As filed with the Securities and Exchange Commission on March 31, 2000
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
ORRSTOWN FINANCIAL SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 23-2530374
(State of Incorporation) I.R.S. Employer
Identification Number)
77 East King Street
Shippensburg, Pennsylvania 17257
(717) 532-6114
(Address, including Zip Code, and Telephone Number,
including Area Code, of Principal Executive Offices)
---------------------
Orrstown Financial Services, Inc.
Employee Stock Option Plan of 2000
(Full Title of the Plan)
Kenneth R. Shoemaker
President and Chief Executive Officer
Orrstown Financial Services, Inc.
77 East King Street
Shippensburg, Pennsylvania 17257
(Name, Address and Telephone Number of Agent for Service)
---------------------
Copy to:
Dean H. Dusinberre, Esquire
Rhoads & Sinon LLP
One South Market Square, 12th Floor
P.O. Box 1146
Harrisburg, PA 17108-1146
(717) 233-5731
---------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================
Proposed Proposed
Maximum Maximum
- --------------------------------------------------------------------------------------------------------
Title of Securities
Registration Amount to be Offering Price Aggregate Amount of
to be Registered Registered Per Share(1) Offering Price(1) Fee
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 200,000 shares $40.00 $8,000,000.00 $2,112.00
========================================================================================================
</TABLE>
(1) Estimated solely for the purposes of calculating the amount of the
registration fee, pursuant to Rule 457(c), on the basis of $40.00 per share,
which was the last reported sale price of the Common Stock as of March 27, 2000.
There were no bid or asked prices on March 27, 2000. The last reported sale was
on March 22, 2000.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
---------------------------------------
The following documents have been filed by Orrstown Financial Services,
Inc. with the Securities and Exchange Commission ("SEC") and are incorporated
herein by reference:
(a) Registrant's Annual Report on Form 10-K for the year ended December
31, 1999.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") since the end of
Registrant's fiscal year covered by the annual report referred to in
(a) above.
(c) The description of Registrant's Common Stock contained in its
registration statement filed under the Exchange Act, and any amendment
or report filed for the purpose of updating such description.
All documents subsequently filed by Registrant 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 have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein or in any
other subsequently filed incorporated document modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part hereof.
ITEM 4. DESCRIPTION OF SECURITIES.
-------------------------
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
--------------------------------------
Not applicable.
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
Sections 1741-1743 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 in such capacities provided
certain standards are met, including good faith and the belief that the
particular action is in the best interests of the corporation. In general, this
power to indemnify does not exist in the case of actions against a director or
officer by or in the right of the corporation if the person entitled to
indemnification shall have been adjudged to be liable to the corporation unless
and only to the extent a court determines that the person is fairly and
reasonably entitled to indemnification. A 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. Section 1746 of the BCL provides that
the foregoing provisions shall not be deemed exclusive of any other rights to
which a person seeking indemnification may be entitled under, among other
things, any by-law provision, provided that no indemnification may be made in
any case where the act or failure or act giving rise to the claim for
indemnification is determined by a court to have constituted willful misconduct
or recklessness. Section 1747 of the BCL authorizes a corporation to purchase
insurance for directors and other representatives. The foregoing statement is
subject to the detailed provisions of Section 1741-1850 of the BCL.
The By-laws of Orrstown Financial Services, Inc. (the "Company") provide
for indemnification of directors and officers to the extent provided in the BCL.
In accordance with Section 1713 of the BCL, the By-laws of the Company also
include a provision that the directors of the Company shall not be personally
liable for monetary damages as such for any action taken, or failure to take any
action, unless: (1) the director has breached or failed to perform the duties of
his office in good faith, in a manner he reasonably believes to be in the best
interests of the Company and with such care, including reasonable inquiry, skill
and diligence, as a person of ordinary prudence would use under similar
circumstances; and (2) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness. Pursuant to Section 1713 of
the BCL, this limitation of personal liability does not apply to (i) the
responsibility or liability of a director pursuant to any criminal statute or
(ii) the liability of a director for the payment of taxes pursuant to federal,
state or local law.
The Company maintains directors and officers liability insurance providing
insurance under certain circumstances for directors and certain officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
-----------------------------------
Not Applicable.
ITEM 8. EXHIBITS.
--------
-2-
<PAGE>
5 Opinion of Rhoads & Sinon LLP.
23.1 Consent of Rhoads & Sinon LLP (included as part of Exhibit 5).
23.2 Consent of Smith Elliott Kearns & Company.
24 Powers of Attorney (included as part of signature page).
99.1 Orrstown Financial Services, Inc. Employee Stock Option Plan of 2000.
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 (the "Securities Act");
(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;
(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 paragraph (A)(1)(i) and (A)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
the foregoing paragraph is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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-
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act 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.
C. Insofar as indemnification for liabilities arising under the Securities
Act 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 Securities 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
-4-
<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 Shippensburg, Commonwealth of Pennsylvania, on March
27, 2000.
ORRSTOWN FINANCIAL SERVICES, INC.
(Registrant)
By: /s/ Kenneth R. Shoemaker
--------------------------------------
Kenneth R. Shoemaker
President and Chief Executive Officer
-5-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth R. Shoemaker and Joel R. Zullinger, and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for such person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to the Registration Statement to which
this power of attorney is attached, and to file all those amendments and all
exhibits to them and other documents to be filed in connection with them, with
the Securities and Exchange Commission, granting unto such attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as they might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
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 date indicated below.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Kenneth R. Shoemaker President and CEO and March 27, 2000
- ------------------------------------- Director
Kenneth R. Shoemaker
/s/ Bradley S. Everly Senior Vice President (chief March 27, 2000
- ------------------------------------ financial officer)
Bradley S. Everly
/s/ Robert B. Russell Vice President (chief accounting March 27, 2000
- ------------------------------------ officer)
Robert B. Russell
/s/ Anthony F. Ceddia Director March 27, 2000
- ------------------------------------
Anthony F. Ceddia
-6-
<PAGE>
/s/ Jeffrey W. Coy Director March 27, 2000
- ------------------------------------
Jeffrey W. Coy
/s/ Andrea Pugh Director March 27, 2000
- -------------------------------------
Andrea Pugh
/s/ Gregory A. Rosenberry Director March 27, 2000
- -------------------------------------
Gregory A. Rosenberry
/s/ Glenn W. Snoke Director March 27, 2000
- -------------------------------------
Glenn W. Snoke
- ------------------------------------- Director
Denver L. Tuckey
- ------------------------------------- Director
John S. Ward
/s/ Joel R. Zullinger Director March 27, 2000
- -------------------------------------
Joel R. Zullinger
</TABLE>
-7-
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit No. Exhibit
- ----------- -------
5 Opinion of Rhoads & Sinon LLP.
23.1 Consent of Rhoads & Sinon LLP (included as part
of Exhibit 5).
23.2 Consent of Smith Elliott Kearns & Company, LLC.
24 Powers of Attorney (included as part of
signature page).
99.1 Orrstown Financial Services, Inc. Employee Stock
Option Plan of 2000.
-8-
[RHOADS & SINON LLP--Letterhead]
Exhibit 5
---------
March 24, 2000
Opinion and Consent of Rhoads & Sinon LLP
Board of Directors
Orrstown Financial Services, Inc.
77 East King Street
Shippensburg, PA 17257
Ladies and Gentlemen:
Reference is made to your Registration Statement on Form S-8, which is to
be filed with the Securities and Exchange Commission on regarding the
registration of 200,000 shares of common stock, no par value per share, of
Orrstown Financial Services, Inc. (the "Company") in connection with the
Company's Employee Stock Option Plan of 2000 (the "Plan").
We have examined the records relating to the organization of the Company,
its Articles of Incorporation, By-laws and all amendments thereto, and the
records of proceedings of its stockholders and directors.
Based upon the foregoing, and upon the examination of such other documents
as we have deemed necessary to express the opinions hereinafter set forth, we
are of the opinion that:
1. The Company is a corporation duly organized and in good standing under
the Laws of the Commonwealth of Pennsylvania; and
2. The shares of the Company's Common Stock to be registered will, when
issued pursuant to and in accordance with the Plan, be duly authorized, fully
paid and non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to the said
Registration Statement and to all references to us therein.
In giving such consent, we do not thereby admit that we are experts within
the meaning of Section 7 of the Securities Act of 1933.
Very truly yours,
RHOADS & SINON LLP
By: /s/ Dean H. Dusinberre
--------------------------------
Dean H. Dusinberre
Exhibit 23.2
- ------------
The Board of Directors and Stockholders
Orrstown Financial Services, Inc.
We consent to the use of our report, dated January 31, 2000, on our audits of
the financial statements of Orrstown Financial Services, Inc. incorporated by
reference to the Registration Statement on Form S-3, and to the reference to our
firm under the heading "Experts" in the Prospectus, in connection with the
Employee Stock Option Plan for Orrstown Financial Services, Inc.
/s/ SMITH ELLIOTT KEARNS & COMPANY, LLC
Chambersburg, Pennsylvania
March 28, 2000
Exhibit 99.1
ORRSTOWN FINANCIAL SERVICES, INC.
EMPLOYEE STOCK OPTION PLAN
OF 2000
TABLE OF CONTENTS
-----------------
Section I Definitions
Section II Purpose
Section III Available Shares; Adjustments
Section IV Class of Employees Eligible to Receive Options
Section V Incentive Stock Options and Nonqualified Stock Options
Section VI Termination and Amendment
Section VII Limitation on Resale
Section VIII Miscellaneous Provisions
Section IX Effective Date
<PAGE>
ORRSTOWN FINANCIAL SERVICES, INC.
EMPLOYEE STOCK OPTION PLAN
OF 2000
SECTION I
DEFINITIONS
ss.1.1. "Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor statute thereto.
ss.1.2. "Committee" shall mean that committee or committees appointed by the
Corporation's Board of Directors as described in Section 8.1 hereof or,
if the Board of Directors does not appoint a Committee, the Board of
Directors itself in its administrative capacity with respect to the
Plan.
ss.1.3. "Corporation" shall mean Orrstown Financial Services, Inc.
ss.1.4. "Incentive Stock Option" shall mean an option granted pursuant to this
Plan which satisfies all of the requirements of Section 422 of the Code
and the regulations thereunder.
ss.1.5. "Nonqualified Stock Option" shall mean an option granted pursuant to
this Plan which does not satisfy all of the requirements of Section 422
of the Code and the regulations thereunder.
ss.l.6. "Permanently Disabled" shall mean the physical or mental condition of
an optionee which renders him incapable of continuing his customary
duties of employment as determined by the Committee.
ss.1.7. "Shares" shall mean shares of the Common Stock, no par value, of the
Corporation.
ss.1.8. "Subsidiary" or "Subsidiaries" shall have the meaning that is ascribed
to those terms in Section 424(f) of the Code, and the Corporation shall
be deemed to be the grantor corporation for purposes of applying such
meaning.
<PAGE>
SECTION II
PURPOSE
ss.2.1. The purpose of this Employee Stock Option Plan (this "Plan") is to
provide additional incentive to officers and key employees of the
Corporation and its Subsidiaries who make substantial contributions by
their abilities, loyalty and industry. By encouraging them to invest
in Shares and thereby to acquire a proprietary interest in the
business of the Corporation, the Corporation intends that this Plan
will facilitate motivating, retaining and securing officers and key
employees of high caliber and potential.
SECTION III
AVAILABLE SHARES; ADJUSTMENTS
ss.3.1. A total of 200,000 Shares (subject to anti-dilution adjustments
provided in Section 3.2) may be issued pursuant to options granted
under this Plan. Shares subject to options which are unexercised upon
termination of such options shall be available for future options
granted under the Plan. Either authorized and unissued Shares or
issued Shares heretofore or hereafter reacquired by the Corporation
may be made available for purchase under the Plan.
ss.3.2. Appropriate adjustments shall be made in the number and kind of shares
of stock available for the grant of options under this Plan and
subject to outstanding options issued under this Plan and, in the case
of outstanding options at the time of the event leading to the
adjustment, in the per share purchase price of Shares upon exercise,
to give effect to any mergers, consolidations, acquisitions, stock
splits, stock dividends, or other relevant changes in the
capitalization occurring after the effective date of the Plan or the
award of an option. Subject to Section 6.4, any agreement of merger or
consolidation will include appropriate provisions for protection of
the then existing rights of optionees under the Plan.
-2-
<PAGE>
SECTION IV
CLASS OF EMPLOYEES ELIGIBLE TO RECEIVE OPTIONS
ss.4.1. All officers and key employees of the Corporation and of any present
or future Subsidiary who are employed on a full-time basis are
eligible to receive an option or options under this Plan. Each officer
and key employee who is granted an option or options shall be selected
by the Committee hereinafter referred to in Section 8.1 hereof.
SECTION V
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
ss.5.1. Options granted pursuant to this Plan may be either Incentive Stock
Options granted pursuant to Section 5.3 hereof or Nonqualified Stock
Options granted pursuant to Section 5.4 hereof, as determined by the
Committee, and shall be clearly identified as such. Option agreements
containing terms and conditions not inconsistent with this Plan (and,
in the case of Incentive Stock Options, Section 422 of the Code),
including, without limitation, vesting or exercisability provisions,
in such form as the Committee shall determine, shall be delivered to
each optionee and likewise shall clearly identify the type of option
being granted. The terms of option agreements need not be identical.
The Committee may grant both an Incentive Stock Option and a
Nonqualified Stock Option to the same person, or more than one of
either type of option to the same person. The Plan is effective as of
January 27, 2000, the date it was adopted by the Board of Directors,
provided that effectiveness of the Incentive Stock Option provisions
contained herein is conditioned upon approval of this Plan within 12
months after such date (or such other period as the Code or
regulations applicable to Incentive Stock Options shall permit), in
the manner required by state law. If the Plan is not approved by the
shareholders, all Options granted under the Plan shall be Nonqualified
Stock Options.
ss.5.2. The purchase price of Shares acquired pursuant to an option shall be
100 percent of the "Fair Market Value" of the Shares as of the date of
grant of the option. The "Fair Market Value" as of any date shall be
determined on a per share basis by the Board of Directors as follows:
-3-
<PAGE>
(a) If the Shares were traded over-the-counter on the date in question and
the Shares were classified by Nasdaq as a national market issue (or, in
the judgment of the Board of Directors, a comparable designation), then
the Fair Market Value shall be equal to the average of the high and low
sales prices of the Shares reported in Nasdaq trading for that date or
if no reported sale of Shares shall have occurred on such date, then on
the next preceding day on which there was a reported sale.
(b) If the Shares were traded over-the-counter on the date in question but
the Shares were not classified by Nasdaq as a national market issue (or,
in the judgment of the Board of Directors, a comparable designation),
then the Fair Market Value shall be equal to the mean between the last
reported representative bid and asked prices quoted by the Nasdaq system
for such date.
(c) If the Shares were traded on a stock exchange on the date in question,
then the Fair Market Value shall be equal to the closing price reported
by the applicable composite transactions reported for such date.
(d) If none of the above are applicable, then the Fair Market Value shall
equal the average of the average of the daily high bid and low offer
quotations for the Shares reported through the National Association of
Securities Dealers, Inc.'s OTC Bulletin Board service for the ten (10)
trading days immediately preceding the applicable date (the "Pricing
period"). If, however, no bid or no offer quotation for the Shares is
reported through the OTC Bulletin Board service during the Pricing
Period, then the Fair Market Value will be the price of the last trade
reported for the Shares through the OTC Bulletin Board service.
(e) If none of the foregoing provisions are applicable, then the Fair Market
Value shall be determined by the Board of Directors in good faith on
such basis as it deems appropriate.
ss.5.3. Options granted pursuant to this Plan may be designated as Incentive
Stock Options. Incentive Stock Options granted pursuant to this Plan
(i) shall not be granted to any individual owning, at the time the
option is granted, stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Corporation, and
(ii) shall not be exercisable after the expiration of ten years after
the date they are granted and shall be subject to earlier termination
as provided in the Plan or in the related option agreement. Further,
no individual shall be granted an Incentive Stock Option which results
in the aggregate fair market value
-4-
<PAGE>
(determined at the time the option is granted) of the stock with respect
to which Incentive Stock Options (under all stock option plans of the
optionee's employer corporation and its parent and subsidiary
corporations) are exercisable for the first time by that optionee during
any calendar year exceeding $100,000. Each of the options granted
pursuant to this Section 5.3 is intended, if possible, to be an
"incentive stock option" as that term is defined in Section 422 of the
Code and the regulations there-under. In the event this Plan or any
option granted pursuant to this Section 5.3 is any way inconsistent with
the applicable legal requirements of the Code or the regulations
thereunder for an incentive stock option, this Plan and such option
shall be deemed automatically amended as of the date hereof to conform
to such legal requirements, if such conformity may be achieved by
amendment, unless the Committee, in its discretion, provides otherwise.
Incentive Stock Options granted pursuant to this Plan must be granted
within 10 years from the earlier of (i) the date the Board of Directors
adopted this Plan as set forth in Section 5.1 and (ii) the date of
approval by shareholders in accordance with Section 5.1, unless
otherwise permitted under Section 422 of the Code and applicable
regulations. Incentive Stock Options shall have such other terms and
conditions not inconsistent with this Plan and Section 422 of the Code
(and applicable regulations) as the Committee shall establish.
ss.5.4. Options granted pursuant to this Plan may be designated as Nonqualified
Stock Options. Nonqualified Stock Options shall have such terms and
conditions not inconsistent with this Plan as the Committee shall
establish. Nonqualified Stock Options shall not be exercisable after
the expiration of ten years after the date they are granted and shall
be subject to earlier termination as may be provided in this Plan or in
the related option agreement. If any Option designated as an Incentive
Stock Option is determined for any reason not to qualify as an
Incentive Stock Option within the meaning of Section 422 of the Code,
such Option shall be treated as a Nonqualified Stock Option for all
purposes under the provisions of the Plan.
ss.5.5. The maximum amount of share options (Incentive and/or Nonqualified)
that may be granted to all optionees in any calendar year pursuant to
this Plan shall be limited to a combined market value (purchase price
per Section 5.2) equal to 25% of the preceding year's consolidated net
income of the Corporation. (For example, if 1999 consolidated net
income is $4,000,000, the maximum amount of share options that could be
granted in 2000 would have an aggregate market value of $1,000,000.
Thus, for example, if the market value at the date of grant was $40,
the aggregate
-5-
<PAGE>
market value of $1,000,000 would establish a limit of 25,000 share
options that could be granted in 2000 pursuant to this Plan.)
Notwithstanding anything else to the contrary set forth herein, no
optionee shall be granted options during any calendar year of the
Corporation for more than 100,000 Shares (such maximum number to be
subject to adjustment on the same basis as the anti-dilution adjustments
provided in Section 3.2).
ss.5.6. Options granted under this Plan, to the extent exercisable at any time,
may be exercised by giving written notice to the Corporation, on such
form as the Corporation shall provide, accompanied by full payment of
the option price for the total number of whole Shares being purchased.
Options may not be exercised for fractional shares. Such payment may be
made in any of the following forms: (i) cash, which may be evidenced by
a check, (ii) the surrender of certificates representing Shares which
have been owned by the optionee for at least six months, which will be
valued according to their Fair Market Value determined in accordance
with the formula set forth in Section 5.2 of this Plan, or (iii) any
combination of cash and such Shares. Any payment made by the surrender
of currently owned Shares shall be by assignment in form and substance
satisfactory to the Secretary of the Corporation, including guarantees
of signature where the same is deemed to be necessary or desirable; and
if the same is specifically permitted in the optionee's option
agreement, such optionee upon surrendering Shares shall automatically
receive an additional option to buy the number of shares surrendered at
the Fair Market Value at the date of surrender and according to the
other terms and conditions set forth in his option agreement. An option
may not be exercised for less than 100 Shares unless the total number
of Shares then available for exercise under the option is less than
100.
ss.5.7. Neither the Corporation nor any present or future Subsidiary, nor their
officers, directors, shareholders, compensation or benefit plan
committees, employees or agents shall have any liability to any
optionee in the event an option designated as an Incentive Stock Option
hereof does not qualify as an "incentive stock option" as that term is
used in Section 422 of the Code and the regulations thereunder, or in
the event any optionee does not obtain the tax benefits of such an
incentive stock option, or in the event any option granted as a
Nonqualified Stock Option is an "incentive stock option".
ss.5.8. In the event that an optionee holding a Nonqualified Stock Option (i)
dies, retires or becomes Permanently Disabled, or (ii) terminates all
positions held as an officer or employee of the Corporation and any of
its Subsidiaries within six months following a Change of Control of the
-6-
<PAGE>
Corporation as defined in Section 5.10, in either case prior to
expiration of such option without its having been fully exercised, said
employee or the employee's legal successor shall have the right to
exercise the option in accordance with its terms, until the tenth
anniversary date of its grant, unless the option earlier expires or is
terminated in accordance with the terms of this Plan or the related
option agreement. In the event of termination of employment by
resignation, for cause or for any other reason (other than retirement,
death, Permanent Disability or during such six month period following a
Change of Control), an optionee holding a Nonqualified Stock Option
shall have the right to exercise the Nonqualified Stock Option as to
any shares which the optionee in accordance with its terms had a right
to purchase (i.e., that were vested by acceleration or otherwise) and
did not purchase prior to the optionee's termination of employment,
during the period of time which is the shorter of (a) the stated term
of exercise of the option, or (b) a period of six months after
termination of employment. The occurrence of retirement for purposes of
this Section 5.8 shall be determined by the Committee with reference to
corporate standards or policies as in effect from time to time or
according to such other standards as the Committee shall decide; and
retirement shall be deemed to include "early retirement" to the extent
the same is actually defined in corporate standards or policies. No
Nonqualified Stock Option may be exercised after the applicable periods
set forth above in this Section 5.8 without the written consent of the
Committee.
ss.5.9. In the event that an optionee holding an Incentive Stock Option dies
while employed by the Corporation or a subsidiary of the Corporation,
the optionee's executor or administrator may, at any time within one
year after the date of death (but in no event later than the stated
term of exercise), exercise the option with respect to any shares which
the optionee had a right to purchase (i.e., that were vested by
acceleration or otherwise) and did not purchase during the optionee's
lifetime. In the event the employment by the Corporation or a
subsidiary of the Corporation of an optionee holding an Incentive Stock
Option is terminated by reason of the optionee becoming disabled
(within the meaning of Section 22(e)(3) of the Code and the regulations
thereunder), the optionee or the optionee's legal guardian or custodian
may at any time within six months after the date of such termination
(but in no event later than the stated term of exercise), exercise the
Incentive Stock Option as to any shares which the optionee had a right
to purchase and did not purchase prior to the optionee's termination of
employment. Except in cases of death or disability, in the event that
the employment by the Corporation or a subsidiary of the Corporation of
an optionee holding an Incentive Stock Option terminates
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(whether such termination is voluntary or involuntary), the optionee
may exercise the Incentive Stock Option within three months after
the termination date as to any shares which the optionee had a right
to purchase and did not purchase prior to the optionee's termination
of employment. No Incentive Stock Option may be exercised after the
applicable periods set forth above in this Section 5.9 without the
written consent of the Committee.
ss.5.10. For purposes of this Plan, a "Change of Control" shall have occurred
if:
(a) Any corporation or other person or group makes a tender or exchange
offer for shares of the Corporation's common stock and any shares
are purchased pursuant thereto; or
(b) Any corporation or other person or group (i) becomes the
beneficial owner (as that term is defined in Section 2552 of the
Pennsylvania Business Corporation Law of 1988 (the "BCL") or any
successor provision) of, or (ii) acquires voting power over,
twenty percent or more of the Corporation's common stock; or
(c) During any period of two consecutive years, individuals who at the
beginning of such period were members of the Board of Directors
cease for any reason to constitute at least a majority thereof
(unless the election, or the nomination for election by the
Corporation's shareholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period); or
(d) An agreement is executed by the Corporation providing for any
merger, consolidation or similar transaction of the Corporation in
which the Corporation is not to be the surviving corporation.
For purposes of subparts (a) and (b) above, "corporation or other
person or group" shall not include the Corporation or any of
Subsidiaries or any employee benefit plans or trusts established
by the Corporation or any of its Subsidiaries. In the event of
occurrence of a Change of Control, then from and after the date
of the first purchase of common stock pursuant to such offer, the
date on which public announcement of the acquisition of such
percentage of stock shall have been made, the date on which such
change in the composition of the Board shall have occurred, or
the date of execution of a merger, consolidation or similar
agreement, as the case may be, all options granted pursuant to
the Plan which remain outstanding shall
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automatically become exercisable in full, whether or not
otherwise exercisable.
ss.5.11. Rights and options under this Plan are not assignable or transferable
by an optionee except by will or the laws of descent and distribution.
During his or her lifetime, options under this Plan are exercisable
only by the optionee.
ss.5.12. An optionee may elect to surrender Shares which have been owned for at
least six months, or authorize the Corporation to withhold a portion of
the Shares otherwise deliverable upon exercise, valued at their Fair
Market Value on the date of surrender or withholding of such shares, in
satisfaction of any tax withholding requirements (a "Withholding
Election"); provided, however, that:
(a) Any Withholding Election shall be made by written notice to the
Corporation; and
(b) Any Withholding Election shall be subject to approval by the
Committee.
ss.5.13. An optionee's employment shall not be deemed to have terminated if the
optionee is transferred from the Corporation to a subsidiary or vice
versa or if the optionee continues to be employed by a corporation or a
subsidiary of a corporation that is the successor to the Corporation
and has assumed the Corporation's obligations with respect to the Plan
and options issued thereunder.
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SECTION VI
TERMINATION AND AMENDMENT
ss.6.1. The Board of Directors of the Corporation reserves the right to make
any amendment to this Plan which it deems to be required or appropriate
to permit the granting of Incentive Stock Options in accordance with
Section 422 of the Code or the regulations thereunder adopted by the
Internal Revenue Service.
ss.6.2. The Board of Directors of the Corporation shall have complete power and
authority to amend this Plan; provided, however, that the Board of
Directors shall not, without the approval of the shareholders of the
Corporation, (i) materially increase the total number of Shares
available for grant under this Plan or (ii) materially modify the class
of eligible employees under this Plan. No termination, modification or
amendment of the Plan may, without the consent of an employee then
having an option under the Plan to purchase stock, adversely affect the
rights of such employee under such option, subject to the provisions of
this Plan.
ss.6.3. This Plan does not have a specified termination date. However,
Incentive Stock Options may not be granted after the period provided in
Section 5.3. The Board of Directors of the Corporation reserves the
right to terminate or suspend this Plan at any time without notice.
Except as provided in Section 6.4, termination or suspension shall not
adversely affect options previously granted pursuant to this Plan, and
the applicable terms of this Plan shall survive such termination or
suspension until all outstanding options have been exercised in full,
forfeited or completely expired in accordance with the terms of this
Plan and the related option agreement.
ss.6.4. Any agreement to which the Corporation is a party which provides for
any merger, consolidation or similar transaction of the Corporation
with or into another corporation whereby the Corporation is not to be
the surviving corporation may provide, without limitation, for the
assumption of outstanding options by the surviving corporation or its
parent, for accelerated vesting and accelerated expiration, or for an
equitable mandatory settlement of outstanding options in cash based on
the consideration paid to shareholders in such transaction and all
outstanding options shall be subject to such agreement. In any case
where the options are assumed by another corporation, appropriate
equitable adjustments as to the number and kind of shares or other
securities and the per share purchase prices shall be made.
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SECTION VII
LIMITATION ON RESALE
ss.7.1. There shall be no limitation on resale of shares purchased under this
plan, except as are provided under applicable federal or state laws,
rules or regulations.
SECTION VIII
MISCELLANEOUS PROVISIONS
ss.8.1. The Board of Directors may administer the Plan and/or it may, in its
discretion, designate a committee or committees of two or more
directors of the Corporation to administer the Plan with respect to all
or a designated portion of the participants. To the extent that a
committee (other than the Board itself acting as the Committee) is
empowered to grant options to officers subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), such
committee shall be composed only of directors satisfying such
requirements as the Securities and Exchange Commission may establish
for non-employee directors or for other eligible directors, if any,
administering plans intended to qualify for exemptions under Rule 16b-3
(or its successor) under the Exchange Act dependent on approval by
non-employee or disinterested directors. References herein to
"Committee" shall mean the Board of Directors or such committee or
committees of disinterested directors, as applicable. The Committee
shall, in addition to its other authority and subject to the provisions
of this Plan, have authority in its sole discretion to determine the
officers and key employees of the Corporation and each present and
future Subsidiary who shall be eligible to receive options under this
Plan; which officers and key employees shall in fact be granted an
option or options; whether the option or options shall be an Incentive
Stock Option (if the shareholders have granted the necessary approval)
or a Nonqualified Stock Option; the number of Shares to be subject to
each of the options; the time or times at which each option shall be
granted; the duration of each option; the rate of option
exercisability; subject to Section 5.2 hereof, the price at which each
of the options is exercisable; restrictions on sale or other
transferability (in addition to the restrictions arising under Sections
7.1 and 8.8 hereof) of Shares obtained upon exercise, and other terms
and conditions as the Committee shall determine not inconsistent with
this Plan. Additionally and subject to the express
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provisions of this Plan, the Committee shall have plenary authority
to interpret and construe all provisions of this Plan and the options
issued pursuant to it; to correct defects, supply omissions and
reconcile inconsistencies to the extent necessary to effectuate this
Plan and the options issued pursuant to it; to adopt rules and
regulations for administering this Plan; and to make all other
determinations deemed necessary or appropriate for administering the
Plan. The Committee's determination as to the foregoing matters shall
be final and conclusive and binding upon all participants. Subject to
the authority and responsibility of the Board of Directors and
Committee as aforesaid, the Committee may authorize such of the
Corporation's officers or other persons to perform functions related
to the execution and administration of this Plan (other than the
granting of stock options, the interpretation of the Plan and the
adoption of rules governing its administration).
ss.8.2. No member of the Committee or the Board of Directors shall be liable
for any act or omission (whether or not negligent) taken or omitted in
good faith, or for the exercise of authority or discretion granted in
connection with this Plan to the Committee or the Board of Directors.
Subject to any numerical limitations and other qualifications on
Committee membership set forth in Section 8.1 hereof, the Board of
Directors may at any time appoint additional members of the Committee
from the Board of Directors and may at any time remove any member of
the Committee with or without cause. Vacancies in the Committee,
however caused, may be filled by the Board of Directors from among its
members if it so desires.
ss.8.3. Employees of any corporation or other entity which becomes a Subsidiary
after the effective date of this Plan shall not be eligible to
participate in the Plan unless and until the Board of Directors of the
Corporation shall designate such corporation or entity as one whose
employees may be offered options under the Plan.
ss.8.4. Nothing contained in this Plan or any option granted pursuant to this
Plan shall confer upon any employee the right to continue in the employ
of the Corporation or any present or future Subsidiary, or interfere in
any way with the rights of the Corporation and any Subsidiary to
terminate his employment in any way and with or without cause.
ss.8.5. The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each
employee participating in the Plan, including, without limitation, such
employee's estate and the executors, administrators or trustees
thereof, heirs and
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legatees, and any receiver, trustee in bankruptcy or representative
of creditors of such employee.
ss.8.6. Corporate action constituting an offer of stock for sale to any
employee under the terms of the options to be granted hereunder shall
be deemed completed as of the date when the Committee authorizes the
grant of the option to the employee, regardless of when the option is
actually delivered to the employee or acknowledged or agreed to by him.
ss.8.7. The laws of the Commonwealth of Pennsylvania will govern all matters
relating to this Plan except to the extent superseded by the laws of
the United States.
ss.8.8. Notwithstanding anything to the contrary contained in the Plan, options
shall be exercisable only if the Shares subject to the options are
registered under such federal and state securities laws as the
Corporation may deem necessary, or if exemptions from such registration
are deemed to be available; but in no event shall options be
exercisable during any period of time in which the Corporation deems
that exercisability, the offer to sell the Shares subject to option, or
the sale thereof, may violate a federal, state or securities exchange
rule, regulation or law, or may cause the Corporation to be legally
obligated to issue or sell more Shares than the Corporation is legally
entitled to issue or sell. Further, in the absence of registration
under federal and state securities laws as referenced above, each
optionee, and each optionee obtaining Shares upon exercise, may be
required by the Corporation to execute such acknowledgements and
agreements as may be deemed necessary or appropriate to secure
compliance with exemptions from registration under federal or state
securities law, which compliance may involve regulation of the manner
in which the Shares may be sold or transferred, and may prohibit the
sale of Shares for a period of time.
ss.8.9 Any reference contained in this Plan to a particular section or
provision of law, rule or regulations, including, but not limited to,
the Internal Revenue Code of 1986 and the Securities Exchange Act of
1934, both as amended, shall include any subsequently enacted or
promulgated section or provision of law, rule or regulation, as the
case may be, of similar import.
SECTION IX
EFFECTIVE DATE
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ss.9.1. The Plan shall become effective when the Plan has been adopted by the
Board of Directors of the Corporation, except that the Incentive Stock
Option provisions contained herein shall not be effective until
shareholder approval is obtained in accordance with Section 5.1. Any
options granted under this Plan prior to approval of shareholders shall
be deemed Nonqualified Stock Options. The Corporation's obligation to
offer, sell and deliver its Shares under this Plan is subject to the
approval of any governmental authority required in connection with the
authorized issuance or sale of such Shares and is further subject to
the Corporation receiving, should it determine to do so, the advice of
its counsel that all applicable laws and regulations have been complied
with.
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