As filed with the Securities and Exchange Commission on October 29, 1999
Registration No. 333-
----
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
PENN TREATY AMERICAN CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Pennsylvania 23-1664166
------------ ----------
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NO.)
3440 Lehigh Street
Allentown, Pennsylvania 18103
----------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Penn Treaty American Corporation
1998 Employee Incentive Stock Option Plan
-----------------------------------------
(FULL TITLE OF THE PLAN)
Irving Levit, President
Penn Treaty American Corporation
3440 Lehigh Street
Allentown, Pennsylvania 18103
--------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(610) 965-2222
--------------
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
with a copy to:
Justin P. Klein, Esquire
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
(215) 665-8500
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share(1) Price(1) Fee
- --------------------------------------------------------------------------------
Common Stock,
par value $.10
per share 600,000(2) $18.4375 $11,062,500 $3,076
<PAGE>
(1) Calculated in accordance with Rule 457(c) and (h) on the basis of the
average of the high and low prices of Penn Treaty American Corporation
Common Stock on October 28, 1999, as reported on the New York Stock
Exchange.
(2) Such number represents the number of shares of Common Stock initially
issuable upon exercise of all options available for grant under the
1998 Employee Incentive Stock Option Plan.
<PAGE>
PART I - INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information specified in Part I of this
Registration Statement will be given or sent to all officers and other key
employees of Penn Treaty American Corporation who participate in the Penn Treaty
American Corporation 1998 Employee Incentive Stock Option Plan as specified by
Rule 428 under the Securities Act.
PART II - INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended by Penn Treaty (File
No. 0-15972) are incorporated herein by reference:
(i) Penn Treaty's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
(ii) Penn Treaty's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999 and June 30, 1999;
(iii) Penn Treaty's Current Report on Form 8-K dated January 15, 1999; and
(iv) the description of Penn Treaty's common stock contained in Penn
Treaty's Registration Statement on Form 8-A for such securities,
including any amendments or reports filed for the purpose of updating
such description.
All documents subsequently filed by Penn Treaty after the date hereof
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities remaining unsold,
shall be deemed to be incorporated by reference in this Registration Statement
and shall be part hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Amended and Restated Bylaws of Penn Treaty provide for indemnification
of directors and officers of Penn Treaty in accordance with indemnification
provisions of the Pennsylvania Business Corporation Law of 1988. Sections
1741-50 of the Pennsylvania Business Corporation Law permit indemnification of
directors, officers, employees and agents of a corporation under certain
conditions and subject to certain limitations.
The Company has directors' and officers' liability insurance insuring its
directors and officers against liability incurred in their capacities as
directors and officers and providing for reimbursement of the registrant for any
indemnification payments made by it to directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 Specimen copy of Common Stock Certificate (incorporated by
reference to Exhibit 4 to Registration Statement on Form S-1,
Reg. No. 33-92690).
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (contained in
Exhibit 5.1)
24.1 Power of Attorney (included on signature page of Registration
Statement)
99.1 Penn Treaty American Corporation 1998 Employee Incentive Stock
Option Plan
<PAGE>
ITEM 9. UNDERTAKINGS.
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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(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;
(2) Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8, and 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.
(3) 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.
(4) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the 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.
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Allentown, Commonwealth of Pennsylvania on October
29, 1999.
Penn Treaty American Corporation
By : /s/ Irving Levit
--------------------------
Irving Levit, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Irving Levit and A.J. Carden and each or
any one of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully
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, or any of them, or
his or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Signature Title Date
--------- ----- ----
/s/ Irving Levit Chairman of the Board, President October 29, 1999
----------- and Chief Executive Officer
Irving Levit (Principal Executive Officer)
<PAGE>
/s/ Michael F. Grill Treasurer, Controller and October 29, 1999
---------------- Director (Principal Accounting
Michael F. Grill Officer)
/s/ A.J. Carden Executive Vice President and October 29, 1999
----------- Director
A.J. Carden
/s/ Domenic P. Stangherlin Secretary and Director October 29, 1999
----------------------
Domenic P. Stangherlin
/s/ Jack D. Baum Vice President, Marketing and October 29, 1999
------------ Director
Jack D. Baum
/s/ Glen A. Levit Vice President, Sales and October 29, 1999
------------ Director
Glen A. Levit
/s/ Cameron Waite Chief Financial Officer October 29, 1999
------------- (Principal Financial Officer)
Cameron Waite
/s/ Emile G. Ilchuk Director October 29, 1999
---------------
Emile G. Ilchuk
/s/ C. Mitchell Goldman Director October 29, 1999
-------------------
C. Mitchell Goldman
/s/ David B. Trindle Director October 29, 1999
----------------
David B. Trindle
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
4.1 Specimen copy of Common Stock Certificate (incorporated by
reference to Exhibit 4 to Registration Statement on Form
S-1, Reg. No. 333-10777).
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP
23.1 Consent of PricewaterhouseCoopers, LLP
23.2 Consent of Ballard Spahr Andrews & Ingersoll, LLP (contained
in Exhibit 5.1)
24.1 Power of Attorney (included on signature page of Registration
Statement)
99.1 Penn Treaty American Corporation 1998 Employee Incentive Stock
Option Plan
<PAGE>
EXHIBIT 5.1
[Ballard Spahr Andrews & Ingersoll, LLP Letterhead]
October 29, 1999
Penn Treaty American Corporation
3440 Lehigh Street
Allentown, PA 18103
Re: Registration Statement on Form S-8
Gentlemen:
We have acted as special counsel to Penn Treaty American Corporation (the
"Company") in connection with the registration under the Securities Act of 1933,
as amended, of 600,000 shares of Common Stock of Penn Treaty, par value $.10 per
share (the "Shares"), issuable upon the exercise of options granted under the
Penn Treaty American Corporation 1998 Employee Incentive Stock Option Plan (the
"Plan").
In rendering our opinion, we have reviewed such certificates, documents,
corporate records and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. In giving this
opinion, we are assuming the authenticity of all instruments presented to us as
originals, the conformity with the originals of all instruments presented to us
as copies and the genuineness of all signatures.
Based on the foregoing, we are of the opinion that the Shares, when issued upon
exercise of options granted under the Plan, in accordance with the terms
thereof, will be legally issued, fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5.1 to the Registration
Statement on Form S-8 being filed with respect to the offering of the Shares.
Yours truly,
/s/ Ballard Spahr Andrews & Ingersoll, LLP
--------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 8, 1999 relating to the
financial statements and financial statement schedules of Penn Treaty American
Corporation which appears in Penn Treaty American Corporation's Annual Report on
Form 10-K for the year ended December 31, 1998.
/s/ PricewaterhouseCoopers LLP
--------------------------
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
October 29, 1999
<PAGE>
EXHIBIT 99.1
PENN TREATY AMERICAN CORPORATION
1998 EMPLOYEE INCENTIVE STOCK OPTION PLAN
ARTICLE I
Purpose
The purpose of the 1998 Employee Incentive Stock Option Plan (the "Plan")
is to enable Penn Treaty American Corporation (the "Company") to offer certain
officers and key executive employees of the Company and its Subsidiaries options
to acquire equity interests in the Company, thereby attracting, retaining and
rewarding such persons, and strengthening the mutuality of interests between
such persons and the Company's shareholders.
ARTICLE II
Definitions
For purposes of the Plan, the following terms shall have the following
meanings:
"Award" shall mean an award under the Plan of a Stock Option.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Compensation Committee of the Board, consisting
of two or more members of the Board, each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended.
"Common Stock" shall mean the Common Stock, par value $.10 per share, of
the Company.
"Disability" shall mean a disability that results in a Participant's
Termination of Employment with the Company or a Subsidiary, as determined
pursuant to standard Company procedures.
<PAGE>
"Fair Market Value" for purposes of the Plan, unless otherwise required by
any applicable provision of the Code or any regulations issued thereunder,
shall mean, as of any date, the average of the high and low sales prices of
a share of Common Stock as reported on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or, if
not listed or traded on any such exchange, The Nasdaq Stock Market
("Nasdaq"), or, if such sales prices are not available, the average of the
bid and asked prices per share reported on Nasdaq, or, if such quotations
are not available, the fair market value as determined by the Board, which
determination shall be conclusive.
"Incentive Stock Option" shall mean any Stock Option awarded under the Plan
intended to be and designated as an "Incentive Stock Option" within the
meaning of Section 422 of the Code.
"Non-Qualified Stock Option" shall mean any Stock Option granted under the
Plan that is not an Incentive Stock Option.
"Participant" shall mean an employee to whom an Award has been granted.
"Stock Option" or "Option" shall mean any option to purchase shares of
Common Stock granted pursuant to Article VI of the Plan.
"Subsidiary" shall mean any subsidiary of the Company, 80% or more of the
voting stock of which is owned, directly or indirectly, by the Company.
"Termination of Employment" shall mean a termination of employment with the
Company and all of its Subsidiaries. Whether authorized leave of absence or
absence for military or governmental service shall constitute termination
of employment, for the purposes of the Plan, shall be determined by the
Committee, which determination shall be final and conclusive.
ARTICLE III
ADMINISTRATION
The Committee. The Plan shall be administered and interpreted by the
Committee.
Awards. The Committee shall have full authority to grant, pursuant to the
terms of the Plan, Stock Options to persons eligible under Article V. In
particular, the Committee shall have the authority:
(a) to select the persons to whom Stock Options may from time to time be
granted;
<PAGE>
(b) to determine whether and to what extent Incentive Stock Options and
Non-Qualified Stock Options, or any combination thereof, are to be
granted to one or more persons eligible to receive Awards under
Article V;
(c) to determine the number of shares of Common Stock to be covered by
each Award granted hereunder; and
(d) to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Award granted hereunder (including, but not
limited to, the option price, the option term, and provisions relating
to any restriction or limitation, any vesting schedule or
acceleration, or any waiver with respect to the Award).
Guidelines. Subject to Article VII hereof, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan as it shall, from time to time, deem
advisable; to interpret the terms and provisions of the Plan and any Award
granted under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in
the Plan or in any Award in the manner and to the extent it shall deem
necessary to carry the Plan into effect. Notwithstanding the foregoing, no
action of the Committee under this Section 3.3 shall impair the rights of
any Participant without the Participant's consent, unless otherwise
required by law.
Decisions Final. Any decision, interpretation or other action made or taken
in good faith by the Committee arising out of or in connection with the
Plan shall be final, binding and conclusive on the Company, all
Participants and their respective heirs, executors, administrators,
successors and assigns.
ARTICLE IV
SHARE LIMITATION
Shares. The maximum aggregate number of shares of Common Stock that may be
issued under the Plan is 600,000 (subject to any increase or decrease
pursuant to Section 4.3), which may be either authorized and unissued
shares of Common Stock or issued Common Stock reacquired by the Company. If
any Option granted under the Plan shall expire, terminate or be cancelled
for any reason without having been exercised in full, the number of
unpurchased shares shall again be available for the purposes of the Plan.
Individual Limit. No employee may be granted Awards covering more than
50,000 shares of Common Stock (subject to increase or decrease pursuant to
Section 4.3) during any calendar year.
<PAGE>
Changes.
(a) Subject to any required action by the shareholders of the Company, the
number of shares of Common Stock covered by each outstanding Stock
Option, and the exercise price per share in each such Option, shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a
subdivision or consolidation of shares or the payment of a stock
dividend (but only on the Common Stock) or any other increase or
decrease in the number of such shares effected without receipt of
consideration by the Company.
(b) Subject to any required action by the shareholders of the Company, if
the Company shall be the surviving corporation in any merger or
consolidation, each outstanding Stock Option shall pertain to and
apply to the securities to which a holder of the number of shares of
Common Stock subject to the Stock Option would have been entitled. A
dissolution or liquidation of the Company or a merger or consolidation
in which the Company is not the surviving corporation, shall cause
each outstanding Stock Option to terminate, provided that each
optionee shall, in such event, if a period of 12 months from the date
of the granting of the Stock Option shall have expired, have the right
immediately prior to such dissolution or liquidation, or merger or
consolidation in which the Company is not the surviving corporation,
to exercise his Stock Option in whole or in part without regard to the
installment provisions of Section 6.4(d) of the Plan. Notwithstanding
the above provisions, an Incentive Stock Option will not terminate if
assumed by the surviving or acquiring corporation, or its parent, upon
a merger or consolidation under circumstances which are not deemed a
modification of the Incentive Stock Option within the meaning of
Sections 425(a) and 425(h)(3)(A) of the Code.
(c) In the event of a change in the Common Stock of the Company as
presently constituted, which is limited to a change of all of its
authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from
any such change shall be deemed to be the Common Stock within the
meaning of the Plan.
(d) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding
and conclusive, provided that no Incentive Stock Option granted
pursuant to the Plan shall be adjusted in a manner that causes the
Incentive Stock Option to fail to continue to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
(e) The grant of a Stock Option pursuant to the Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassification, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or any part of its business or
assets.
<PAGE>
ARTICLE V
ELIGIBILITY
All officers (whether or not they are Directors) and other key executive
employees of the Company and its Subsidiaries are eligible to be granted Stock
Options under the Plan.
ARTICLE VI
STOCK OPTIONS
Options. Each Stock Option granted under the Plan shall be either an Incentive
Stock Option or a Non-Qualified Stock Option.
Grants. The Committee shall have the authority to grant to any person eligible
under Article V one or more Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options. To the extent that any Stock Option
does not qualify as an Incentive Stock Option (whether because of its provisions
or the time or manner of its exercise or otherwise), such Stock Option or the
portion thereof which does not qualify as an Incentive Stock Option shall
constitute a separate Non-Qualified Stock Option.
Incentive Stock Options. Anything in the Plan to the contrary notwithstanding,
no term of the Plan relating to Incentive Stock Options shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the Plan
be exercised, so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the Participants affected, to disqualify any Incentive
Stock Option under such Section 422.
Terms of Options. Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable:
Notice of Grant of Stock Option. Each Stock Option shall be evidenced by, and
subject to the terms of, a Notice of Grant of Stock Option executed by the
Company and the Participant. The Notice of Grant of Stock Option shall specify
whether the Option is an Incentive Stock Option or a Non-Qualified Stock Option,
the number of shares of Common Stock subject to the Stock Option, the option
price, the option term, and the other terms and conditions applicable to the
Stock Option.
Option Price. Subject to subsection (l) below, the option price per share of
Common Stock purchasable upon exercise of a Stock Option shall be determined by
the Committee at the time of grant, but shall be not less than 100% of the Fair
Market Value of the Common Stock on the date of grant if the Stock Option is
intended to be an Incentive Stock Option. The Committee may, in its discretion,
grant Non-Qualified Stock Options at an option price per share which is below
the Fair Market Value of the Common Stock on the date of grant.
<PAGE>
Option Term. Subject to subsection (l) below, the term of each Stock Option
shall be fixed by the Committee at the time of grant, but no Stock Option shall
be exercisable more than ten years after the date it is granted.
Exercisability. Stock Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee at
the time of grant; provided, however, that no Stock Option shall be exercisable
in whole or in part prior to 12 months from the date it is granted; and provided
further, that the Committee may waive any installment exercise or waiting period
provisions, in whole or in part, at any time after the date of grant, based on
such factors as the Committee shall deem appropriate in its sole discretion.
Method of Exercise. Subject to such installment exercise and waiting period
provisions as may be imposed by the Committee, Stock Options may be exercised in
whole or in part at any time during the option term by delivering to the Company
written notice of exercise specifying the number of shares of Common Stock to be
purchased and the option price therefor; provided, however, that not less than
100 shares may be purchased at any one time unless the number purchased is the
total number at the time purchasable under the Stock Option. The notice of
exercise shall be accompanied by payment in full of the option price and, if
requested, by the representation described in Section 9.2. Payment of the option
price may be made (i) in cash or by check payable to the Company, (ii) to the
extent determined by the Committee on or after the date of grant, in shares of
Common Stock duly owned by the Participant (and for which the Participant has
good title free and clear of any liens and encumbrances) or (iii) by reduction
in the number of shares of Common Stock issuable upon such exercise, based, in
each case, on the Fair Market Value of the Common Stock on the last trading date
preceding the date of exercise. In addition, the Committee and the Board shall
have the discretion to include in any Option grant the right of the Participant
(A) to receive a loan from the Company to pay the exercise price of the Stock
Option, with such terms as shall not cause the Stock Option, if an Incentive
Stock Option, to become disqualified under Section 422 of the Code or amendments
thereto, and/or (B) to receive such assistance from the Company in obtaining a
loan from a financial institution as is necessary in the sole discretion of the
Committee and the Board. Upon payment in full of the option price and
satisfaction of the other conditions provided herein, a stock certificate
representing the number of shares of Common Stock to which the Participant is
entitled shall be issued and delivered to the Participant.
Death. In the event of a Participant's Termination of Employment by reason of
death, any Stock Option held by such Participant which was exercisable on the
date of death may thereafter be exercised by the legal representative of the
Participant's estate until the earlier of three months after the date of death
or the expiration of the stated term of such Stock Option, and any Stock Option
not exercisable on the date of death shall be forfeited.
<PAGE>
Disability. In the event of a Participant's Termination of Employment by reason
of Disability, any Stock Option held by such Participant which was exercisable
on the date of such Termination of Employment may thereafter be exercised by the
Participant until the earlier of three months after such date or the expiration
of the stated term of such Stock Option, and any Stock Option not exercisable on
the date of such Termination of Employment shall be forfeited. If an Incentive
Stock Option is exercised after the expiration of the exercise period that
applies for purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Non-Qualified Stock Option.
Termination of Employment. Unless otherwise determined by the Committee on or
after the date of grant, in the event of a Participant's Termination of
Employment other than by reason of Death or Disability, all Stock Options held
by such Participant on the date of such Termination of Employment shall be
forfeited as of such date.
Non-Transferability of Options. No Stock Option shall be transferrable by the
Participant otherwise than by will or by the laws of descent and distribution,
to the extent consistent with the terms of the Plan and the Option, and all
Stock Options shall be exercisable, during the Participant's lifetime, only by
the Participant.
Incentive Stock Option Limitations. To the extent that the aggregate Fair Market
Value (determined as of the date of grant) of the Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by the
Participant during any calendar year under the Plan and/or any other stock
option plan of the Company or any subsidiary or parent corporation (within the
meaning of Section 424 of the Code) exceeds $100,000, such Options shall be
treated as Options which are not Incentive Stock Options.
Should the foregoing provisions not be necessary in order for the Stock Options
to qualify as Incentive Stock Options, or should any additional provisions be
required, the Committee may amend the Plan accordingly, without the necessity of
obtaining the approval of the shareholders of the Company.
Ten-Percent Shareholder Rule. Notwithstanding any other provision of the Plan to
the contrary, no Incentive Stock Option shall be granted to any person who,
immediately prior to the grant, owns stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Company or any
subsidiary or parent corporation (within the meaning of Section 424 of the
Code), unless the option price is at least 110% of the Fair Market Value of the
Common Stock on the date of grant and the Option, by its terms, expires no later
than five years after the date of grant.
Rights as Shareholder. A Participant shall not be deemed to be the holder of
Common Stock, or to have any of the rights of a holder of Common Stock, with
respect to shares subject to the Option, unless and until the Option is
exercised and a stock certificate representing such shares of Common Stock is
issued to the Participant.
<PAGE>
ARTICLE VII
TERMINATION OR AMENDMENT
7.1 Termination or Amendment of Plan. The Committee may at any time amend,
discontinue or terminate the Plan or any part thereof (including any amendment
deemed necessary to ensure that the Company may comply with any regulatory
requirement referred to in Article IX); provided, however, that, unless
otherwise required by law, the rights of a Participant with respect to Awards
granted prior to such amendment, discontinuance or termination may not be
impaired without the consent of such Participant and, provided further that,
without the approval of the Company's shareholders, no amendment may be made
that would (i) materially increase the number of shares of Common Stock that may
be issued under the Plan (except by operation of Section 4.3); (ii) materially
modify the requirements as to eligibility to participate in the Plan; or (iii)
materially increase the benefits accruing to Participants.
7.2 Amendment of Options. The Committee may amend the terms of any Award
previously granted, prospectively or retroactively, but, subject to Article IV,
no such amendment or other action by the Committee shall impair the rights of
any holder without the holder's consent. The Committee may also substitute new
Stock Options for previously granted Stock Options having higher option prices.
ARTICLE VIII
UNFUNDED PLAN
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payment not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonassignment. Except as otherwise provided in the Plan, any Award
granted hereunder and the rights and privileges conferred thereby shall not be
sold, transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise), and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of an Award, right or privilege contrary to the
provisions hereof, or upon the levy of any attachment or similar process
thereon, such Award and the rights and privileges conferred hereby shall
immediately terminate and the Award shall immediately be forfeited to the
Company.
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9.2 Legend. The Committee may require each person acquiring shares pursuant
to an Award to represent to the Company in writing that the Participant is
acquiring the shares without a view to distribution thereof. The stock
certificates representing such shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer.
All certificates representing shares of Common Stock delivered under the
Plan shall be subject to such stock transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange or
stock market upon which the Common Stock is then listed or traded, any
applicable Federal or state securities law, and any applicable corporate law,
and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
9.3 Other Plans. Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
9.4 No Right to Employment. Neither the Plan nor the grant of any Award
hereunder shall give any Participant or other employee any right with respect to
continuance of employment by the Company or any Subsidiary, nor shall the Plan
impose any limitation on the right of the Company or any Subsidiary by which a
Participant is employed to terminate such Participant's employment at any time.
9.5 Withholding of Taxes. The Company shall have the right to reduce the
number of shares of Common Stock otherwise deliverable pursuant to the Plan by
an amount that would have a Fair Market Value equal to the amount of all
Federal, state and local taxes required to be withheld, or to deduct the amount
of such taxes from any cash payment otherwise to be made to the Participant. In
connection with such withholding, the Committee may make such arrangements as
are consistent with the Plan as it may deem appropriate.
9.6 Listing and Other Conditions.
(a) If the Common Stock is listed on a national securities exchange or The
Nasdaq Stock Market, the issuance of any shares of Common Stock
pursuant to an Award shallbe conditioned upon such shares being listed
on such exchange or Nasdaq. The Company shall have no obligation to
issue any shares of Common Stock unless and until such shares are so
listed, and the right to exercise any Option shall be suspended until
such listing has been effected.
(b) If at any time counsel to the Company shall be of the opinion that any
sale or delivery of shares of Common Stock pursuant to an Award is or
may in the circumstances be unlawful or result in the imposition of
excise taxes under the statutes, rules or regulations of any
applicable jurisdiction, the Company shall have no obligation to make
such sale or delivery, or to make any application or to effect or to
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maintain any qualification or registration under the Securities Act of
1933, as amended, or otherwise with respect to shares of Common Stock
or Awards, and the right to exercise any Option shall be suspended
until, in the opinion of such counsel, such sale or delivery shall be
lawful or shall not result in the imposition of excise taxes.
(c) Upon termination of any period of suspension under this Section 9.6,
any Award affected by such suspension which shall not then have
expired or terminated shall be reinstated as to all shares available
before such suspension and as to shares which would otherwise have
become available during the period of such suspension, but no such
suspension shall extend the term of any Option.
9.7 Governing Law. The Plan and actions taken in connection herewith shall
be governed and construed in accordance with the laws of the Commonwealth of
Pennsylvania.
9.8 Construction. Wherever any words are used in the Plan in the masculine
gender they shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and wherever any words are used
herein in the singular form they shall be construed as though they were also
used in the plural form in all cases where they would so apply.
9.9 Liability of the Board and the Committee. No member of the Board or the
Committee nor any employee of the Company or any of its subsidiaries shall be
liable for any act or action hereunder, whether of omission or commission, by
any other member or employee or by any agent to whom duties in connection with
the administration of the Plan have been delegated or, except in circumstances
involving bad faith, gross negligence or fraud, for anything done or omitted to
be done by himself.
9.10 Other Benefits. No payment pursuant to an Award shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or any Subsidiary nor affect any benefits under any other benefit plan
now or hereafter in effect under which the availability or amount of benefits is
related to the level of compensation.
9.11 Costs. The Company shall bear all expenses incurred in administering
the Plan, including expenses related to the issuance of Common Stock pursuant to
Awards.
9.12 Severability. If any part of the Plan shall be determined to be
invalid or void in any respect, such determination shall not affect, impair,
invalidate or nullify the remaining provisions of the Plan which shall continue
in full force and effect.
9.13 Successors. The Plan shall be binding upon and inure to the benefit of
any successor or successors of the Company.
9.14 Headings. Article and section headings contained in the Plan are
included for convenience only and are not to be used in construing or
interpreting the Plan.
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ARTICLE X
TERM OF PLAN
10.1 Effective Date. The Plan shall be effective as of the date of its
approval by the Company's shareholders.
10.2 Termination Date. Unless sooner terminated, the Plan shall terminate
ten years after it is adopted by the Board and no Awards may be granted
thereafter. Termination of the Plan shall not affect Awards granted before such
date.
