<PAGE>
As filed with the Securities and Exchange Commission on December 23, 1996
Registration No. 33-
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------
Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------------
SUSQUEHANNA BANCSHARES, INC.
(Exact Name of Issuer as Specified in Its Charter)
Pennsylvania 23-2201716
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
26 North Cedar Street
Lititz, Pennsylvania 17543
(717) 626-4721
(Address of Principal Executive Offices)
SUSQUEHANNA BANCSHARES, INC. EQUITY COMPENSATION PLAN
(Full title of the plan)
RICHARD M. CLONEY
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, Pennsylvania 17543
(Name and address of agent for service)
(717) 626-4721
(Telephone number, including area code, of agent for service)
------------------------------
Copy to:
LISA M. CAVAGE
Morgan, Lewis & Bockius LLP
One Commerce Square
417 Walnut Street
Harrisburg, PA 17101-1904
(717) 237-4032
-----------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================
Title of securities Number of Proposed maximum Proposed maximum Amount of
to be registered shares to be offering price per aggregate offering registration fee (2)
registered share (1) price (1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $2.00 per
share 650,000 $32.69 $21,248,500 $6,438.94
==================================================================================================================
</TABLE>
(1) 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 sale prices of shares of Common Stock on December 19,
1996, as reported on the National Association of Securities Dealers'
National Market System.
(2) Calculated pursuant to Section 6(b) as follows: proposed maximum aggregate
offering price per 3300.
===========================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, as filed by Susquehanna Bancshares, Inc.
(herein the "Registrant") with the Securities and Exchange Commission, are
incorporated by reference in this Registration Statement and made a part hereof:
(a) The Registrant's latest annual report, filed pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
(b) All other reports filed pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 since the end of the fiscal year
covered by the annual report referred to in (a) above.
(c) The description of the Common Stock of the Registrant
contained in a registration statement filed under the Securities Exchange
Act of 1934, including any amendment or report filed for the purpose of
updating such description.
All reports and other 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 that indicates that
all securities offered hereby have been sold or that deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference herein
and to be part hereof from the date of filing of such documents. Any statement
contained in any document, all or a portion of which is incorporated by
reference herein, shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained or
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Sections 1741 and 1742 of the Pennsylvania Business Corporation Law of
1988, as amended (the "BCL"), provide that a business corporation may indemnify
directors and officers against liabilities they may incur as such provided that
the particular person acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation,
and, with respect to any criminal proceeding, had no reasonable cause to believe
his or her conduct was unlawful. In the case of actions against a director or
officer by or in the right of the corporation, the power to indemnify extends
only to expenses (not judgments and amounts paid in settlement) and such power
generally does not exist if the person otherwise entitled to indemnification
shall have been adjudged to be liable to the corporation unless it is judicially
determined that, despite the adjudication of liability but in view of
II-1
<PAGE>
all the circumstances of the case, the person is fairly and reasonably entitled
to indemnification for specified expenses. Under Section 1743 of the BCL, the
corporation is required to indemnify directors and officers against expenses
they may incur in defending actions against them in such capacities if they are
successful on the merits or otherwise in the defense of such actions. Under
Section 1745 of the BCL, a corporation may pay the expenses of a director or
officer incurred in defending an action or proceeding in advance of the final
disposition thereof upon receipt of an undertaking from such person to repay the
amounts advanced unless it is ultimately determined that such person is entitled
to indemnification from the corporation. Article XIV of the Registrant's Bylaws
provides indemnification of directors, officers and other agents of the
Registrant and advancement of expenses to the extent otherwise permitted by
Sections 1741, 1742 and 1745 of the BCL. Article XIV of the Registrant's Bylaws
conditions any indemnification or advancement of expenses upon a determination,
made in accordance with the procedures specified in Section 1744 of the BCL, by
the Registrant's directors or shareholders that indemnification or advancement
of expenses is proper because the director or officer met the standard of
conduct set forth in Section 1741 or 1742 of the BCL, as applicable.
Section 1746 of the BCL grants a corporation broad authority to
indemnify its directors, officers and other agents for liabilities and expenses
incurred in such capacity, except in circumstances where the act or failure to
act giving rise to the claim for indemnification is determined by a court to
have constituted willful misconduct or recklessness. Pursuant to the authority
of Section 1746 of the BCL, the Registrant has also entered into employment
agreements with certain principal officers which also provide for
indemnification in connection with the performance of their offices. As
permitted by the BCL and the Registrant's Articles of Incorporation, the
Registrant maintains on behalf of its directors and officers insurance
protection against certain liabilities arising out of their service in such
capacities.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following is a list of exhibits filed as part of this Registration
Statement.
Exhibit Number Exhibit
- -------------- -------
3.1 Articles of Incorporation of the Registrant (1)(Attachment E)
3.2 Bylaws of the Registrant (1) (Attachment E)
5.1 Opinion of Morgan, Lewis & Bockius LLP
23.1 Consent of Coopers & Lybrand, L.L.P.
23.2 Consent of Morgan, Lewis & Bockius LLP (included as part of
Exhibit 5.1)
24.1 Power of Attorney (included as part of the signature page)
99.1 Susquehanna Bancshares, Inc. Equity Compensation Plan
- ----------------------
(1) Exhibit incorporated herein by reference to the Registrant's Registration
Statement on Form S-4 (Registration No. 33-53608) filed with the
Securities and Exchange Commission on October 22, 1992.
II-2
<PAGE>
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 include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
Provided, however, that subparagraphs (a)(1)(i) and (a)(1)(ii)
-----------------
of this section 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 the
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 the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for the purpose
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 a 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) The undersigned Registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 if under the Securities Act of 1934;
and, where interim financial information required to be presented by Article 3
of Regulation S-X are not set forth in the prospectus, to deliver, or cause to
be delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) 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
II-3
<PAGE>
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
---------------
1933, as amended, the Company 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 the City of Lititz, Commonwealth of
Pennsylvania, on this 20th day of December, 1996.
SUSQUEHANNA BANCSHARES, INC.
By: /s/ Richard M. Cloney
------------------------------------------------
Richard M. Cloney, Vice President
The Plan. Pursuant to the requirements of the Securities Act of 1933,
---------
as amended, the Susquehanna Bancshares, Inc. Equity Compensation Plan Committee
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Lititz, Commonwealth of
Pennsylvania, on December 20, 1996
SUSQUEHANNA BANCSHARES, INC.
EQUITY COMPENSATION PLAN
By: SUSQUEHANNA BANCSHARES, INC. EQUITY
COMPENSATION PLAN COMMITTEE
By: /s/ George J. Morgan
------------------------------------------------
George J. Morgan, Chairman of the Susquehanna
Bancshares, Inc. Equity Compensation Plan
Committee
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by or on behalf of
the following persons in the capacities and on the dates indicated. Each
person, in so signing, also makes, constitutes and appoints Robert S. Bolinger
and Richard M. Cloney, and each of such officers acting singly, his true and
lawful attorney-in-fact, in his name, place and stead to execute and cause to be
filed with the Securities and Exchange Commission any or all amendments to this
Registration Statement, with all exhibits and any and all documents required to
be filed with respect thereto, and to do and perform each and every act and
thing necessary to effectuate the same.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert S. Bolinger
- --------------------------- President and Chief Executive December 20, 1996
Robert S. Bolinger Officer and a Director
/s/ Drew K. Hostetter
- --------------------------- Treasurer (Principal Financial December 20, 1996
Drew K. Hostetter and Accounting Officer)
/s/ Richard M. Cloney
- --------------------------- Vice President, Secretary and a December 20, 1996
Richard M. Cloney Director
/s/ John M. Denlinger
- --------------------------- Director December 20, 1996
John M. Denlinger
/s/ Henry H. Gibbel
- --------------------------- Director December 13, 1996
Henry H. Gibbel
/s/ Richard E. Funke
- --------------------------- Director December 20, 1996
Richard E. Funke
/s/ George J. Morgan
- --------------------------- Director December 20, 1996
George J. Morgan
/s/ James G. Apple
- --------------------------- Director December 20, 1996
James G. Apple
/s/ Edward W. Helfrick
- --------------------------- Director December 20, 1996
Edward W. Helfrick
/s/ Roger V. Weist
- --------------------------- Director December 12, 1996
Roger V. Weist
/s/ Marley R. Gross
- --------------------------- Director December 20, 1996
Marley R. Gross
</TABLE>
<PAGE>
<TABLE>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ T. Max Hall
- --------------------------- Director December 13, 1996
T. Max Hall
/s/ Raymond M. O'Connell
- --------------------------- Director December 20, 1996
Raymond M. O'Connell
/s/ C. William Hetzer, Jr.
- --------------------------- Director December 20, 1996
C. William Hetzer, Jr.
/s/ Robert C. Reymer, Jr.
- --------------------------- Director December 20, 1996
Robert C. Reymer, Jr.
/s/ Robert S. Bolinger
- --------------------------- Attorney-in-Fact December 20, 1996
Robert S. Bolinger
/s/ Richard M. Cloney
- --------------------------- Attorney-in-Fact December 20, 1996
Richard M. Cloney
</TABLE>
<PAGE>
SUSQUEHANNA BANCSHARES, INC.
INDEX TO EXHIBITS
<TABLE>
Exhibit Number Document
- -------------- --------
<S> <C>
3.1 Articles of Incorporation of the Registrant (1)(Attachment E)
3.2 Bylaws of the Registrant (1) (Attachment E)
5.1 Opinion of Morgan, Lewis & Bockius LLP
23.1 Consent of Coopers & Lybrand, L.L.P.
23.2 Consent of Morgan, Lewis & Bockius LLP (included as part of Exhibit 5.1)
24.1 Power of Attorney (included as part of the signature page)
99.1 Susquehanna Bancshares, Inc. Equity Compensation Plan
</TABLE>
<PAGE>
EXHIBIT 5.1
December 20, 1996
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Re: Registration Statement on Form S-8 Relating
to the Company's Equity Compensation
---------------------------------------------
Dear Sir or Madam:
We have acted as counsel to Susquehanna Bancshares, Inc. a Pennsylvania
corporation (the "Company") in connection with the preparation of a
registration statement on Form S-8 (the "Registration Statement") filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), relating to the offering of up to 650,000 shares of the Company's
Common Stock, par value $2.00 per share (the "Common Stock"), to be issued
pursuant to the Company's Equity Compensation Plan (the "Plan"). We have
examined our records, documents, statutes and decisions as we have deemed
relevant in rendering this opinion.
In our opinion, the shares of the Company's Common Stock to be issued in
accordance with the terms of the Plan will be, when issued in accordance with
the terms of the Plan, validly issued, fully paid and nonassessable shares of
the Common Stock of the Company.
We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration
Statement. In giving such opinion, we do not thereby admit that we are acting
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
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-8 of our report dated January 23, 1996, except for Note 2 as to which the
date is February 1, 1996, on our audits of the consolidated financial statements
of Susquehanna Bancshares, Inc.
Coopers & Lybrand L.L.P.
Harrisburg, Pennsylvania
December 20, 1996
<PAGE>
EXHIBIT 23.2
Exhibit 23.2 included as part of Exhibit 5.1
<PAGE>
EXHIBIT 24.1
Power of Attorney included as part of the signature page.
<PAGE>
EXHIBIT 99.1
SUSQUEHANNA BANCSHARES, INC.
EQUITY COMPENSATION PLAN
----------------------------
The purpose of the Susquehanna Bancshares, Inc. Equity Compensation
Plan (the "Plan") is to provide (i) designated officers (including officers who
are also directors) and other employees of Susquehanna Bancshares, Inc. (the
"Company") and its subsidiaries, and (ii) 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 or phantom stock appreciation rights and restricted stock. 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
--------------
The Plan shall be administered and interpreted by a committee (the
"Committee"), which shall consist of two or more persons appointed by the Board,
all of whom shall be "disinterested persons" 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.
Except as provided in Section 6 hereof, 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 vesting and the acceleration of vesting and (iv) deal with any
other matters arising under the Plan.
The Committee may, in its discretion or in accordance with a directive
from the Board, waive or amend any provisions of any Grant, provided such waiver
or amendment is not inconsistent with the terms of this Plan as then in effect.
The Committee may, if it so desires, base any of the foregoing determinations
upon the recommendations of management of the Company. A majority of the
Committee shall constitute a quorum thereof, and the actions of a majority of
the Committee at a meeting at which a quorum is present, or actions unanimously
approved in writing by all members of the Committee, shall be actions of the
Committee.
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 interests in the Plan or in any
awards granted hereunder. All powers of the Committee shall be executed in its
sole discretion, in the best interest of the Company and in keeping with the
objectives of the Plan and need not be uniform as to similarly situated
individuals.
2. Grants
------
Incentives under the Plan shall consist of grants of incentive stock
options, nonqualified stock options, stock appreciation rights, phantom stock
appreciation rights and restricted stock (hereinafter collectively
<PAGE>
referred to as "Grants"). All Grants shall be subject to the terms and
conditions set forth herein and to those 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 (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 the common stock of the Company, par value $2.00 per share (the
"Company Stock") that may be issued or transferred under the Plan is 650,000
shares. Notwithstanding anything in the Plan to the contrary, the maximum
aggregate number of shares of Company Stock that shall be subject to Grants made
under the Plan to any one individual during any calendar year shall be 200,000.
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 granted under the
Plan terminate, expire, or are canceled, forfeited, exchanged or surrendered
without having been exercised or if any shares of restricted stock 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 by reason of a stock dividend, a recapitalization, stock
split, or combination or exchange of shares, or merger, reorganization or
consolidation in which the Company is the surviving corporation,
reclassification or change in par value or by reason of any other extraordinary
or unusual events 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 due to 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
may be subject to Grants to any one individual under the Plan in any calendar
year, the number of shares covered by outstanding Grants, and the price per
share or the applicable market value of such Grants shall be proportionately
adjusted by the Committee to reflect any increase or decrease in the number or
kind 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 by rounding any
portion of a share equal to .500 or greater up, and any portion of a share equal
to less than .500 down, in each case to the nearest whole number. For purposes
of this Section 3(b), "shares of Company Stock" and "shares" include referenced
shares with respect to SARs. The adjustments determined by the Committee shall
be final, binding and conclusive. Notwithstanding the foregoing, no adjustment
shall be authorized or made pursuant to this Section to the extent that such
authority or adjustment would cause any incentive stock option to fail to comply
with section 422 of the Code.
4. Eligibility for Participation
-----------------------------
All employees of the Company and its subsidiaries ("Employees"),
including Employees who are officers or members of the Board, shall be eligible
to participate in the Plan. 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.
The Board shall select the Employees and Non-Employee Directors to
receive Grants and determine the number of shares of Company Stock subject to a
particular Grant in such manner as the Board determines. Employees and Non-
Employee Directors who receive Grants under this Plan shall hereinafter be
referred to as "Grantees".
<PAGE>
Nothing contained in this Plan shall be construed to (i) limit the
right of the Board to make Grants under this Plan in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association, including options
granted to employees thereof who become Employees of the Company, or for other
proper corporate purpose, or (ii) limit the right of the Company to grant stock
options or make other awards outside of this Plan.
5. Granting of Options
-------------------
(a) Number of Shares. The Committee, in its sole discretion, shall
----------------
determine the number of shares of Company Stock that will be subject to each
Grant of stock options.
(b) Type of Option and Price. The Committee may grant options
------------------------
intended to qualify as "incentive stock options" within the meaning of section
422 of the Code ("Incentive Stock Options") or options which are not intended to
so qualify ("Nonqualified Stock Options") or any combination of Incentive Stock
Options and Nonqualified Stock Options (hereinafter collectively the "Stock
Options"), all in accordance with the terms and conditions set forth herein.
The purchase price of Company Stock subject to a Stock 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 such
Stock Option is granted; provided, however, that (i) the purchase price of
Company Stock subject to an Incentive Stock Option shall be equal to the Fair
Market Value of a share of such Stock on the date such Stock Option is granted;
and (ii) the purchase price of Company Stock subject to a Nonqualified Stock
Option shall not be less than 100% of the Fair Market Value of a share of such
stock on the date such Stock Option is Granted.
If the Company Stock is traded in a public market, then the Fair
Market Value per share shall be, if the principal trading market for the Company
Stock is a national securities exchange or the National Market segment of The
NASDAQ Stock 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, if the Company Stock is not principally traded on such
exchange or market, the mean between the last reported "bid" and "asked" prices
thereof 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 Stock
-----------
Option. The term of any Stock Option shall not exceed ten years from the date
of grant.
(d) Exercisability of Options. Stock Options shall become exercisable
-------------------------
in accordance with the terms and conditions determined by the Committee, in its
sole discretion, and specified in the Grant Instrument. The Committee, in its
sole discretion, may accelerate the exercisability of any or all outstanding
Stock Options at any time for any reason. In addition, all outstanding Stock
Options automatically shall become fully and immediately exercisable upon a
Change of Control (as defined herein) in accordance with the provisions of
Section 11.
(e) Vesting of Options and Restrictions on Shares. The vesting period
---------------------------------------------
for Stock Options shall commence on the date of grant and shall end on the date
or dates, determined by the Committee, that shall be specified in the Grant
Instrument. Notwithstanding any other provision of the Plan, except as
otherwise provided by the Committee in the Grant Instrument, all outstanding
Stock Options shall become immediately exercisable upon the earliest to occur of
the following, if at such time the Grantee is an Employee of the Company
<PAGE>
or a parent or subsidiary of the Company, or a Non-Employee Director in the case
of a Nonqualified Stock Option: (i) the Grantee's normal retirement date, (ii)
five years from the date of the Grant, (iii) the Grantee's death or Disability
(as defined herein), or (iv) the occurrence of a Change of Control (as defined
herein) of the Company.
(f) Manner of Exercise. A Grantee may exercise a Stock Option which
------------------
has become exercisable, in whole or in part, by delivering a duly completed
notice of exercise to the Secretary of the Company with accompanying payment of
the option price in accordance with Subsection (h) below. Such notice may
instruct the Company to deliver shares of Company Stock due upon the exercise of
the Stock Option to any registered broker or dealer designated by the Committee
("Designated Broker") in lieu of delivery to the Grantee. Such instructions
must designate the account into which the shares are to be deposited. The
Grantee may tender a notice of exercise, which has been properly executed by the
Grantee and the aforementioned delivery instructions to any Designated Broker.
(g) Termination of Employment, Disability or Death.
----------------------------------------------
(i) Except as provided below, a Stock Option may only be
exercised while the Grantee is employed by the Company as an Employee or Non-
Employee Director. In the event that a Grantee ceases to be employed by the
Company for any reason other than a "Disability" or death, any Stock 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 in the Grant
Instrument), but in any event no later than the date of expiration of the option
term. Any of the Grantee's Stock 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.
(ii) In the event the Grantee ceases to be employed by the
Company because the Grantee is "disabled," any Stock Option which is otherwise
exercisable by the Grantee shall terminate unless exercised within one year 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 in the Grant Instrument), but in
any event no later than the date of expiration of the option term. Any of the
Grantee's Stock Options which are not otherwise exercisable as of the date on
which the Grantee ceases to be an Employee shall terminate as of such date.
(iii) If (a) the Grantee dies while employed by the Company, or
(b) in the case of disability, during the period provided at Section 5(g)(ii)
above, or (c) within 90 days after the date on which the Grantee ceases to be
employed by the Company on account of a termination of employment specified in
Section 5(g)(i) above (or within such other period of time as may be specified
in the Grant Instrument), any Stock Option which is otherwise exercisable by the
Grantee shall terminate unless exercised within one year of the date of death
(or within such other period of time as may be specified in the Grant
Instrument), but in any event no later than the date of expiration of the option
term. Any of the Grantee's Stock 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) For purposes of this Section 5, the term "Company" shall
include the Company's subsidiaries and the term "Disability" or "Disabled" shall
mean a Grantee's becoming disabled within the meaning of section 22(e)(3) of the
Code.
(h) Satisfaction of Option Price. The Grantee shall pay the option
----------------------------
price specified in the Grant Instrument in (i) cash, (ii) with the approval of
the Committee, by delivering shares of Company Stock owned by the Grantee
(including Company Stock acquired in connection with the exercise of a Stock
Option, subject to such restrictions as the Committee deems appropriate) and
having a Fair Market Value on the date of exercise equal to the option price or
(iii) through any combination of (i) and (ii). The Grantee shall pay the option
price and the amount of withholding tax due, if any, at the time of exercise.
Shares of Company Stock shall not
<PAGE>
be issued or transferred upon exercise of a Stock Option until the option price
is fully paid and any required withholding is made.
(i) Election to Withhold Shares. Grantees may make an election to
---------------------------
satisfy the Company income tax withholding obligation with respect to a Stock
Option 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. Such election must be in the form and manner prescribed
by the Committee. If the Grantee is a director or officer within the meaning of
Rule 16a-1(f) promulgated under the Exchange Act, such election must be
irrevocable and must be made six months prior to the date on which the Stock
Option is exercised with respect to such shares.
(i) Rule 16b-3 Restrictions. Unless a Grantee who is an "insider," as
-----------------------
defined under Section 16 of the Exchange Act, could otherwise transfer Company
Stock issued pursuant to a Stock Option without incurring liability under
Section 16(b) of the Exchange Act, at least six months must elapse from the date
of acquisition of a Stock Option by such a Grantee to the date of disposition of
the Company Stock issued upon exercise of such option.
(j) Limits on Incentive Stock Options. Each Incentive Stock Option
---------------------------------
shall provide that, to the extent that the aggregate Fair Market Value of the
Company 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 exceeds $100,000,
then such option as to the excess shall be treated as a Nonqualified Stock
Option. An Incentive Stock Option shall not be granted to any participant who
is not an Employee of the Company or any "subsidiary" within the meaning of
section 424(f) of the Code. An Incentive Stock Option shall not be granted to
any 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 within the meaning of
section 424(e) and (f) of the Code, unless the option price per share is not
less than 110% of the Fair Market Value of Company Stock on the date of grant
and the option exercise period is not more than five years from the date of
grant.
6. Formula Option Grants to Non-Employee Directors
-----------------------------------------------
A Non-Employee Director shall be entitled to receive Nonqualified
Stock Options in accordance with this Section 6.
(a) Initial Grant. Each Non-Employee Director who is a member of the
-------------
Board on the effective date of this Plan, as defined in Section 21 hereof, will
receive a grant of a Nonqualified Stock Option to purchase 1,000 shares of
Company Stock as of such date. Each Non-Employee Director who first becomes a
member of the Board after the effective date of this Plan, will receive a grant
of a Nonqualified Stock Option to purchase 1,000 shares immediately upon the
date he or she becomes a member of the Board.
(b) Annual Grants. For a 5-year period beginning from the date of the
-------------
initial grant specified in Section 6(a) above (the "Initial Grant Date"), on
each anniversary date of the Initial Grant Date (the "Annual Automatic Grant
Date"), each Non-Employee Director will receive a grant of a Nonqualified Stock
Option to purchase 1,000 shares of Company Stock (for a total, aggregate grant
of 5,000 shares), provided that the Non-Employee Director remains as such on the
Annual Automatic Grant Date.
(c) Option Price. The purchase price per share of Company Stock
------------
subject to a Stock 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.
<PAGE>
(d) Option Term. The term of each Stock Option granted pursuant to
-----------
this Section 6 shall be ten years.
(e) Exercisability. Options granted under this Section 6 shall be
--------------
exercisable one-third on the third anniversary following the date of the grant,
one-third on the fourth anniversary following the date of the grant, and one-
third on the fifth anniversary following the date of the grant.
(f) Administration. The provisions of this Section 6 are intended to
--------------
operate automatically and not require administration. However, to the extent
that administrative determinations are required, 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 Stock Options granted
hereunder.
(g) Applicability of Plan Provisions. Except as otherwise provided
--------------------------------
in, and not inconsistent with, this Section 6, the 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.
(h) Amendment. Notwithstanding any other provision of the Plan, this
---------
Section 6 may not be amended more than once every six months, except for
amendments necessary to conform the Plan to changes in the provisions of or the
regulations relating to applicable laws, including the Code or the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
7. Restricted Stock Grants
-----------------------
The Committee may issue or transfer shares of Company Stock to an
Employee under a Grant (a "Restricted Stock Grant"), upon such terms as the
Committee deems appropriate. The following provisions are applicable to
Restricted Stock Grants:
(a) General Requirements. Shares of Company Stock issued pursuant to
--------------------
Restricted Stock Grants may be issued for cash consideration or for no cash
consideration, at the sole discretion of the Committee. The Committee shall
establish conditions under which restrictions on the transfer of shares of
Company Stock shall lapse over a period of time or according to such other
criteria as the Committee deems appropriate. The period of years during which
the Restricted Stock Grant will remain subject to restrictions will be
designated in the Grant Instrument as the "Restriction Period."
(b) Number of Shares. The Committee shall grant to each Grantee a
----------------
number of shares of Company Stock pursuant to a Restricted Stock Grant in such
manner as the Committee determines.
(c) Termination of Employment or Services. If the Grantee ceases to
-------------------------------------
be employed by the Company (as an Employee or Non-Employee Director) 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 restrictions on transfer 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 equitable.
(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 Company Stock to which such Restriction
Period applies except to a Successor Grantee under Section 10. Each certificate
for a share issued or transferred under a Restricted Stock Grant 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 or
certificates covering any of the shares subject to restrictions when all
restrictions on such shares have lapsed.
<PAGE>
(e) Right to Vote and to Receive Cash Dividends. During the
-------------------------------------------
Restriction Period, unless the Committee determines otherwise, the Grantee shall
have the right to vote shares subject to the Restricted Stock Grant 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 under the
---------------------
Restricted Stock Grant shall lapse upon the expiration of the applicable
Restriction Period and the satisfaction of any conditions imposed by the
Committee. The Committee may determine, as to any or all Restricted Stock
Grants, that all the restrictions shall lapse without regard to any Restriction
Period. All restrictions under all outstanding Restricted Stock Grants shall
automatically and immediately lapse upon a Change of Control.
(g) Election to Withhold Shares. Grantees may make an election to
---------------------------
satisfy the Company income tax withholding obligation with respect to a
Restricted Stock Grant by having shares withheld up to an amount that does not
exceed the participant's maximum marginal tax rate for federal (including FICA),
state and local tax liabilities. Such election must be in the form and manner
prescribed by the Committee. If the Grantee is a director or officer within the
meaning of Rule 16a-1(f) promulgated under the Exchange Act, such election must
be irrevocable and must be made six months prior to the date on which all
restrictions lapse with respect to such shares.
8. Stock Appreciation Rights
-------------------------
(a) General Requirements. The Committee may grant stock appreciation
--------------------
rights ("SARs") to any Grantee in tandem with any Stock Option, for all or a
portion of the applicable Stock Option, either at the time the Stock Option is
granted or at any time thereafter while the Stock Option remains outstanding;
provided, however, that in the case of an Incentive Stock Option, such rights
may be granted only at the time of the Grant of such Stock Option. Unless the
Committee determines otherwise, the base price of each SAR shall be equal to the
greater of (i) the exercise price of the related Stock Option or (ii) the Fair
Market Value of a share of Company Stock as of the date of Grant of such SAR.
(b) Number of SARs. The number of SARs granted to a Grantee which
--------------
shall be exercisable during any given period of time shall not exceed the number
of shares of Company Stock which the Grantee may purchase upon the exercise of
the related Stock Option during such period of time. Upon the exercise of a
Stock Option, the SARs relating to the Company Stock covered by such Stock
Option shall terminate. Upon the exercise of SARs, the related Stock Option
shall terminate to the extent of an equal number of shares of Company Stock.
(c) Value of SARs. Upon a Grantee's exercise of some or all of the
-------------
Grantee's 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 difference between the base price of the SAR as described in
subsection (a) and the Fair Market Value of the underlying Company Stock on the
date of exercise of such SAR.
(d) Form of Payment. At the time of such exercise, the Grantee shall
---------------
have the right to elect the portion of the amount to be received that shall
consist of cash and the portion that shall consist of Common Stock, which for
purposes of calculating the number of shares of Company Stock to be received,
shall be valued at their Fair Market Value on the date of exercise of such SARs.
The Committee shall have the right to disapprove a Grantee's election to receive
cash in full or partial settlement of the SARs exercised and to require that
shares of Company Stock be delivered in lieu of cash. If shares of Company
Stock are to be received upon exercise of an SAR, cash shall be delivered in
lieu of any fractional share.
<PAGE>
(e) Certain Restrictions. An SAR is exercisable only during the
--------------------
period when the Stock Option to which it is related is also exercisable. No SAR
may be exercised for cash by an officer or director of the Company subject to
Section 16 of the Exchange Act, in whole or in part, except in accordance with
Rule 16b-3 under the Exchange Act.
9. Phantom Stock Appreciation Rights
---------------------------------
The Plan will include phantom stock appreciation rights under a
program substantially similar to the Phantom Stock Appreciation Plan (the
"PSAP") currently maintained by the Company. In connection with adoption of the
Plan, at the time of shareholder approval of the Plan, the PSAP will be
terminated as a separate plan but its provisions will be incorporated herein and
become a part of the Plan. Any inconsistency between the terms of this Plan and
the PSAP will be resolved in favor of the terms of this Plan. Interests
previously awarded under the PSAP and outstanding at the time of adoption of the
Plan will be subject to conversion to cash and Company Stock in an equitable
manner but subject to the PSAP participant's acceptance.
10. Transferability of Grants
-------------------------
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 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 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. 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 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 Grant Instruments relating to
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.
11. Change of Control of the Company
--------------------------------
As used herein, a "Change of Control" shall be deemed to have occurred
if:
(a) A liquidation or dissolution of the Company (excluding transfers
to subsidiaries) or the sale of all or substantially all of the Company's
assets occurs;
(b) As a result of a tender offer, stock purchase, other stock
acquisition, merger, consolidation, recapitalization, reverse split or sale
or transfer of assets, any person or group (as such terms are used in and
under Section 13(d)(3) or 14(d)(2) of the Exchange Act) becomes the
beneficial owner (as defined in Rule 13-d under the Exchange Act), directly
or indirectly, of securities of the Company representing more than 20% of
the common stock of the Company or the combined voting power of the
Company's then outstanding securities; provided, however, that for purposes
of this subsection 11(b), a person or group shall not include the Company
or any subsidiary or any employee benefit plan (or related trust) sponsored
or maintained by the Company or any subsidiary;
<PAGE>
(c) If at least a majority of the Board at any time does not consist
of individuals who were elected, or nominated for election, by directors in
office at the time of such election or nomination; or
(d) The Company merges or consolidates with any other corporation
(other than a wholly owned subsidiary) and is not the surviving corporation
(or survives only as a subsidiary of another corporation).
12. Consequences of a Change of Control
-----------------------------------
(a) Notice.
------
(i) If a Change of Control described in Section 11(a), (b) or
(d) will occur, then, not later than 10 days after the approval by the
stockholders of the Company (or approval by the Board, if stockholder action is
not required) of such Change of Control, the Company shall give each Grantee
with any outstanding Stock Options, Phantom Stock Appreciation Rights or SARs
written notice of such proposed Change of Control.
(ii) If a Change of Control described in Section 11(b) may occur
without approval by the shareholders (or approval by the Board) and does so
occur, or if a Change of Control described in Section 11(c) occurs, then, not
later than 10 days after such Change of Control, the Company shall give each
Optionee with any outstanding Stock Options, Phantom Stock Appreciation Rights
or SARs written notice of the Change of Control.
(b) Election Period. In connection with the Change of Control and
---------------
effective only upon such Change of Control, each Grantee shall thereupon have
the right, within 10 days after such written notice is sent by the Company (the
"Election Period"), to make an election as described in Subsection (c) with
respect to all of his or her outstanding Stock Options, Phantom Stock
Appreciation Rights or SARs (whether the right to exercise such Stock Options,
Phantom Stock Appreciation Rights or SARs has then accrued or the right to
exercise such Stock Options, Phantom Stock Appreciation Rights or SARs will
occur or has occurred upon the Change of Control).
(c) Election Right. During the Election Period, each Grantee shall
--------------
have the right to elect to exercise in full any installments of such Stock
Options, Phantom Stock Appreciation Rights or SARs not previously exercised;
provided, however, that in the case of an SAR or Phantom Stock Appreciation
Right 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) Termination of Stock Options. If a Grantee does not make a
----------------------------
timely election in accordance with Subsection (c) in connection with a Change of
Control where the Company is not the surviving corporation (or survives only as
a subsidiary of another corporation), the Grantee's Stock Options, Phantom Stock
Appreciation Rights or SARs shall terminate as of the Change of Control.
Notwithstanding the foregoing, a Stock Option, Phantom Stock Appreciation Right
or SAR will not terminate if assumed by the surviving or acquiring corporation,
or its parent, upon a merger or consolidation and, with respect to an Incentive
Stock Option, the assumption of the Stock Option occurs under circumstances
which are not deemed a modification of the Stock Option within the meaning of
sections 424(a) and 424(h)(3)(A) of the Code.
(e) Accounting and Tax Limitations. Notwithstanding the foregoing,
------------------------------
(i) if the right described in Subsection (c) in connection with SARs
or Phantom Stock Appreciation Rights would make the applicable Change of Control
ineligible for pooling of interest accounting treatment under APB No. 16 or make
such Change of Control ineligible for desired tax treatment with respect to such
Change of Control and, but for those provisions, the Change of Control would
otherwise qualify for such
<PAGE>
treatment, the Grantee shall receive shares of Company Stock with a Fair
Market Value equal to the cash that would otherwise be payable pursuant to
Subsection (c) in substitution for the cash, and
(ii) if the termination of the Stock Options described in Subsection
(d) would make the applicable Change of Control ineligible for pooling of
interest accounting treatment under APB No. 16 and, but for such provision, the
Change of Control would otherwise qualify for such treatment, each affected
Grantee shall receive a replacement or substitute stock option issued by the
surviving or acquiring corporation.
13. 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 or transferred 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.
(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 20(b) hereof. 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 20(b) hereof 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.
14. 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.
15. Rights of Participants
----------------------
Nothing in this Plan shall entitle any Employee or Non-Employee
Director or other person to any claim or right to be granted a Grant under this
Plan. 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.
<PAGE>
16. 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.
17. Withholding of Taxes
--------------------
The Company shall have the right to deduct from all Grants paid in
cash, or from other wages paid to an Employee of the Company, any federal, state
or local taxes required by law to be withheld with respect to such cash awards
and, in the case of Grants paid in Company Stock, the Grantee or other person
receiving such shares shall be required to pay to the Company the amount of any
such taxes which the Company is required to withhold with respect to such Grants
or the Company shall have the right to deduct from other wages paid to the
Employee by the Company the amount of any withholding due with respect to such
Grants.
18. 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 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.
19. 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.
20. 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 Stock Options 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
<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.
21. Effective Date of the Plan.
--------------------------
The Plan shall be effective as of the date of the approval by the
Company's shareholders of the Plan.
