EXHIBIT 10(p)(1)
Alcoa Stock Incentive Plan
[Alcoa logo]
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ALCOA STOCK INCENTIVE PLAN
SECTION 1. PURPOSE. The purposes of the Alcoa Stock
Incentive Plan are to encourage selected employees of the Company
and its Subsidiaries to acquire a proprietary and vested interest
in the long-term growth and financial success of the Company, to
generate an increased incentive to promote its well-being and
profitability, to link the interests of such employees to the
long-term interests of shareholders and to enhance the ability of
the Company and its Subsidiaries to attract and retain
individuals of exceptional managerial, technical and professional
talent upon whom, in large measure, the sustained progress,
growth and profitability of the Company depend.
SECTION 2. DEFINITIONS. As used in the Plan, the following
terms have the meanings set forth below:
"Award" means any Option, Stock Appreciation Right,
Contingent Stock Award, Performance Share, Performance Unit,
Other Stock Unit Award, or any other right, interest, or option
relating to Shares or other property granted pursuant to the
provisions of the Plan.
"Award Agreement" means any written agreement, contract, or
other instrument or document evidencing any Award granted by the
Committee hereunder, which may, but need not, be executed or
acknowledged by both the Company and the Participant.
"Beneficial Owner" means beneficial owner as defined in
Rule 13d-3 under the Exchange Act.
"Board" means the Board of Directors of the Company.
"Change in Control" means the first to occur of any of the
following events:
(a) An Entity, other than a trustee or other fiduciary
of securities held under an employee benefit plan of the
Company or any of its Subsidiaries, is or becomes a
Beneficial Owner, directly or indirectly, of stock of the
Company representing 20% or more of the total voting power
of the Company's then outstanding stock and securities;
provided, however, that for purposes of this subsection (a),
the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition
by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation
pursuant to a transaction that complies with clauses (i) or
(ii) of subsection (c) of this definition;
(b) individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board"), cease for any reason to
constitute a majority thereof; provided,
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however, that any individual becoming a director whose
election, or nomination for election by the Company's
shareholders, was approved by a vote of at least 75% of the
directors then comprising the Incumbent Board shall be
considered as though such individual was a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by
or on behalf of an Entity other than the Board;
(c) there is consummated a merger, consolidation or
other corporate transaction, other than (i) a merger,
consolidation or transaction that would result in the voting
securities of the Company outstanding immediately prior to
such merger, consolidation or transaction continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving Entity or
any parent thereof) at least 55% of the combined voting
power of the stock and securities of the Company or such
surviving Entity or any parent thereof outstanding
immediately after such merger, consolidation or transaction,
or (ii) a merger, consolidation or transaction effected to
implement a recapitalization of the Company (or similar
transaction) in which no Entity is or becomes the Beneficial
Owner, directly or indirectly, of stock and securities of
the Company representing more than 20% of the combined
voting power of the Company's then outstanding stock and
securities;
(d) the sale or disposition by the Company of all or
substantially all of the Company's assets other than a sale
or disposition by the Company of all or substantially all of
the assets to an Entity at least 55% of the combined voting
power of the stock and securities of which is owned by
Persons in substantially the same proportions as their
ownership of the Company's voting stock immediately prior to
such sale; or
(e) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company.
"Change in Control Price" means the higher of (a) the
highest reported sales price, regular way, of a Share in any
transaction reported on the New York Stock Exchange Composite
Tape or other national exchange on which Shares are listed or on
NASDAQ during the 60-day period prior to and including the date
of a Change in Control or (b) if the Change in Control is the
result of a tender or exchange offer or a merger, consolidation
or other corporate transaction, the highest price per Share paid
in such tender or exchange offer or corporate transaction. To
the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other
non-cash consideration, the value of such securities or other non-
cash consideration shall be determined in the sole discretion of
the Board.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
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"Committee" means the Compensation Committee of the Board, or
any successor to such committee, or a subcommittee thereof,
composed of no fewer than two directors, each of whom is a Non-
Employee Director and an "outside director" within the meaning of
Section 162(m) of the Code, or any successor provision thereto.
"Company" means Alcoa Inc., a Pennsylvania corporation.
"Contingent Stock" means any Share issued with the
contingency or restriction that the holder may not sell,
transfer, pledge or assign such Share and with such other
contingencies or restrictions as the Committee, in its sole
discretion, may impose (including, without limitation, any
contingency or restriction on the right to vote such Share and
the right to receive any cash dividends), which contingencies and
restrictions may lapse separately or in combination, at such time
or times, in installments or otherwise, as the Committee may deem
appropriate.
"Contingent Stock Award" means an award of Contingent Stock
under Section 8 hereof.
"Covered Employee" means a "covered employee" within the
meaning of Section 162(m)(3) of the Code, or any successor
provision thereto.
"Employee" means any employee of the Company or of any
Subsidiary.
"Entity" means any individual, entity, person (within the
meaning of Section 3(a)(9) of the Exchange Act) or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act),
other than (a) any employee plan established by the Company,
(b) any affiliate (as defined in Rule 12b-2 promulgated under the
Exchange Act) of the Company, (c) an underwriter temporarily
holding securities pursuant to an offering of such securities, or
(d) a corporation owned, directly or indirectly, by shareholders
of the Company in substantially the same proportions as their
ownership of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means, with respect to any property, the
market value of such property determined by such methods or
procedures as shall be established from time to time by the
Committee.
"Non-Employee Director" has the meaning set forth in Rule 16b-
3(b)(3) under the Exchange Act, or any successor definition
adopted by the Securities and Exchange Commission.
"Option" means any right granted to a Participant under the
Plan allowing such Participant to purchase Shares at such price
or prices and during such period or periods as the Committee
shall determine. All Options granted under the Plan are intended
to be nonqualified stock options for purposes of the Code.
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"Other Stock Unit Award" means any right granted to a
Participant by the Committee pursuant to Section 10 hereof.
"Participant" means an Employee who is selected by the
Committee to receive an Award under the Plan.
"Performance Award" means any Award of Performance Shares or
Performance Units pursuant to Section 9 hereof.
"Performance Period" means that period established by the
Committee at the time any Performance Award is granted or at any
time thereafter during which any performance goals specified by
the Committee with respect to such Award are to be measured. A
Performance Period may not be less than one year.
"Performance Share" means any grant pursuant to Section 9
hereof of a unit valued by reference to a designated number of
Shares, which value may be paid to the Participant by delivery of
such property as the Committee shall determine, including,
without limitation, cash, Shares or any combination thereof, upon
achievement of such performance goals during the Performance
Period as the Committee shall establish at the time of such grant
or thereafter.
"Performance Unit" means any grant pursuant to Section 9
hereof of a unit valued by reference to a designated amount of
property other than Shares, which value may be paid to the
Participant by delivery of such property as the Committee shall
determine, including, without limitation, cash, Shares or any
combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at
the time of such grant or thereafter.
"Person" means any individual, corporation, partnership,
association, joint stock company, trust, unincorporated
organization or government or political subdivision thereof.
"Plan" means this Alcoa Stock Incentive Plan.
"Prior Plan" means the Company's Long Term Stock Incentive
Plan.
"Reload Option" means an Option described in Section 6(e) of
the Plan, granted in connection with the exercise of an option
under the Prior Plan or an Award under the Plan (an "antecedent
award"). As a condition to the grant of a Reload Option, a
Participant must elect at the time of exercise of the antecedent
award that a designated portion, as determined by the Committee,
of the Shares issued upon exercise of the antecedent award shall
be restricted in terms of transfer for such period of time as the
Committee may determine at the time of grant of the Reload Option
or at a later date.
"Shares" means the shares of common stock of the Company,
$1.00 par value.
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"Stock Appreciation Right" means any right granted to a
Participant pursuant to Section 7 hereof to receive, upon
exercise by the Participant, the excess of (a) the Fair Market
Value of one Share on the date of exercise or, if the Committee
shall so determine, at any time during a specified period before
the date of exercise over (b) the grant price of the right on the
date of grant, or if granted in connection with an outstanding
Option on the date of grant of the related Option, as specified
by the Committee in its sole discretion, which, except in the
case of Substitute Awards or in connection with an adjustment
provided in Section 4(g), shall not be less than the Fair Market
Value of one Share on such date of grant of the right or the
related Option, as the case may be. Any payment by the Company
in respect of such right may be made in cash, Shares, other
property or any combination thereof, as the Committee, in its
sole discretion, shall determine.
"Subsidiary" means any corporation in which the Company
owns, directly or indirectly, stock possessing 50 percent or more
of the total combined voting power of all classes of stock in
such corporation, and any corporation, partnership, joint
venture, limited liability company or other business entity as to
which the Company possesses a significant ownership interest,
directly or indirectly, as determined by the Committee.
"Substitute Awards" means Awards granted or Shares issued by
the Company in assumption of, or in substitution or exchange for,
awards previously granted, or the right or obligation to make
future awards, by a company acquired by the Company or any of its
Subsidiaries or with which the Company or any of its Subsidiaries
combines.
SECTION 3. ADMINISTRATION. The Plan shall be administered
by the Committee. The Committee shall have full power and
authority, subject to such orders or resolutions not inconsistent
with the provisions of the Plan as may from time to time be
adopted by the Board, to: (i) select the Employees of the Company
and its Subsidiaries to whom Awards may from time to time be
granted hereunder; (ii) determine the type or types of Award to
be granted to each Participant hereunder; (iii) determine the
number of Shares to be covered by each Award granted hereunder;
(iv) determine the terms and conditions, not inconsistent with
the provisions of the Plan, of any Award granted hereunder;
(v) determine whether, to what extent and under what
circumstances Awards may be settled in cash, Shares or other
property or canceled or suspended; (vi) determine whether, to
what extent and under what circumstances cash, Shares and other
property and other amounts payable with respect to an Award under
this Plan shall be deferred either automatically or at the
election of the Participant; (vii) interpret and administer the
Plan and any instrument or agreement entered into under the Plan;
(viii) establish such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration
of the Plan; and (ix) make any other determination and take any
other action that the Committee deems necessary or desirable for
administration of the Plan. Decisions of the Committee shall be
final, conclusive and binding upon all persons, including the
Company, any Participant, any shareholder and any Employee.
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SECTION 4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the adjustment provisions of Section 4(g)
below and the provisions of Section 4(b) through (f), up to 14
million Shares may be issued under the Plan.
(b) In addition to the Shares authorized by Section 4(a),
the following Shares may be issued under the Plan:
(i) Shares that were authorized to be issued under the
Prior Plan, but that are not issued under that plan because of
the cancellation, termination or expiration of awards under the
Prior Plan shall be available for issuance under this Plan.
(ii) If a Participant tenders, or has withheld, Shares
in payment of all or part of the option price under a stock
option granted under the Plan or the Prior Plan, or in
satisfaction of withholding tax obligations thereunder, the
Shares tendered by the Participant or so withheld shall become
available for issuance under the Plan.
(iii) If Shares that are the issued under the Plan
are subsequently forfeited in accordance with the terms of the
Award or an Award Agreement, the forfeited Shares shall become
available for issuance under the Plan.
(iv) If the Company repurchases any Shares and, in
connection therewith, the Board designates that any or all of the
repurchased Shares shall be available for issuance under the
Plan, those repurchased Shares allocated to the Plan shall become
available for issuance under the Plan.
(c) Subject to the adjustment provisions of Section 4(g),
not more than one million Shares shall be issued under Awards
other than Options and Stock Appreciation Rights.
(d) If an Award may be paid only in Shares or in either
cash or Shares, the Shares shall be deemed to be issued hereunder
only when and to the extent that payment is actually made in
Shares. However, the Committee may authorize a cash payment
under an Award in lieu of Shares if there are insufficient Shares
available for issuance under the Plan.
(e) Any Shares issued hereunder may consist, in whole or in
part, of authorized and unissued shares, treasury shares or
shares purchased in the open market or otherwise.
(f) Shares issued or granted in connection with Substitute
Awards shall not reduce the Shares available for issuance under
the Plan or to a Participant in any calendar year.
(g) In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split,
reverse stock split, spin-off or similar transaction or other
change in corporate structure affecting the Shares, such
adjustments and other substitutions shall be made to the Plan and
to Awards as the Committee in its sole discretion deems equitable
or appropriate, including, without limitation, such adjustments
in the aggregate number, class and kind of
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securities that may be delivered under the Plan, in the aggregate
or to any one Participant, in the number, class, kind and option
or exercise price of securities subject to outstanding Options,
Stock Appreciation Rights or other Awards granted under the Plan,
and in the number, class and kind of securities subject to Awards
granted under the Plan (including, if the Committee deems
appropriate, the substitution of similar options to purchase the
shares of, or other awards denominated in the shares of, another
company) as the Committee may determine to be appropriate in its
sole discretion; provided that the number of Shares subject to
any Award shall always be a whole number.
SECTION 5. ELIGIBILITY. Any Employee shall be eligible to
be selected as a Participant.
SECTION 6. STOCK OPTIONS. Options may be granted hereunder
to Participants either alone or in addition to other Awards
granted under the Plan. Any Option granted under the Plan may be
evidenced by an Award Agreement in such form as the Committee
from time to time approves. Any such Option shall be subject to
the terms and conditions required by this Section 6 and to such
additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee may deem appropriate in
each case.
(a) Option Price. The purchase price per Share purchasable
under an Option shall be determined by the Committee in its sole
discretion; provided that, except in connection with an
adjustment provided for in Section 4(g), such purchase price
shall not be less than the Fair Market Value of the Share on the
date of the grant of the Option.
(b) Option Period. The term of each Option shall be fixed
by the Committee in its sole discretion, not to exceed ten years
from the date the Option is granted.
(c) Exercisability. Options shall be exercisable at such
time or times as determined by the Committee at or subsequent to
grant.
(d) Method Of Exercise. Subject to the other provisions of
the Plan, any Option may be exercised by the Participant in whole
or in part at such time or times, and the Participant may make
payment of the option price in such form or forms, including,
without limitation, payment by delivery of cash, Shares or other
consideration (including, where permitted by law and the
Committee, Awards) having a Fair Market Value on the exercise
date equal to the total option price, or by any combination of
cash, Shares and other consideration as the Committee may specify
in the applicable Award Agreement.
(e) Reload Options. The Committee shall have the authority
to specify, either at the time of grant of an Option or at a
later date, that upon exercise of all or a portion of that Option
a Reload Option shall be granted under specified conditions. A
Reload Option entitles the Participant to purchase Shares (i)
that are covered by an antecedent award at the time of its
exercise, but are not issued upon such exercise, or (ii) whose
aggregate grant price equals the purchase price of the exercised
antecedent award and any related tax withholdings. The grant
price per Share of the Reload Option shall be the Fair Market
Value per Share at the time of
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grant. The duration of a Reload Option shall not extend beyond
the expiration date of the antecedent award. The specific terms
and conditions applicable to Reload Options shall be determined
by the Committee and shall be set forth in rules adopted by the
Committee and/or in agreements or other documentation evidencing
such Options.
(f) Transferability of Options. Notwithstanding the
provisions of Section 14(a) of the Plan, at the discretion of the
Committee and in accordance with rules it establishes from time
to time, Participants may be permitted to transfer some or all of
their Options to one or more immediate family members.
SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights may be granted hereunder to Participants either alone or
in addition to other Awards granted under the Plan and may, but
need not, relate to a specific Option granted under Section 6.
The provisions of Stock Appreciation Rights need not be the same
with respect to each recipient. Any Stock Appreciation Right
related to an Option may be granted at the same time such Option
is granted or at any time thereafter before exercise or
expiration of such Option. In the case of any Stock Appreciation
Right related to any Option, the Stock Appreciation Right or
applicable portion thereof shall terminate and no longer be
exercisable upon the termination or exercise of the related
Option, except that a Stock Appreciation Right granted with
respect to less than the full number of Shares covered by a
related Option shall not be reduced until the exercise or
termination of the related Option exceeds the number of Shares
not covered by the Stock Appreciation Right. Any Option related
to any Stock Appreciation Right shall no longer be exercisable to
the extent the related Stock Appreciation Right has been
exercised. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as
it shall deem appropriate.
SECTION 8. CONTINGENT STOCK
(a) Issuance. A Contingent Stock Award shall be subject to
contingencies or restrictions imposed by the Committee during a
period of time specified by the Committee (the "Contingency
Period"). Contingent Stock Awards may be issued hereunder to
Participants, for no cash consideration or for such minimum
consideration as may be required by applicable law, either alone
or in addition to other Awards granted under the Plan. The
provisions of Contingent Stock Awards need not be the same with
respect to each recipient.
(b) Registration. Any Contingent Stock issued hereunder
may be evidenced in such manner as the Committee in its sole
discretion shall deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in
respect of shares of Contingent Stock awarded under the Plan,
such certificate shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the
terms, conditions, contingencies and restrictions applicable to
such Award.
(c) Forfeiture. Except as otherwise determined by the
Committee at the time of grant or thereafter, upon termination of
employment for any reason during the Contingency Period, all
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Shares of Contingent Stock still subject to contingency or
restriction shall be forfeited by the Participant and reacquired
by the Company. Noncontingent Shares, evidenced in such manner
as the Committee shall deem appropriate, shall be issued to the
Participant promptly after the Contingency Period, as determined
or modified by the Committee, shall expire.
(d) Minimum Vesting Condition. The minimum Contingency
Period applicable to any Contingent Stock Award that is not
subject to performance conditions restricting transfer shall be
three (3) years from the date of grant; provided, however, that a
Contingency Period of less than three (3) years may be approved
for such Awards with respect to up to 100,000 Shares under the
Plan.
SECTION 9. PERFORMANCE AWARDS. Performance Awards may be
granted hereunder to Participants, for no cash consideration or
for such minimum consideration as may be required by applicable
law, either alone or in addition to other Awards granted under
the Plan. The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall
be determined by the Committee upon the grant of each Performance
Award. Except as provided in Section 11, Performance Awards will
be paid only after the end of the relevant Performance Period.
Performance Awards may be paid in cash, Shares, other property or
any combination thereof in the sole discretion of the Committee
at the time of payment. The performance levels to be achieved
for each Performance Period and the amount of the Award to be
paid shall be conclusively determined by the Committee.
Performance Awards may be paid in a lump sum or in installments
following the close of the Performance Period or, in accordance
with procedures established by the Committee, on a deferred
basis.
SECTION 10. OTHER STOCK UNIT AWARDS.
(a) Other Awards of Shares and other Awards that are valued
in whole or in part by reference to, or are otherwise based on,
Shares or other property ("Other Stock Unit Awards") may be
granted hereunder to Participants, either alone or in addition to
other Awards granted under the Plan. Other Stock Unit Awards may
be paid in Shares, cash or any other form of property as the
Committee shall determine. Subject to the provisions of the
Plan, the Committee shall have sole and complete authority to
determine the Employees of the Company and its Subsidiaries to
whom, and the time or times at which, such Awards shall be made,
the number of Shares to be granted pursuant to such Awards and
all other conditions of the Awards. The provisions of Other
Stock Unit Awards need not be the same with respect to each
recipient.
(b) Subject to the provisions of this Plan and any
applicable Award Agreement, Awards and Shares subject to Awards
granted under this Section 10, may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on
which the Shares are issued, or, if later, the date on which any
applicable contingency, restriction, performance or deferral
period lapses. For any Award or Shares subject to any Award
granted under this Section 10 the transferability of which is
conditioned only on the passage of time, such restriction period
shall be a minimum of three (3) years. Shares (including
securities
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convertible into Shares) subject to Awards granted under this
Section 10 may be issued for no cash consideration or for such
minimum consideration as may be required by applicable law.
Shares (including securities convertible into Shares) purchased
pursuant to a purchase right granted under this Section 10
thereafter shall be purchased for such consideration as the
Committee shall in its sole discretion determine, which shall
not be less than the Fair Market Value of such Shares or other
securities as of the date such purchase right is granted.
SECTION 11. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. Notwithstanding any other provision
of the Plan to the contrary, unless the Committee shall determine
otherwise at the time of grant with respect to a particular
Award, in the event of a Change in Control:
(i) any Options and Stock Appreciation Rights
outstanding as of the date such Change in Control is determined
to have occurred, and which are not then exercisable and vested,
shall become fully exercisable and vested to the full extent of
the original grant;
(ii) the contingencies, restrictions and deferral
limitations applicable to any Contingent Stock shall lapse, and
such Contingent Stock shall become free of all contingencies,
restrictions and limitations and become fully vested and
transferable to the full extent of the original grant;
(iii) all Performance Awards shall be considered to
be earned and payable pro rata and shall be immediately settled
or distributed. The pro rata portion of a Performance Award
shall be calculated by multiplying the number of Shares or other
property underlying the Performance Award by a fraction, the
numerator of which is the number of days from the beginning of
the applicable Performance Period to the date of the Change in
Control and the denominator of which is the number of days
originally determined by the Committee as the term of the
applicable Performance Period. Any deferral, contingency or
other restriction applicable to such Performance Awards shall
lapse.
(iv) the contingencies, restrictions and deferral
limitations and other conditions applicable to any Other Stock
Unit Awards or any other Awards shall lapse, and such Other Stock
Unit Awards or such other Awards shall become free of all
contingencies, restrictions, limitations or conditions and become
fully vested and transferable to the full extent of the original
grant; and
(v) the restrictions applicable to any Shares received
in connection with the grant of a Reload Option shall lapse and
such Shares shall be freely and fully transferable.
(b) Change In Control Settlement. Notwithstanding any
other provision of the Plan, during the 60-day period from and
after a Change in Control (the "Change in Control Election
Period"), a Participant holding an Option or Stock Appreciation
Right shall have the right, whether or not the Option or Stock
Appreciation Right is fully exercisable and in lieu of the
payment of the purchase price for the Shares being purchased
under the Option or Stock Appreciation Right and by giving notice
to the Company, to elect (within the Change in Control Election
Period) to surrender all or part of the Option or Stock
Appreciation Right to the
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Company and to receive cash, within 30 days of such notice, in
an amount equal to the amount by which the Change in Control
Price per Share on the date of such election shall exceed the
purchase price per Share under the Option or Stock Appreciation
Right multiplied by the number of Shares granted under the
Option or Stock Appreciation right as to which the right granted
under this Section 11(b) shall have been exercised.
(c) Alternate Settlement. Notwithstanding any other
provision of this Plan, if any right granted pursuant to this
Plan would make a Change in Control transaction ineligible for
pooling-of-interests accounting under APB No. l6 (or any
successor standard), that (after giving effect to any other
actions taken to cause such transaction to be eligible for such
pooling-of-interests accounting treatment) but for the nature of
such right would otherwise be eligible for such accounting
treatment, the Committee shall have the ability to substitute for
the cash payable pursuant to such right Shares with a Fair Market
Value equal to the cash that would otherwise be payable pursuant
thereto.
(d) Other Forms of Settlement. The foregoing provisions of
this Section 11 shall not preclude other forms of settlement of
outstanding Awards in the event of a Change in Control, including
a conversion or exchange of Awards for awards or securities of
any person that is a party to or initiates the Change in Control
transaction; provided that no Participant shall be required to
accept any such substituted or exchanged award or security
without such Participant's written consent.
SECTION 12. CODE SECTION 162(m) PROVISIONS.
(a) Notwithstanding any other provision of this Plan, if
the Committee determines at the time Contingent Stock, a
Performance Award or an Other Stock Unit Award is granted to a
Participant that such Participant is, or is likely to be as of
the end of the tax year in which the Company would claim a tax
deduction in connection with such Award, a Covered Employee, then
the Committee may provide that this Section 12 is applicable to
such Award.
(b) If an Award is subject to this Section 12, then the
lapsing of contingencies or restrictions thereon and the
distribution of cash, Shares or other property pursuant thereto,
as applicable, shall be subject to the achievement of one or more
objective performance goals established by the Committee, which
shall be based on the attainment of specified levels of one or
any combination of the following: cumulative net income or
cumulative net income per share during the performance period;
return on sales; return on assets; return on shareholders'
equity; cash flow; economic value added; cumulative operating
income; total shareholders' return; cost reductions; or
achievement of environment, health & safety goals of the Company
or the Subsidiary or business unit of the Company for or within
which the Participant is primarily employed. Such performance
goals shall be set by the Committee within the time period
prescribed by, and shall otherwise comply with the requirements
of Section 162(m) of the Code, or any successor provision
thereto, and the regulations thereunder.
(c) Notwithstanding any provision of this Plan other than
Section 11, with respect to any Award that is subject to this
Section 12, the Committee may adjust downwards, but not
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upwards, the amount payable pursuant to such Award, and the
Committee may not waive the achievement of the applicable
performance goals.
(d) The Committee shall have the power to impose such other
restrictions on Awards subject to this Section 12 as it may deem
necessary or appropriate to ensure that such Awards satisfy all
requirements for "performance-based compensation" within the
meaning of Section 162(m)(4)(C) of the Code, or any successor
provision thereto.
(e) Notwithstanding any provision of this Plan other than
Section 4(g), no Participant may be granted Options and/or Stock
Appreciation Rights in any calendar year with respect to more
than two million (2,000,000) Shares or Contingent Stock Awards or
Performance Share Awards covering more than 25,000 Shares. The
maximum dollar value payable with respect to Performance Units
and/or Other Stock Unit Awards that are valued with reference to
property other than Shares and granted to any Participant in any
one calendar year is $2,000,000.
SECTION 13. AMENDMENTS AND TERMINATION. The Board may
amend, alter, suspend, discontinue or terminate the Plan or any
portion thereof at any time; provided that no such amendment,
alteration, suspension, discontinuation or termination shall be
made without (i) shareholder approval (x) if such approval is
necessary to qualify for or comply with any tax or regulatory
requirement for which or with which the Board deems it necessary
or desirable to qualify or comply or (y) if a proposed amendment
or alteration would materially increase the benefits accruing to
Participants, materially increase the maximum number of shares
which may be issued under the Plan or materially modify the
Plan's eligibility requirements or(ii) the consent of the
affected Participant, if such action would impair the rights of
such Participant under any outstanding Award. Notwithstanding
anything to the contrary herein, the Committee may amend the Plan
in such manner as may be necessary so as to have the Plan conform
to local rules and regulations in any jurisdiction outside the
United States.
The Committee may amend the terms of any Award theretofore
granted, prospectively or retroactively, but no such amendment
shall impair the rights of any Participant without his or her
consent. Notwithstanding any provision of this Plan, the
Committee may not amend the terms of any Option to reduce the
option price.
SECTION 14. GENERAL PROVISIONS.
(a) Nontransferability of Awards. Unless the Committee
determines otherwise at the time the Award is granted or
thereafter and except for transfers of Options permitted by
Section 6(f) of the Plan: (i) no Award, and no Shares subject to
Awards described in Section 10 which have not been issued or as
to which any applicable contingency, restriction, performance or
deferral period has not lapsed, may be sold, assigned,
transferred, pledged or otherwise encumbered, except by will or
by the laws of descent and distribution; provided that, if so
determined by the Committee, a Participant may, in the manner
established by the Committee, designate a beneficiary to exercise
the rights of the Participant with respect to any Award upon the
death of the Participant, and (ii) each Award shall be
exercisable, during the Participant's
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lifetime, only by the Participant or, if permissible under
applicable law, by the Participant's guardian or legal
representative.
(b) Award Term. The term of each Award shall be for such
period of months or years from the date of its grant as may be
determined by the Committee.
(c) Award Entitlement. No Employee or Participant shall
have any claim to be granted any Award under the Plan and there
is no obligation for uniformity of treatment of Employees or
Participants under the Plan.
(d) Requirement of an Award Agreement. The prospective
recipient of any Award under the Plan shall not, with respect to
such Award, be deemed to have become a Participant, or to have
any rights with respect to such Award, until and unless such
recipient shall have executed an agreement or other instrument
evidencing the Award and delivered a copy thereof to the Company
and otherwise complied with the then applicable terms and
conditions.
(e) Award Adjustments. Except as provided in Section 12,
the Committee shall be authorized to make adjustments in
Performance Award criteria or in the terms and conditions of
other Awards in recognition of unusual or nonrecurring events
affecting the Company or its financial statements or changes in
applicable laws, regulations or accounting principles. The
Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the
manner and to the extent it shall deem desirable to carry it into
effect.
(f) Committee Right to Cancel. The Committee shall have
full power and authority to determine whether, to what extent and
under what circumstances any Award shall be canceled or
suspended. In particular, but without limitation, all
outstanding Awards to any Participant shall be canceled if the
Participant, without the consent of the Committee, while employed
by the Company or after termination of such employment, becomes
associated with, employed by, renders services to or owns any
interest in (other than any nonsubstantial interest, as
determined by the Committee) any business that is in competition
with the Company or with any business in which the Company has a
substantial interest as determined by the Committee or otherwise
takes any action that in the judgment of the Committee is not in
the best interests of the Company.
(g) Stock Certificate Legends. All certificates for Shares
delivered under the Plan pursuant to any Award 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 upon which the Shares are then listed and any
applicable Federal or state securities law, and the Committee may
cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
(h) Compliance with Securities Laws. No Award granted
hereunder shall be construed as an offer to sell securities of
the Company, and no such offer shall be outstanding, unless and
until the Committee in its sole discretion has determined that
any such offer, if made, would be in compliance with all
applicable requirements of the U.S. Federal securities laws and
any other laws to which such offer, if made, would be subject.
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(i) Award Deferrals; Dividends. The Committee shall be
authorized to establish procedures pursuant to which the payment
of any Award may be deferred. Subject to the provisions of the
Plan and any Award Agreement, the recipient of an Award
(including, without limitation, any deferred Award) may, if so
determined by the Committee, be entitled to receive, currently or
on a deferred basis, cash dividends, or cash payments in amounts
equivalent to cash dividends on Shares ("Dividend Equivalents"),
with respect to the number of Shares covered by the Award, as
determined by the Committee, in its sole discretion, and the
Committee may provide that such amounts (if any) shall be deemed
to have been reinvested in additional Shares or otherwise
reinvested.
(j) Consideration for Awards. Except as otherwise required
in any applicable Award Agreement or by the terms of the Plan,
recipients of Awards under the Plan shall not be required to make
any payment or provide consideration other than the rendering of
services.
(k) Delegation of Authority by Committee. The Committee
may delegate to one or more executive officers (as that term is
defined in Rule 3b-7 under the Exchange Act) or a committee of
executive officers the right to grant Awards to Employees who are
not executive officers or directors of the Company and to cancel
or suspend Awards to Employees who are not executive officers or
directors of the Company.
(l) Withholding Taxes. The Company shall be authorized to
withhold from any Award granted or payment due under the Plan the
amount of withholding taxes due in respect of an Award or payment
hereunder and to take such other action as may be necessary in
the opinion of the Company to satisfy all obligations for the
payment of such taxes. The Committee shall be authorized to
establish procedures for election by Participants to satisfy such
obligations for the payment of such taxes by delivery of or
transfer of Shares to the Company or by directing the Company to
retain Shares otherwise deliverable in connection with the Award.
(m) Other Compensatory Arrangements. Nothing contained in
this 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.
(n) Governing Law. The validity, construction, and effect
of the Plan and any rules and regulations relating to the Plan
shall be determined in accordance with the laws of the
Commonwealth of Pennsylvania and applicable Federal law.
(o) Severability. If any provision of this Plan is or
becomes or is deemed invalid, illegal or unenforceable in any
jurisdiction, or would disqualify the Plan or any Award under any
law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws or if
it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of
the Plan, it shall be stricken and the remainder of the Plan
shall remain in full force and effect.
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(p) Awards to NonU.S. Employees. Awards may be granted to
Employees who are foreign nationals or employed outside the
United States, or both, on such terms and conditions different
from those applicable to Awards to Employees employed in the
United States as may, in the judgment of the Committee, be
necessary or desirable in order to recognize differences in local
law or tax policy. The Committee also may impose conditions on
the exercise or vesting of Awards in order to minimize the
Company's obligation with respect to tax equalization for
Employees on assignments outside their home countries.
(q) Repricing Prohibited. The repricing of Options or
Stock Appreciation Right Awards under the Plan is expressly
prohibited. "Repricing" means the grant of a new Option, Stock
Appreciation Right or other Award in consideration of the
exchange, cancellation or forfeiture of an Award that has a
higher grant price than the new Award or the amendment of an
outstanding Award to reduce the grant price; provided, that the
grant of a Substitute Award shall not be considered to be
repricing.
SECTION 15. TERM OF PLAN. The Plan shall be effective as of
June 1, 1999. No Award shall be granted pursuant to the Plan
after May 31, 2009, but any Award theretofore granted may extend
beyond that date.
SECTION 16. TERMINATION OF PRIOR PLAN. No stock options or
other awards may be granted under the Prior Plan after May 31,
1999, but all such awards theretofore granted shall extend for
the full stated terms thereof.
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