, the kind of shares issued under the
Plan, and
2
<PAGE>
the price per share or the applicable market value of such Grants may
appropriately adjusted by the Committee to reflect any increase or decrease in
the number of, or change in the kind or value of,of issued shares of Company
Stock to preclude the enlargement or dilution of rights and benefits under such
Grants; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated. Any adjustments determined by the Committee
shall be final, binding and conclusive.
4. Eligibility for Participation
-----------------------------
(a) Prior to the Effective Date specified in Section 22(b), members of the
Board who are not employees of the Company or any of its subsidiaries ("Non-
Employee Directors") shall be eligible to participate in the Plan, but shall not
be eligible to receive Incentive Stock Options. After the Effective Date
specified in Section 22(b), Non-Employee Directors shall be eligible to receive
Grants only under Section 6 of the Plan. Any independent contractors or
consultants who perform valuable services to the Company or any of its
subsidiaries ("Consultants") shall be eligible to participate in the Plan, but
shall not be eligible to receive Incentive Stock Options.
(b) The Committee shall select the Employees, Non-Employee Directors and
Consultants to receive Grants and shall determine the number of shares of
Company Stock subject to a particular Grant in such manner as the Committee
determines. Employees, Consultants and Non-Employee Directors who receive
Grants under this Plan shall hereinafter be referred to as "Grantees".
5. Granting of Options
-------------------
(a) Number of Shares. The Committee shall determine the number of shares
----------------
of Company Stock that will be subject to each Grant of Options.
(b) Type of Option and Price.
------------------------
(i) The Committee may grant Incentive Stock Options that are
intended to qualify as "incentive stock options" within the meaning of section
422 of the Code or Nonqualified Stock Options that are not intended so to
qualify or any combination of Incentive Stock Options and Nonqualified Stock
Options, all in accordance with the terms and conditions set forth herein.
(ii) The purchase price (the "Exercise Price") of Company Stock
subject to an Option shall be determined by the Committee and may be equal to,
greater than, or less than the Fair Market Value (as defined below) of a share
of such Stock on the date the Option is granted; provided, however, that (x) the
Exercise Price of an Incentive Stock Option shall be equal to, or greater than,
the Fair Market Value of a share of Company Stock on the date the Incentive
Stock Option is granted and (y) an Incentive Stock Option may not be granted
3
<PAGE>
to an Employee who, at the time of grant, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary of the Company, unless the Exercise Price
per share is not less than 110% of the Fair Market Value of Company Stock on the
date of grant.
(iii) If the Company Stock is traded in a public market, then the
Fair Market Value per share shall be determined as follows: (x) if the principal
trading market for the Company Stock is a national securities exchange or the
Nasdaq National Market, the last reported sale price thereof on the relevant
date or (if there were no trades on that date) the latest preceding date upon
which a sale was reported, or (y) if the Company Stock is not principally traded
on such exchange or market, the mean between the last reported "bid" and "asked"
prices of Company Stock on the relevant date, as reported on Nasdaq or, if not
so reported, as reported by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service, as applicable and as the
Committee determines. If the Company Stock is not traded in a public market or
subject to reported transactions or "bid" or "ask" quotations as set forth
above, the Fair Market Value per share shall be as determined by the Committee.
(c) Option Term. The Committee shall determine the term of each Option.
-----------
The term of any Option shall not exceed ten years from the date of grant.
However, an Incentive Stock Option that is granted to an Employee who, at the
time of grant, owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company, or any parent or subsidiary
of the Company, may not have a term that exceeds five years from the date of
grant.
(d) Exercisability of Options. Options shall become exercisable in
-------------------------
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Committee and specified in the Grant Instrument. The
Committee may accelerate the exercisability of any or all outstanding Options at
any time for any reason.
(e) Termination of Employment, Disability or Death.
----------------------------------------------
(i) Except as provided below, an Option may only be exercised while
the Grantee is employed by the Company as an Employee, Consultant or member of
the Board. In the event that a Grantee ceases to be employed by the Company for
any reason other than a "disability", death, or "termination for cause", any
Option which is otherwise exercisable by the Grantee shall terminate unless
exercised within 90 days of the date on which the Grantee ceases to be employed
by the Company (or within such other period of time as may be specified by the
Committee), but in any event no later than the date of expiration of the Option
term. Any of the Grantee's Options that are not otherwise exercisable as of the
date on which the Grantee ceases to be employed by the Company shall terminate
as of such date.
(ii) In the event the Grantee ceases to be employed by the Company
on
4
<PAGE>
account of a "termination for cause" by the Company, any Option held by the
Grantee shall terminate as of the date the Grantee ceases to be employed by the
Company.
(iii) In the event the Grantee ceases to be employed by the Company
because the Grantee is "disabled", any Option which is otherwise exercisable by
the Grantee shall terminate unless exercised within one year after the date on
which the Grantee ceases to be employed by the Company (or within such other
period of time as may be specified by the Committee, but in any event no later
than the date of expiration of the Option term. Any of the Grantee's Options
which are not otherwise exercisable as of the date on which the Grantee ceases
to be employed by the Company shall terminate as of such date.
(iv) If the Grantee dies while employed by the Company or within 90
days after the date on which the Grantee ceases to be employed on account of a
termination of employment specified in Section 5(e)(i) above (or within such
other period of time as may be specified by the Committee), any Option that is
otherwise exercisable by the Grantee shall terminate unless exercised within one
year after the date on which the Grantee ceases to be employed by the Company
(or within such other period of time as may be specified by the Committee), but
in any event no later than the date of expiration of the Option term. Any of
the Grantee's Options that are not otherwise exercisable as of the date on which
the Grantee ceases to be employed by the Company shall terminate as of such
date.
(v) For purposes of this Section 5(e) and Sections 6, 7, 8 and 9:
(A) The term "Company" shall mean the Company and its parent and
subsidiary corporations.
(B) "Employed by the Company" shall mean employment as an Employee,
Consultant or member of the Board (so that, for purposes of exercising
Options and SARs and satisfying conditions with respect to Restricted Stock
and Performance Units, a Grantee shall not be considered to have terminated
employment until the Grantee ceases to be an Employee, Consultant and
member of the Board), unless the Committee determines otherwise.
(C) "Disability" shall mean a Grantee's becoming disabled within the
meaning of section 22(e)(3) of the Code.
(D) "Termination for cause" shall mean, except to the extent specified
otherwise by the Committee, a finding by the Committee that the Grantee has
breached his or her employment or service contract with the Company, or has
been engaged in disloyalty to the Company, including, without limitation,
fraud, embezzlement, theft, commission of a felony or proven dishonesty in
the course of his or her employment or service, or has disclosed trade
secrets or confidential information of the Company to persons not entitled
to receive such information. In the event a Grantee's employment
5
<PAGE>
is terminated for cause, in addition to the immediate termination of all
Grants, the Grantee shall automatically forfeit all Option shares for any
exercised portion of an Option for which the Company has not yet delivered
the share certificates, upon refund by the Company of the Exercise Price
paid by the Grantee for such shares.
(f) Exercise of Options. A Grantee may exercise an Option that has become
-------------------
exercisable, in whole or in part, by delivering a notice of exercise to the
Company with payment of the Exercise Price. The Grantee shall pay the Exercise
Price for an Option as specified by the Committee (x) in cash, (y) with the
approval of the Committee, by delivering shares of Company Stock owned by the
Grantee owned by the Grantee for the period necessary to avoid a charge to the
Company's earnings for financial reporting purposes] (including Company Stock
acquired in connection with the exercise of an Option, subject to such
restrictions as the Committee deems appropriate) and having a Fair Market Value
on the date of exercise equal to the Exercise Price or (z) except with respect
to Options granted under Section 6 and held by persons who are then Non-Employee
Directors by such other method as the Committee may approve, including payment
through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board or any successor regulation of the agency than responsible
for administering margin regulations pertaining to securities brokers. Non-
Employee Directors who hold Options granted under Section 6 may make payment
through a broker in accordance with procedures permitted by Regulation T. The
Grantee shall pay the Exercise Price and the amount of any withholding tax due
(pursuant to Section 10) at the time of exercise. Shares of Company Stock shall
not be issued upon exercise of an Option until the Exercise Price is fully paid
and any required withholding is made.
(g) Limits on Incentive Stock Options. Each Incentive Stock Option shall
---------------------------------
provide that, if the aggregate Fair Market Value of the stock on the date of the
grant with respect to which Incentive Stock Options are exercisable for the
first time by a Grantee during any calendar year, under the Plan or any other
stock option plan of the Company or a parent or subsidiary, exceeds $100,000,
then the option, as to the excess, shall be treated as a Nonqualified Stock
Option. An Incentive Stock Option shall not be granted to any person who is not
an Employee of the Company or a parent or subsidiary (within the meaning of
section 424(f) of the Code).
6. Formula Option Grants to Non-Employee Directors
-----------------------------------------------
This Section 6 shall apply to any grant of an Option to a Non-Employee
Director after the Effective Date specified in Section 22(b).
(a) Initial Grant. Each Non-Employee Director who first becomes a member
-------------
of the Board after the Effective Date specified in Section 22(b) shall receive a
grant of a Nonqualified Stock Option to purchase 2,500 shares of Company Stock
on the date as of which he or she first becomes a member of the Board.
6
<PAGE>
(b) Annual Grants. On each date that the Company holds its annual meeting
-------------
of shareholders, commencing with the 1997 annual meeting, each Non-Employee
Director who is in office immediately after the annual election of directors
(other than a director who is first elected to the Board at such meeting) shall
receive a grant of a Nonqualified Stock Option to purchase 2,500 shares of
Company Stock. The date of grant of each such annual Grant shall be the date of
the annual meeting of the Company's shareholders.
(c) Exercise Price. The Exercise Price per share of Company Stock subject
--------------
to an Option granted under this Section 6 shall be equal to the Fair Market
Value of a share of Company Stock on the date of grant.
(d) Option Term and Exercisability. The term of each Option granted
------------------------------
pursuant to this Section 6 shall be ten years. Options granted under this
Section 6 shall be fully exercisable as of the date of grant.
(e) Payment of Exercise Price.
-------------------------
(i) The Exercise Price for an Option granted under this Section 6
shall be paid in cash. The Grantee shall pay the Exercise Price and the amount
of any withholding tax due at the time of exercise. Shares of Company Stock
shall not be issued upon exercise of an Option until the Exercise Price is fully
paid and any required withholding is made.
(ii) A Grantee may exercise an Option granted under this Section 6
by delivering to the Committee a notice of exercise as described below, with
accompanying payment of the Exercise Price in accordance with Subsection (i)
above. The notice of exercise may instruct the Company to deliver shares of
Company Stock due upon the exercise of the Option to any registered broker or
dealer designated by the Committee in lieu of delivery to the Grantee. Such
instructions shall designate the account into which the shares are to be
deposited.
(f) Applicability of Plan Provisions. Except as otherwise provided in this
--------------------------------
Section 6, Nonqualified Stock Options granted to Non-Employee Directors shall be
subject to the provisions of this Plan applicable to Nonqualified Stock Options
granted to other persons, provided however that (i) if an event described in
Section 3(b) occurs, appropriate adjustments, as described in that Section,
shall be made automatically, (ii) with respect to the provisions of Section
5(e), the Committee shall not have discretion to modify the terms of such
provisions in the Grant Instrument, and (iii) in the event of a Change of
Control (as defined in Section 12), the provisions of Section 13 shall apply to
Options granted pursuant to this Section 6, except that the Committee shall not
have discretion under Section 13(c) to modify the automatic provisions of that
Section.
(g) Administration. The provisions of this Section 6 are intended to
--------------
operate automatically and not require administration. To the extent that any
administrative
7
<PAGE>
determinations are required, any determinations with respect to the provisions
of this Section 6 shall be made by the members of the Board who are not eligible
to receive Grants under this Section 6, but in no event shall such
determinations affect the eligibility of Grantees, the determination of the
Exercise Price, the timing of the Grants or the number of shares subject to
Options granted hereunder. If at any time there are not sufficient shares
available under the Plan to permit an automatic Grant as described in this
Section 6, the Grant shall be reduced pro rata (to zero, if necessary) so as not
to exceed the number of shares then available under the Plan.
7. Restricted Stock Grants
-----------------------
The Committee may issue shares of Company Stock to an Employee, Non-
Employee Director (but only before the Effective Date specified in Section
22(b)) or Consultant under a Grant of Restricted Stock, upon such terms as the
Committee deems appropriate. The following provisions are applicable to
Restricted Stock:
(a) General Requirements. Shares of Company Stock issued pursuant to
--------------------
Restricted Stock Grants may be issued for consideration or for no consideration
as determined by the Committee. The Committee may establish conditions under
which restrictions on shares of Restricted Stock shall lapse over a period of
time or according to such other criteria as the Committee deems appropriate.
The period of time during which the Restricted Stock will remain subject to
restrictions will be designated in the Grant Instrument as the "Restriction
Period."
(b) Number of Shares. The Committee shall determine the number of shares
----------------
of Company Stock to be issued pursuant to a Restricted Stock Grant and the
restrictions applicable to such shares.
(c) Requirement of Employment. If the Grantee ceases to be employed by
-------------------------
the Company (as defined in Section 5(e)) during a period designated in the Grant
Instrument as the Restriction Period, or if other specified conditions are not
met, the Restricted Stock Grant shall terminate as to all shares covered by the
Grant as to which the restrictions have not lapsed, and those shares of Company
Stock must be immediately returned to the Company. The Committee may, however,
provide for complete or partial exceptions to this requirement as it deems
appropriate.
(d) Restrictions on Transfer and Legend on Stock Certificate. During the
--------------------------------------------------------
Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of Restricted Stock except to a Successor
Grantee under Section 11(a). Each certificate for a share of Restricted Stock
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to have the legend removed from the stock
certificate covering the shares subject to restrictions when all restrictions on
such shares have lapsed. The Committee, in its sole discretion, may determine
that the Company will not issue
8
<PAGE>
certificates for shares of Restricted Stock until all restrictions on such
shares have lapsed, or that the Company will retain possession of certificates
for shares of Restricted Stock until all restrictions on such shares have
lapsed.
(e) Right to Vote and to Receive Dividends. Unless the Committee
--------------------------------------
determines otherwise, during the Restriction Period, the Grantee shall have the
right to vote shares of Restricted Stock and to receive any dividends or other
distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee.
(f) Lapse of Restrictions. All restrictions imposed on Restricted Stock
---------------------
shall lapse upon the expiration of the applicable Restriction Period and the
satisfaction of all conditions imposed by the Committee. The Committee may
determine, as to any or all Restricted Stock Grants, that the restrictions shall
lapse without regard to any Restriction Period.
8. Stock Appreciation Rights
-------------------------
(a) General Requirements. The Committee may grant stock appreciation
--------------------
rights ("SARs") to any Grantee separately or in tandem with any Option (for all
or a portion of the applicable Option). Tandem SARs may be granted either at
the time the Option is granted or at any time thereafter while the Option
remains outstanding; provided, however, that, in the case of an Incentive Stock
Option, SARs may be granted only at the time of the Grant of the Incentive Stock
Option. The Committee shall establish the base amount of the SAR at the time
the SAR is granted. Unless the Committee determines otherwise, the base amount
of each SAR shall be equal to the per share Exercise Price of the related Option
or, if there is no related Option, the Fair Market Value of a share of Company
Stock as of the date of Grant of the SAR.
(b) Tandem SARs. In the case of tandem SARs, the number of SARs granted
-----------
to a Grantee that shall be exercisable during a specified period shall not
exceed the number of shares of Company Stock that the Grantee may purchase upon
the exercise of the related Option during such period. Upon the exercise of an
Option, the SARs relating to the Company Stock covered by such Option shall
terminate. Upon the exercise of SARs, the related Option shall terminate to the
extent of an equal number of shares of Company Stock.
(c) Exercisability. An SAR shall be exercisable during the period
--------------
specified by the Committee in the Grant Instrument and shall be subject to such
vesting and other restrictions as may be specified in the Grant Instrument. The
Committee, in its sole discretion, may accelerate the exercisability of any or
all outstanding SARs at any time for any reason. SARs may only be exercised
while the Grantee is employed by the Company or during the applicable period
after termination of employment as described in Section 5(e). A tandem SAR
shall be exercisable only during the period when the Option to which it is
related is also exercisable. After the Effective Date specified in Section
22(b), no SAR may be exercised for
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<PAGE>
cash by an officer or director of the Company who is subject to Section 16 of
the Exchange Act, except in accordance with Rule 16b-3 under the Exchange Act.
(d) Value of SARs. When a Grantee exercises SARs, the Grantee shall
-------------
receive in settlement of such SARs an amount equal to the value of the stock
appreciation for the number of SARs exercised, payable in cash, Company Stock or
a combination thereof. The stock appreciation for an SAR is the amount by which
the Fair Market Value of the underlying Company Stock on the date of exercise of
the SAR exceeds the base amount of the SAR as described in Subsection (a).
(e) Form of Payment. The Committee shall determine whether the
---------------
appreciation in an SAR shall be paid in the form of cash, shares of Company
Stock, or a combination of the two, in such proportion as the Committee deems
appropriate. For purposes of calculating the number of shares of Company Stock
to be received, shares of Company Stock shall be valued at their Fair Market
Value on the date of exercise of the SAR. If shares of Company Stock are to be
received upon exercise of an SAR, cash shall be delivered in lieu of any
fractional share.
9. Performance Units
-----------------
(a) General Requirements. The Committee may grant performance units
--------------------
("Performance Units") to a Grantee. Each Performance Unit shall represent the
right of the Grantee to receive an amount based on the value of the Performance
Unit, if performance goals established by the Committee are met. A Performance
Unit shall be based on the Fair Market Value of a share of Company Stock or on
such other measurement base as the Committee deems appropriate. The Committee
shall determine the number of Performance Units to be granted and the
requirements applicable to such Units.
(b) Performance Period and Performance Goals. When Performance Units are
----------------------------------------
granted, the Committee shall establish the performance period during which
performance shall be measured (the "Performance Period"), performance goals
applicable to the Units ("Performance Goals") and such other conditions of the
Grant as the Committee deems appropriate. Performance Goals may relate to the
financial performance of the Company or its operating units, the performance of
Company Stock, individual performance, or such other criteria as the Committee
deems appropriate.
(c) Payment with respect to Performance Units. At the end of each
-----------------------------------------
Performance Period, the Committee shall determine to what extent the Performance
Goals and other conditions of the Performance Units are met and the amount, if
any, to be paid with respect to the Performance Units. Payments with respect to
Performance Units shall be made in cash, in Company Stock, or in a combination
of the two, as determined by the Committee.
10
<PAGE>
(d) Requirement of Employment. If the Grantee ceases to be employed by
-------------------------
the Company (as defined in Section 5(e)) during a Performance Period, or if
other conditions established by the Committee are not met, the Grantee's
Performance Units shall be forfeited. The Committee may, however, provide for
complete or partial exceptions to this requirement as it deems appropriate.
10. Withholding of Taxes
--------------------
(a) Required Withholding. All Grants under the Plan shall be subject to
--------------------
applicable federal (including FICA), state and local tax withholding
requirements. The Company shall have the right to deduct from all Grants paid
in cash, or from other wages paid to the Grantee, any federal, state or local
taxes required by law to be withheld with respect to such Grants. In the case of
Options and other Grants paid in Company Stock, the Company may require the
Grantee or other person receiving such shares to pay to the Company the amount
of any such taxes that the Company is required to withhold with respect to such
Grants, or the Company may deduct from other wages paid by the Company the
amount of any withholding taxes due with respect to such Grants.
(b) Election to Withhold Shares. A Grantee may elect to satisfy the
---------------------------
Company's income tax withholding obligation with respect to an Option, SAR,
Restricted Stock or Performance Units paid in Company Stock by having shares
withheld up to an amount that does not exceed the Grantee's maximum marginal tax
rate for federal (including FICA), state and local tax liabilities. The
election must be in a form and manner prescribed by the Committee and shall be
subject to the prior approval of the Committee. If the Grantee is a director or
officer who is subject to Section 16 of the Exchange Act, the election must be
made in compliance with Rule 16b-3 under the Exchange Act.
11. Transferability of Grants
-------------------------
(a) Only the Grantee or his or her authorized representative may exercise
rights under a Grant. Such persons may not transfer those rights except by will
or by the laws of descent and distribution or, with respect to Grants other than
Incentive Stock Options, if permitted under Rule 16b-3 of the Exchange Act (to
the extent applicable) and if permitted in any specific case by the Committee in
its sole discretion, pursuant to a qualified domestic relations order (as
defined under the Code or Title I of the ERISA or the regulations thereunder).
When a Grantee dies, the representative or other person entitled to succeed to
the rights of the Grantee ("Successor Grantee") may exercise such rights. A
Successor Grantee must furnish proof satisfactory to the Company of his or her
right to receive the Grant under the Grantee's will or under the applicable laws
of descent and distribution.
(b) Notwithstanding the foregoing, the Committee may provide, in a Grant
Instrument, that a Grantee may transfer Nonqualified Stock Options to his or her
children, grandchildren or spouse or to one or more trusts for the benefit of
such family members or to
11
<PAGE>
partnerships in which such family members are the only partners (a "Family
Transfer"), provided that the Grantee receives no consideration for a Family
Transfer and the Nonqualified Stock Options transferred in a Family Transfer
continue to be subject to the same terms and conditions that were applicable to
such Nonqualified Stock Options immediately prior to the Family Transfer.
12. Right of First Refusal
----------------------
Prior to the Effective Date specified in Section 22(b), if at any time an
individual desires to sell, encumber, or otherwise dispose of shares of Company
Stock distributed to him under this Plan, the individual shall first offer the
shares to the Company by giving the Company written notice disclosing: (a) the
name of the proposed transferee of the Company Stock; (b) the certificate number
and number of shares of Company Stock proposed to be transferred or encumbered;
(c) the proposed price; (d) all other terms of the proposed transfer; and (e) a
written copy of the proposed offer. Within 60 days after receipt of such
notice, the Company shall have the option to purchase all or part of such
Company Stock at the then current Fair Market Value (as defined in Section 5(b))
and may pay such price in installments over a period not to exceed four years,
at the discretion of the Committee.
In the event the Company does not exercise the option to purchase Company
Stock, as provided above, the individual shall have the right to sell, encumber,
or otherwise dispose of his shares of Company Stock on the terms of the transfer
set forth in the written notice to the Company, provided such transfer is
effected within 15 days after the expiration of the option period. If the
transfer is not effected within such period, the Company must again be given an
option to purchase, as provided above.
On and after the Effective Date specified in Section 22(b), the Company
shall have no further right to purchase shares of Company Stock under this
Section, and its limitations shall be null and void.
Notwithstanding the foregoing, the Committee may require that a Grantee
execute a stockholder's agreement, with such terms as the Committee deems
appropriate, with respect to any Company Stock distributed pursuant to this
Plan, in which case the provisions of this Section 9 and Section 10 below shall
not apply to such Company Stock.
13. Purchase by the Company
-----------------------
Prior to the Effective Date specified in Section 22(b), if a Grantee ceases
to be employed by the Company, the Company shall have the right to purchase all
or part of any Company Stock distributed to him under this Plan at its then
current Fair Market Value (as defined in Section 5(b)); provided, however, that
such repurchase shall be made in accordance with applicable accounting rules to
avoid adverse accounting treatment.
12
<PAGE>
14. Change of Control of the Company
--------------------------------
As used herein, a "Change of Control" shall be deemed to have occurred if:
(a) As a result of any transaction, any one stockholder, other than
an existing stockholder as of the effective date of the Plan (or his beneficiary
or estate), becomes a beneficial owner, directly or indirectly, of securities of
the Company representing more than 40% of the common stock of the Company or the
combined voting power of the Company's then outstanding securities;
(b) A liquidation or dissolution of the Company or sale (other than a
transfer to a subsidiary) of all or substantially all of the Company's assets
occurs;
(c) On or after the Effective Date specified in Section 22(b), any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 50% or
more of the voting power of the then outstanding securities of the Company;
(d) The shareholders of the Company approve (or, if shareholder
approval is not required, the Board approves) an agreement providing for (i) the
merger or consolidation of the Company with another corporation where the
shareholders of the Company, immediately prior to the merger or consolidation,
will not beneficially own, immediately after the merger or consolidation, shares
entitling such shareholders to 50% or more of all votes to which all
shareholders of the surviving corporation would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect
directors by a separate class vote), or where the members of the Board,
immediately prior to the merger or consolidation, would not, immediately after
the merger or consolidation, constitute a majority of the board of directors of
the surviving corporation, (ii) the sale or other disposition of all or
substantially all of the assets of the Company, or (iii) a liquidation or
dissolution of the Company;
(e) Any person has commenced a tender offer or exchange offer for 50%
or more of the voting power of the then outstanding shares of the Company; or
(f) At least a majority of the Board does not consist of individuals
who were elected, or nominated for election, by the directors in office at the
time of such election or nomination.
15. Consequences of a Change of Control
-----------------------------------
(a) Upon a Change of Control (i) the Company shall provide each Grantee
with outstanding Grants written notice of such Change of Control, (ii) all
outstanding Options and
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<PAGE>
SARs shall automatically accelerate and become fully exercisable, (iii) the
restrictions and conditions on all outstanding Restricted Stock shall
immediately lapse, and (iv) Grantees holding Performance Units shall receive a
payment in settlement of such Performance Units, in an amount determined by the
Committee, based on the Grantee's target payment for the Performance Period and
the portion of the Performance Period that precedes the Change of Control.
(b) In addition, upon a Change of Control described in Section 12(b)(i)
where the Company is not the surviving corporation (or survives only as a
subsidiary of another corporation), all outstanding Options and SARs shall be
assumed by, or replaced with comparable options or rights by, the surviving
corporation.
(c) Notwithstanding the foregoing, subject to subsection (d) below, in the
event of a Change of Control, the Committee may take one or both of the
following actions: the Committee may (i) require that Grantees surrender their
outstanding Options and SARs in exchange for a payment by the Company, in cash
or Company Stock as determined by the Committee, in an amount equal to the
amount by which the then Fair Market Value of the shares of Company Stock
subject to the Grantee's outstanding Options and SARs exceeds the Exercise Price
of the Options or the base amount of the SARs, as applicable, and (ii) terminate
any or all outstanding Options and SARs at such time as the Committee deems
appropriate. Such surrender shall take place as of the date of the Change of
Control or such other date as the Committee may specify, and, in the case of an
Option or SAR held by a Grantee who is subject to Section 16(b) of the Exchange
Act, any such surrender or payment shall be made on such date as the Committee
shall determine consistent with Rule 16b-3 under the Exchange Act.
(d) Notwithstanding anything in the Plan to the contrary, in the event of
a Change of Control, the Committee shall not have the right to take actions
described in the Plan (including without limitation actions described in
Subsection (c) above) that would make the Change of Control ineligible for
pooling of interest accounting treatment or that would make the Change of
Control ineligible for desired tax treatment if, in the absence of such right,
the Change of Control would qualify for such treatment and the Company intends
to use such treatment with respect to the Change of Control.
16. Amendment and Termination of the Plan
-------------------------------------
(a) Amendment. The Board may amend or terminate the Plan at any time;
---------
provided, however, that any amendment that increases the aggregate number (or
individual limit for any single Grantee) of shares of Company Stock that may be
issued under the Plan (other than by operation of Section 3(b)), or modifies the
requirements as to eligibility for participation in the Plan, shall be subject
to approval by the shareholders of the Company and provided, further, that the
Board shall not amend the Plan without shareholder approval if such approval is
required by Rule 16b-3 of the Exchange Act or Section 162(m) of the Code.
14
<PAGE>
(b) Termination of Plan. The Plan shall terminate on the day immediately
-------------------
preceding the tenth anniversary of its effective date unless terminated earlier
by the Board or unless extended by the Board with the approval of the
shareholders.
(c) Termination and Amendment of Outstanding Grants. A termination or
-----------------------------------------------
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the
Committee acts under Section 21(b). The termination of the Plan shall not impair
the power and authority of the Committee with respect to an outstanding Grant.
Whether or not the Plan has terminated, an outstanding Grant may be terminated
or amended under Section 21(b) or may be amended by agreement of the Company and
the Grantee consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling document. No
------------------
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
17. Funding of the Plan
-------------------
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
18. Rights of Participants
----------------------
Nothing in this Plan shall entitle any Employee, Consultant or other person
to any claim or right to be granted a Grant under this Plan, except as provided
in Section 6. Neither this Plan nor any action taken hereunder shall be
construed as giving any individual any rights to be retained by or in the employ
of the Company or any other employment rights.
19. No Fractional Shares
--------------------
No fractional shares of Company Stock shall be issued or delivered pursuant
to the Plan or any Grant. The Committee shall determine whether cash, other
awards or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
20. Requirements for Issuance of Shares
-----------------------------------
No Company Stock shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such
15
<PAGE>
Company Stock have been complied with to the satisfaction of the Committee. The
Committee shall have the right to condition any Grant made to any Grantee
hereunder on such Grantee's undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such shares of Company
Stock as the Committee shall deem necessary or advisable as a result of any
applicable law, regulation or official interpretation thereof and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued under the Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.
21. Headings
--------
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.
22. Effective Date of the Plan.
--------------------------
(a) Plan Effective Date. Subject to the approval of the Company's
-------------------
shareholders, this Plan shall be effective on May 17, 1996.
(b) Effective Date of Section 16 and Section 162(m) Provisions. The
----------------------------------------------------------
provisions of the Plan that refer to, or are applicable to persons subject to,
Section 16 of the Exchange Act or Section 162(m) of the Code shall be effective,
if at all, upon the initial registration of the Company Stock under Section
12(g) of the Exchange Act, and shall remain effective thereafter for so long as
such stock is so registered.
23. Miscellaneous
-------------
(a) Substitute Grants. The Committee may make a Grant to an employee of
-----------------
another corporation who becomes an Employee by reason of a corporate merger,
consolidation, acquisition of stock or property, reorganization or liquidation
involving the Company or any of its subsidiaries in substitution for a stock
option or restricted stock grant made by such corporation ("Substituted Stock
Incentives"). The terms and conditions of the substitute grant may vary from
the terms and conditions required by the Plan and from those of the Substituted
Stock Incentives. The Committee shall prescribe the provisions of the
substitute grants.
(b) Compliance with Law. The Plan, the exercise of Options and SARs and
-------------------
the obligations of the Company to issue or transfer shares of Company Stock
under Grants shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With respect to persons
subject to Section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable
provisions of Rule 16b-3 or its successors under the Exchange Act. The
Committee
16
<PAGE>
may revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory government regulation. The Committee may
also adopt rules regarding the withholding of taxes on payments to Grantees. The
Committee may, in its sole discretion, agree to limit its authority under this
Section.
(c) Ownership of Stock. A Grantee or Successor Grantee shall have no
------------------
rights as a shareholder with respect to any shares of Company Stock covered by a
Grant until the shares are issued or transferred to the Grantee or Successor
Grantee on the stock transfer records of the Company.
(d) Governing Law. The validity, construction, interpretation and effect
-------------
of the Plan and Grant Instruments issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the Commonwealth of
Pennsylvania.
17
