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V.F. CORPORATION
1996 STOCK COMPENSATION PLAN,
AS AMENDED
ARTICLE I
PURPOSE
1.1 PURPOSE. The purpose of the V.F. Corporation 1996 Stock
Compensation Plan (this "Plan") is to strengthen the ability of V.F. Corporation
(the "Company") to attract, motivate, and retain employees and directors of
superior ability and to more closely align the interests of such employees and
directors with those of the Company's shareholders by relating compensation to
increases in shareholder value.
ARTICLE II
GENERAL DEFINITIONS
2.1 "AGREEMENT" The written instrument evidencing the grant to a
Participant of an Award. Each Participant may be issued one or more Agreements
from time to time, evidencing one or more Awards.
2.2 "AWARD" Any award granted under this Plan.
2.3 "BOARD" The Board of Directors of the Company.
2.4 "CHANGE IN CONTROL" A change in control of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
regulation 14A, as in effect on the Effective Date hereof, promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); provided that,
without limitation, such a Change in Control shall be deemed to have occurred if
(i) any "Person" (as such term is used in Section 13(d) and Section 14(d) of the
Exchange Act), except for (A) those certain trustees under Deeds of Trust dated
August 21, 1951 and under the Will of John E. Barbey, deceased (a "Trust" or the
"Trustee"), and (B) any employee benefit plan of the Company or any Subsidiary,
or any
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entity holding voting securities of the Company for or pursuant to the terms of
any such plan (a "Benefit Plan" or the "Benefit Plans"), is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities; (ii) there occurs a contested proxy solicitation of the
Company's shareholders that results in the contesting party obtaining the
ability to vote securities representing 30% or more of the combined voting power
of the Company's then outstanding securities; (iii) there occurs a sale,
exchange, transfer or other disposition of substantially all of the assets of
the Company to another entity, except to an entity controlled directly or
indirectly by the Company, or a merger, consolidation or other reorganization of
the Company in which the Company is not the surviving entity, or a plan of
liquidation or dissolution of the Company other than pursuant to bankruptcy or
insolvency laws is adopted; or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board cease for
any reason to constitute at least a majority thereof unless the election, or the
nomination for election by the Company'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.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to have occurred for purposes of this Plan (x) in the event of a sale, exchange,
transfer or other disposition of substantially all of the assets of the Company
to, or a merger, consolidation or other reorganization involving the Company and
officers of the Company, or any entity in which such officers have, directly or
indirectly, at least a 5% equity or ownership interest or (y) in a transaction
otherwise commonly referred to as a "management leveraged buyout".
Clause (i) above to the contrary notwithstanding, a Change in Control
shall not be deemed to have occurred if a Person becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities solely as
the result of an acquisition by the Company or any Subsidiary of voting
securities of the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 20% or more of the combined voting power of the Company's then outstanding
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securities; provided, however, that if a Person becomes the beneficial owner of
20% or more of the combined voting power of the Company's then outstanding
securities by reason of share purchases by the Company or any Subsidiary and
shall, after such share purchases by the Company or a Subsidiary, become the
beneficial owner, directly or indirectly, of any additional voting securities of
the Company, then a Change in Control of the Company shall be deemed to have
occurred with respect to such Person under clause (i). Notwithstanding the
foregoing, in no event shall a Change in Control of the Company be deemed to
occur under clause (i) with respect to any Trust or Benefit Plan.
Clauses (i) and (ii) to the contrary notwithstanding, the Board may, by
resolution adopted by at least two-thirds of the directors who were in office at
the date a Change in Control occurred, declare that a Change in Control
described in clause (i) or (ii) has become ineffective for purposes of this Plan
if the following conditions then exist: (x) the declaration is made within 120
days of the Change in Control; and (y) no person, except for (A) the Trusts, and
(B) the Benefit Plans, either is the beneficial owner, directly or indirectly,
of securities of the Company representing 10% or more of the combined voting
power of the Company's outstanding securities or has the ability or power to
vote securities representing 10% or more of the combined voting power of the
Company's then outstanding securities. If such a declaration shall be properly
made, the Change in Control shall be ineffective ab initio.
2.5 "CODE" The Internal Revenue Code of 1986, as amended, and
applicable regulations and rulings issued thereunder.
2.6 "COMMITTEE" The Committee, appointed by the Board, to administer
the Plan in accordance with the provisions in Article IV.
2.7 "COMMON STOCK" The common stock of the Company as described in
the Company's Articles of Incorporation, or such other stock as shall be
substituted therefor.
2.8 "COMPANY" V.F. Corporation, or any successor to the Company.
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2.9 "DATE OF GRANT" The date on which the granting of an Award is
authorized by the Committee, unless another date is specified by the Committee
or by a provision in this Plan applicable to the Award.
2.10 "DIRECTOR" A member of the Board who is not an Employee.
2.11 "DISPOSITION" Any sale, transfer, encumbrance, gift, donation,
assignment, pledge, hypothecation, or other disposition, whether similar or
dissimilar to those previously enumerated, whether voluntary or involuntary, and
whether during the Participant's lifetime or upon or after his or her death,
including, but not limited to, any disposition by operation of law, by court
order, by judicial process, or by foreclosure, levy, or attachment.
2.12 "EMPLOYEE" Any employee of the Company or a Subsidiary.
2.13 "EXCHANGE ACT" The Securities Exchange Act of 1934, as amended,
and applicable regulations and rulings issued thereunder.
2.14 "FAIR MARKET VALUE" The average of the reported high and low
sales price of the Common Stock (rounded up to the nearest one-tenth of a
dollar) on the date on which Fair Market Value is to be determined (or if there
was no reported sale on such date, the next preceding date on which any reported
sale occurred) on the principal exchange or in such other principal market on
which the Common Stock is trading.
2.15 "INCENTIVE STOCK OPTION" A Stock Option intended to satisfy the
requirements of Section 422(b) of the Code.
2.16 "LIMITED STOCK APPRECIATION RIGHT" OR "LIMITED RIGHT" The rights
specified in Article VIII.
2.17 "NON-QUALIFIED STOCK OPTION" A Stock Option other than an
Incentive Stock Option.
2.18 "PARTICIPANT" An Employee or Director selected by the Committee
to receive an Award.
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2.19 "PERFORMANCE OBJECTIVE" A performance objective established
pursuant to Section 9.3 hereof.
2.20 "RESTRICTED STOCK" Common Stock which is subject to restrictions
and awarded to Participants under Article IX of this Plan and any Common Stock
purchased with or issued in respect of dividends and distributions on the
Restricted Stock.
2.21 "RESTRICTED STOCK UNITS" Stock Units which are subject to a risk
of forfeiture and other restrictions and awarded to Participants under Article
IX of this Plan, including Stock Units resulting from deemed reinvestment of
dividend equivalents on Restricted Stock Units.
2.22 "RETIREMENT" Employment separation and commencement of pension
benefits under the V.F. Corporation Pension Plan (or any successor plan thereto)
on account of early, normal or late retirement thereunder.
2.23 "RULE 16B-3" Rule 16b-3 under the Exchange Act or any successor
thereto.
2.24 "SECURITIES ACT" The Securities Act of 1933, as amended, and
applicable regulations and rulings issued thereunder.
2.25 "STOCK OPTION" An award of a right to purchase Common Stock
pursuant to Article VII.
2.26 "STOCK UNITS" An unfunded obligation of the Company, the terms
of which are set forth in Section 9.6.
2.27 "SUBSIDIARY" Any majority-owned business organization of the
Company or its direct or indirect subsidiaries, including but not limited to
corporations, limited liability companies, partnerships, and any "subsidiary
corporation" as defined in Section 424(f) of the Code that is a subsidiary of
the Company.
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ARTICLE III
SHARES OF COMMON STOCK SUBJECT TO THE PLAN
3.1 COMMON STOCK AUTHORIZED. Subject to the provisions of this
Article and Article XI, the total aggregate number of shares of Common Stock
that may be issued, pursuant to Awards, shall not exceed 15,900,000 shares (plus
additional shares, if any, which, as of the effective date of this Plan or
thereafter, are available or become available for award under the Company's 1991
Stock Option Plan and the 1995 Key Employee Restricted Stock Plan); provided,
however, that in no event shall the number of shares of Restricted Stock and
Restricted Stock Units to be awarded either as Service Awards or Performance
Awards under this Plan exceed 1,200,000.
3.2 LIMITATION OF SHARES. For purposes of the limitations specified
in Section 3.1, the following principles apply: (a) a decrease in the number of
shares which thereafter may be issued or transferred for purposes of Section 3.1
shall result from (i) the delivery of shares of Common Stock upon exercise of a
Stock Option or payment of cash in settlement of a Limited Stock Appreciation
Right in any manner, and (ii) the expiration of the risk of forfeiture on
Restricted Stock or Restricted Stock Units, including the conversion of
Restricted Stock to Stock Units under Section 9.6; (b) shares of Common Stock
with respect to which Stock Options and Limited Stock Appreciation Rights
expire, are canceled without being exercised, or are otherwise terminated may be
regranted under this Plan; and (c) if any shares of Common Stock related to an
Award are not issued or, for any reason, cease to be issuable or are forfeited,
such shares of Common Stock shall no longer be charged against the limitation
provided for in Section 3.1 and shall be available again for grant of Awards.
3.3 SHARES AVAILABLE. At the discretion of the Board or the
Committee, the shares of Common Stock to be delivered under this Plan shall be
made available either from authorized and unissued shares of Common Stock or
shares of Common Stock controlled by the Company, or both; provided, however,
that absent such determination by the Board or the Committee to the contrary, in
whole or in part, the shares shall consist of the Company's authorized but
unissued Common Stock.
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ARTICLE IV
ADMINISTRATION OF THE PLAN
4.1 COMMITTEE. The Plan generally shall be administered by the
Organization and Compensation Committee of the Board, or such other Board
committee as may be designated by the Board to administer the Plan, subject to
this Article IV. The Committee shall consist of two or more Directors. The
members of the Committee shall serve at the pleasure of the Board, which shall
have the power, at any time and from time to time, to remove members from the
Committee or to add members thereto. Vacancies on the Committee, however caused,
shall be filled by action of the Board. In appointing members of the Committee,
the Board may consider whether a member is or will qualify as a "Non-Employee
Director" within the meaning of Rule 16b-3(b)(3) under the Exchange Act and an
"outside director" within the meaning of Treasury Regulation 1.62-27(e)(3) under
Code Section 162(m), but such members are not required to so qualify at the time
of appointment or during their term of service on the Committee. At any time
that a member of the Committee does not so qualify, any action of the Committee
relating to an award granted or to be granted to a Participant who is then
subject to Section 16 of the Exchange Act in respect of the Company, or relating
to an award intended by the Committee to constitute "performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder, may be taken either (i) by a subcommittee, designated by the
Committee, composed solely of two or more Directors who so qualify as a
"Non-Employee Director" or "outside director" (whichever may apply), or (ii) by
the Committee but with each such member who does not so qualify as a
"Non-Employee Director" or "outside director" (whichever may apply) abstaining
or recusing himself or herself from such action, provided that at least two
Directors serving on the Committee remain qualified to act. Such action,
authorized by such a subcommittee or by the Committee upon the abstention or
recusal of such non-qualified member(s), shall be the action of the Committee
for purposes of the Plan. The foregoing notwithstanding, the Board may perform
any function of the Committee under the Plan, including transactions with
respect to Directors. In any case in which the Board is performing a function of
the Committee under the Plan, each reference to the Committee herein shall be
deemed to refer to the Board, except where the context otherwise requires.
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4.2 POWERS. The Committee has discretionary authority to determine
the Employees and Directors to whom, and the time or times at which, Awards
shall be granted. The Committee also has authority to determine the amount of
shares of Common Stock that shall be subject to each Award and the terms,
conditions, and limitations of each Award, subject to the express provisions of
this Plan. The Committee shall have the discretion to interpret this Plan and to
make all other determinations necessary for Plan administration. The Committee
has authority to prescribe, amend and rescind any rules and regulations relating
to this Plan, subject to the express provisions of this Plan. All Committee
interpretations, determinations, and actions shall be in the sole discretion of
the Committee and shall be binding on all parties. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in this Plan or in
any Agreement in the manner and to the extent it shall deem expedient to carry
it into effect, and it shall be the sole and final judge of such expediency.
4.3 AGREEMENTS. Awards shall be evidenced by an Agreement and may
include any terms and conditions not inconsistent with this Plan, as the
Committee may determine.
4.4 NO LIABILITY. No member of the Board, the Committee or any of
its delegates shall be liable for any action or determination made in good faith
with respect to this Plan, any Award or any Agreement.
ARTICLE V
ELIGIBILITY
5.1 PARTICIPATION. Participants shall be selected by the Committee
from the Employees and Directors. Such designation may be by individual or by
class.
5.2 INCENTIVE STOCK OPTION ELIGIBILITY. A Director shall not be
eligible for the grant of an Incentive Stock Option. In addition, no Employee
shall be eligible for the grant of an Incentive Stock Option who owns (within
the meaning of Section 422(b) of the Code), or would own immediately before the
grant of
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such Incentive Stock Option, directly or indirectly, stock possessing more than
10 percent of the total combined voting power of all classes of stock of the
Company or any Subsidiary.
5.3 LIMIT ON AWARDS. Awards granted to any Employee shall not exceed
in the aggregate during any calendar year (a) 500,000 Stock Options (with or
without tandem Limited Rights and inclusive of any Limited Rights granted
pursuant to Section 11.2) and (b) 50,000 shares of Restricted Stock (subject in
each case to adjustment as provided in Article XI).
ARTICLE VI
FORMS OF AWARDS
6.1 AWARD ELIGIBILITY. The forms of Awards under this Plan are Stock
Options as described in Article VII, Limited Stock Appreciation Rights as
described in Article VIII, and Restricted Stock and Restricted Stock Units as
described in Article IX. The Committee may, in its discretion, permit holders of
Awards under this Plan to surrender outstanding Awards in order to exercise or
realize the rights under other Awards.
ARTICLE VII
STOCK OPTIONS
7.1 EXERCISE PRICE. The exercise price of Common Stock under each
Stock Option shall be not less than 100 percent of the Fair Market Value of the
Common Stock on the Date of Grant.
7.2 TERM. Stock Options may be exercised as determined by the
Committee, provided that Stock Options may in no event be exercised later than
10 years from the Date of Grant and Incentive Stock Options may not be granted
later than 10 years after the applicable date under Section 422(b)(2) of the
Code. During the Participant's lifetime, only the Participant may exercise an
Incentive Stock Option. The Committee may amend the terms of an Incentive Stock
Option at any time to include provisions that have the effect of changing such
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Incentive Stock Option to a Non-qualified Stock Option, or vice versa (to the
extent any such change is permitted by applicable law).
7.3 METHOD OF EXERCISE. Upon the exercise of a Stock Option, the
exercise price shall be payable in full in cash or an equivalent acceptable to
the Committee. No fractional shares shall be issued pursuant to the exercise of
a Stock Option, and no payment shall be made in lieu of fractional shares. At
the discretion of the Committee and provided such payment can be effected
without causing the Participant to incur liability under Section 16(b) of the
Exchange Act, the exercise price may be paid by assigning and delivering to the
Company shares of Common Stock or a combination of cash and such shares equal in
value to the exercise price. Any shares so assigned and delivered to the Company
in payment or partial payment of the exercise price shall be valued at the
closing market price of the Common Stock on the principal exchange or in such
other principal market on which the Common Stock is trading on the exercise
date. In addition, at the request of the Participant and to the extent permitted
by applicable law, the Company in its discretion may selectively approve
arrangements with a brokerage firm under which such brokerage firm, on behalf of
the Participant, shall pay to the Company the exercise price of the Stock
Options being exercised, and the Company, pursuant to an irrevocable notice from
the Participant, shall promptly deliver the shares being purchased to such firm.
7.4 LIMITATION OF INCENTIVE STOCK OPTIONS. With respect to Incentive
Stock Options, the aggregate Fair Market Value (determined at the Date of Grant)
of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any calendar year (under
all stock option plans of the Company and its Subsidiaries) shall not exceed
$100,000, or such other amount as may be prescribed under the Code. If any Stock
Option intended to be an Incentive Stock Option fails to so qualify, including
under the requirement set forth in this Section 7.4, such Stock Option shall be
deemed to be a Non-qualified Stock Option and shall be exercisable in accordance
with the Plan and the Stock Option's terms.
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ARTICLE VIII
LIMITED STOCK APPRECIATION RIGHTS
8.1 GRANT. The grant of Limited Stock Appreciation Rights under this
Plan shall be subject to the terms and conditions of this Article VIII and shall
contain such additional terms and conditions, not inconsistent with the express
provisions of this Plan, as the Committee shall deem desirable. A Limited Right
is a stock appreciation right which is effective only upon a Change in Control
(as defined in Section 2.4) and is payable only in cash. The amount of payment
to which any grantee of such a Limited Right shall be entitled upon exercise
shall be equal to the difference between the exercise price per share of any
Common Stock covered by a Stock Option in connection with, whether or not in
tandem, such Limited Right and the "Market Price" of a share of Common Stock.
For purposes of this Section 8.1, the term "Market Price" shall mean the greater
of (i) the highest price per share of Common Stock paid in connection with the
Change in Control and (ii) the highest price per share of Common Stock reflected
in the NYSE Transactions Report during the sixty day period prior to the Change
in Control. If the Limited Rights are exercised, the tandem Stock Options shall
cease to be exercisable to the extent of the Common Stock with respect to which
such Limited Rights are exercised.
ARTICLE IX
RESTRICTED STOCK
9.1 TYPES OF AWARD. The Committee, in its discretion, is authorized
to grant Awards of Restricted Stock and Restricted Stock Units (together,
"Restricted Awards") either as Service Awards or Performance Awards. As used
herein, the term "Service Award" refers to any Restricted Award described in
Section 9.2 and the term "Performance Award" refers to any Restricted Award
described in Section 9.3. Restricted Stock shall be nontransferable until such
time as all of the restrictions underlying the Award have been satisfied.
Subject to Section 3.1, the Committee in its discretion may grant up to 5% of
the number of shares of Common Stock available for grant under this Plan as
Service Awards or Performance Awards without regard to any minimum vesting
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requirement set forth in Section 9.2 or 9.3 except Service Awards shall have a
minimum vesting requirement of one year.
9.2 SERVICE AWARD. The Committee may grant shares of Restricted
Stock or Restricted Stock Units to a Participant subject to forfeiture upon an
interruption in the Participant's continuous service with the Company or a
Subsidiary within a specified period (which shall not be less than three years)
specified by the Committee. The period during which Restricted Stock Units are
subject to a risk of forfeiture may be shorter than the period during which
settlement of the Restricted Stock Units is deferred.
9.3 PERFORMANCE AWARD. The Committee may grant Restricted Stock or
Restricted Stock Units to a Participant upon the attainment of a Performance
Objective as follows: Not later than the applicable deadline under Treasury
Regulation 1.162-27(e), the Committee, in its sole discretion, may establish (a)
a Performance Award for a Participant for a specified period (which shall not be
less than one year) during which performance will be measured (the "Performance
Period"), and (b) with respect to such Participant one or more Performance
Objectives to be satisfied prior to the Participant's becoming entitled to
settlement of such Performance Award for such Performance Period. Any
Performance Objective shall be comprised of specified corporate, business group
or divisional levels of performance, over the Performance Period, relating to
one or more of the following performance criteria: earnings per share; net
earnings; pretax earnings; operating income; net sales; market share; balance
sheet measurements; cash return on assets; book value; shareholder return, or
return on average common equity. In establishing the level of Performance
Objective to be attained, the Committee may disregard or offset the effect of
such factors as extraordinary and/or nonrecurring items as determined by the
Company's outside accountants in accordance with generally accepted accounting
principles and changes in accounting standards as may be required by the
Financial Accounting Standards Board. Performance Awards may also be granted in
the sole discretion of the Committee, if the Company's performance during a
specified Performance Period, as measured by one or more of the criteria
enumerated in this Section 9.3, as compared to comparable measures of
performance of peer companies, equals or exceeds Performance Objectives
established by the Committee not later than the applicable deadline under
Treasury Regulation
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1.162-27(e). No Performance Award shall be settled or paid out to a Participant
for a Performance Period prior to written certification by the Committee of
attainment of the Performance Objective(s) applicable to such Participant.
Notwithstanding attainment of the applicable Performance Objective or any
provisions of this Plan to the contrary, the Committee shall have the power, in
its sole discretion, to (a) exercise negative discretion to reduce the
Performance Award to a Participant for any Performance Period to zero or such
other amount as it shall determine; (b) impose service requirements which must
be fulfilled by the Participant during the Performance Period or subsequent to
the attainment of the Performance Objective; and (c) provide for accelerated
settlement or payment of a Performance Award upon a Change in Control or
specified terminations of employment.
9.4 DELIVERY. If a Participant, with respect to a Service Award,
continuously remains in the employ of the Company or a Subsidiary for the period
specified by the Committee, or, with respect to a Performance Award, if and to
the extent that the Participant fulfills the requirements of the Performance
Objective and any service requirements as may be imposed by the Committee, the
shares awarded to such Participant as Restricted Stock shall be delivered to
such Participant without any restrictions promptly after the applicable event,
and the risk of forfeiture applicable to Restricted Stock Units shall end and
such Restricted Stock units shall then and thereafter be settled in accordance
with the terms of such Restricted Stock Units (including any elective deferral
of settlement permitted by the Committee). The foregoing notwithstanding, the
Committee may determine that any restrictions and/or deferral period applicable
to a Restricted Award shall be deemed to end or have ended on an accelerated
basis at the time of the Participant's death while employed or serving as a
Director or upon the Participant's termination of employment or service due to
disability or following a Change in Control.
9.5 SHAREHOLDER RIGHTS. Except as otherwise provided in this Plan,
each Participant shall have, with respect to all shares of Restricted Stock, all
the rights of a shareholder of the Company, including the right to vote the
Restricted Stock; provided, however, that all distributions payable with respect
to the Restricted Stock shall be retained by the Company and reinvested in
additional shares of Common Stock to be issued in the name of the Participant.
Any
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shares of Common Stock acquired as a result of reinvestment of such
distributions shall also be Restricted Stock subject to the terms and conditions
of this Plan. A Participant shall have no rights of a shareholder relating to
Restricted Stock Units or Stock Units until such time as shares are issued or
delivered in settlement of such Restricted Stock Units or Stock Units.
9.6 DEFERRAL OF RECEIPT OF RESTRICTED STOCK. A Stock Unit, whether
or not restricted, shall represent the conditional right of the Participant to
receive delivery of one share of Common Stock at a specified future date,
subject to the terms of the Plan and the applicable Agreement. Until settled, a
Stock Unit shall represent an unfunded and unsecured obligation of the Company
with respect to which a Participant has rights no greater than those of a
general creditor of the Company. Unless otherwise specified by the Committee,
each Stock Unit will carry with it the right to crediting of an amount equal to
dividends and distributions paid on a share of Common Stock ("dividend
equivalents"), which amounts will be deemed reinvested in additional Stock
Units, at the Fair Market Value of Common Stock at the dividend payment date.
Such additional Stock Units will be subject to the same risk of forfeiture,
other restrictions, and deferral of settlement as the original Stock Units to
which such additional Stock Units directly or indirectly relate. Unless the
Committee determines to settle Stock Units in cash, Stock Units shall be settled
solely by issuance or delivery of shares of Common Stock. The Committee may, in
its sole discretion, permit Participants to convert their Restricted Stock into
an equivalent number of stock units as of the date on which all applicable
restrictions pertaining to the Restricted Stock would either lapse or be deemed
satisfied (the "Vesting Date"). Any such request for conversion must (a) be made
by the Participant at least six months prior to the Vesting Date and (b) specify
a deferral date which is no earlier than the earlier of (i) the Participant's
termination of employment or (ii) the first anniversary of the Vesting Date.
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ARTICLE X
FORFEITURE AND EXPIRATION OF AWARDS
10.1 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to the express
provisions of this Plan and the terms of any applicable Agreement, the
Committee, in its discretion, may provide for the forfeiture or continuation of
any Award for such period and upon such terms and conditions as are determined
by the Committee in the event that a Participant ceases to be an Employee or
Director. In the absence of Committee action or except as otherwise provided in
an Agreement, the following rules shall apply:
(a) With respect to Stock Options granted to Employees, in
the event of Retirement, the Stock Options shall continue to vest according to
the original schedule, but no Stock Options may be exercised after the
expiration of the earlier of the remaining term of such Stock Options or 36
months (12 months in the case of Incentive Stock Options) following the date of
Retirement; in the event of permanent and total disability, the Stock Options
shall continue to vest according to the original schedule, but no Stock Options
may be exercised after the expiration of the earlier of the remaining term of
such Stock Option or 12 months following the date of permanent and total
disability; in the event of death, Stock Options held at the time of death by
the Participant may be exercised by the estate or beneficiary of such
Participant until the expiration of the earlier of the remaining term of such
Stock Options or three years from the date of death; in the event of the
Participant's voluntary separation of employment, the Stock Options shall
terminate and be forfeited as of the date of separation of employment; in the
event of the Participant's involuntary separation of employment, the Stock
Option shall be exercisable until the end of the period of the Participant's
receipt of installments of severance pay, if any, from the Company; in the event
of an involuntary separation of employment without severance pay or if severance
pay is paid in a lump sum, the Stock Options shall not be exercisable after the
date of separation of employment;
(b) With respect to Limited Rights granted to Employees, in
the event of Retirement or permanent and total disability, the Limited Rights
shall continue in effect for six months following separation of service, and
such Limited Rights may be exercised during such six month period; in the event
of the Participant's death or voluntary separation of service, the Limited
Rights shall terminate as of the date of separation from employment; provided
that Limited
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Rights pursuant to Section 8.1 may be exercised in accordance with their terms
by the holder thereof who separated from employment following a Change in
Control, without respect to the separation of employment of such holder; and
(c) With respect to Restricted Awards granted to Employees,
in the event of a Participant's voluntary or involuntary separation before the
expiration of the employment period specified by the Committee, with respect to
Service Awards, or before the fulfillment of the Performance Objective and any
other restriction imposed by the Committee, with respect to Performance Awards,
any shares of Restricted Stock shall be returned to the Company and any
Restricted Award shall be deemed to have been forfeited by the Participant as of
the date of such separation.
10.2 LEAVE OF ABSENCE. With respect to an Award, the Committee may,
in its sole discretion, determine that any Participant who is on leave of
absence for any reason shall be considered to still be in the employ of the
Company, provided that rights to such Award during a leave of absence shall be
limited to the extent to which such rights were earned or vested when such leave
of absence began.
ARTICLE XI
ADJUSTMENT PROVISIONS
11.1 SHARE ADJUSTMENTS. If the number of outstanding shares of Common
Stock is increased, decreased, or exchanged for a different number or kind of
shares or other securities, or if additional, new, or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all or substantially all of
the assets of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other distribution with
respect to such shares of Common Stock or other securities, an appropriate
adjustment in order to preserve the benefits or potential benefits intended to
be made available to the Participants may be made, in the discretion of the
Committee, in all or any of the following (i) the maximum number and kind of
shares provided in Section 3.1 and the number of Awards that may be granted to
an Employee in the specified period under Section 5.3; (ii) the number and kind
of shares or other securities
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subject to then outstanding Awards; and (iii) the price for each share or other
unit of any other securities subject to then outstanding Awards. The Committee
may also make any other adjustments, or take such action as the Committee, in
its discretion, deems appropriate in order to preserve the benefits or potential
benefits intended to be made available to the Participants. Any fractional share
resulting from such adjustment may be eliminated.
11.2 CORPORATE CHANGES. Subject to Article XIII, upon (i) the
dissolution or liquidation of the Company; (ii) a reorganization, merger, or
consolidation (other than a merger or consolidation effecting a reincorporation
of the Company in another state or any other merger or consolidation in which
the shareholders of the surviving Company and their proportionate interests
therein immediately after the merger or consolidation are substantially
identical to the shareholders of the Company and their proportionate interests
therein immediately prior to the merger or consolidation) of the Company with
one or more corporations, following which the Company is not the surviving
Company (or survives only as a subsidiary of another Company in a transaction in
which the shareholders of the parent of the Company and their proportionate
interests therein immediately after the transaction are not substantially
identical to the shareholders of the Company and their proportionate interests
therein immediately prior to the transaction); (iii) the sale of all or
substantially all of the assets of the Company; or (iv) the occurrence of a
Change in Control, subject to the terms of any applicable Agreement, the
Committee serving prior to the date of the applicable event may, to the extent
permitted in Section 3.1 of this Plan, in its discretion and without obtaining
shareholder approval, take any one or more of the following actions with respect
to any Participant:
(a) accelerate the exercise dates of any or all outstanding
Awards;
(b) grant Limited Rights to holders of outstanding Stock
Options;
(c) eliminate any and all restrictions with respect to
outstanding Restricted Awards;
(d) pay cash to any or all holders of Stock Options in
exchange for the cancellation of their outstanding Stock
Options and cash out all outstanding stock units;
(e) grant new Awards to any Participants; or
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(f) make any other adjustments or amendments to outstanding
Awards or determine that there shall be substitution of
new Awards by such successor employer Company or a
parent or subsidiary company thereof, with appropriate
adjustments as to the number and kind of shares or units
subject to such awards and prices.
11.3 BINDING DETERMINATION. Adjustments under Sections 11.1 and 11.2
shall be made by the Committee, and its determination as to what adjustments
shall be made and the extent thereof shall be final, binding, and conclusive.
ARTICLE XII
GENERAL PROVISIONS
12.1 NO RIGHT TO EMPLOYMENT. Nothing in this Plan or in any
instrument executed pursuant to this Plan shall confer upon any Participant any
right to continue in the employ of the Company or a Subsidiary or affect the
Company's or a Subsidiary's right to terminate the employment of any Participant
at any time with or without cause or any right to continue to serve as a
Director of the Company or affect any party's right to remove such Participant
as a Director.
12.2 SECURITIES REQUIREMENTS. The Company shall not be obligated to
issue or transfer shares of Common Stock pursuant to an Award unless all
applicable requirements imposed by federal and state laws, regulatory agencies,
and securities exchanges upon which the Common Stock may be listed have been
fully complied with. As a condition precedent to the issuance of shares pursuant
to the grant or exercise of an Award, the Company may require the Participant to
take any reasonable action to meet such requirements.
12.3 NO RIGHT TO STOCK. No Participant and no beneficiary or other
person claiming under or through such Participant shall have any right, title,
or interest in any shares of Common Stock allocated or reserved under this Plan
or subject to any Award except as to such shares of Common Stock, if any, that
have been issued or transferred to such Participant.
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12.4 WITHHOLDING. The Company or a Subsidiary, as appropriate, shall
have the right to deduct from all Awards paid in cash any federal, state, or
local taxes as required by law to be withheld with respect to such cash
payments. In the case of Awards paid in Common Stock, the Participant or other
person receiving such Common Stock may be required to pay to the Company or a
Subsidiary, as appropriate, the amount of any such taxes which the Company or
Subsidiary is required to withhold with respect to such Common Stock. Also, at
the discretion of the Committee and provided such withholding can be effected
without causing the Participant to incur liability under Section 16(b) of the
Exchange Act, the Participant may (i) direct the Company or Subsidiary to
withhold from the shares of Common Stock to be issued or transferred to the
Participant the number of shares necessary to satisfy the Company's or
Subsidiary's obligation to withhold taxes, such determination to be based on the
shares' Fair Market Value as of the date on which tax withholding is to be made,
(ii) deliver sufficient shares of Common Stock (based upon the Fair Market Value
at the date of withholding) to satisfy the withholding obligations, or (iii)
deliver sufficient cash to satisfy the withholding obligations. Participants who
elect to use such a stock withholding feature must make the election at the time
and in the manner prescribed by the Committee.
12.5 NO DISPOSITION. No Award under this Plan may be the subject of
any Disposition (excluding shares of Common Stock with respect to which all
restrictions have lapsed), other than by will or the laws of descent or
distribution. Any attempted Disposition in violation of this provision shall be
void and ineffective for all purposes. Notwithstanding the foregoing, the
Committee may, in its sole discretion, permit a Participant to transfer a
Non-qualified Stock Option (and any related limited right) to (a) a member or
members of the Participant's immediate family, (b) a trust, the beneficiaries of
which consist exclusively of members of the Participant's immediate family, (c)
a partnership, the partners of which consist exclusively of members of the
Participant's immediate family, or (d) any similar entity created for exclusive
benefit of members of the Participant's immediate family.
12.6 SEVERABILITY; CONSTRUCTION. If any provision of this Plan is
held to be illegal or invalid for any reason, then the illegality or invalidity
shall not affect
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the remaining provisions hereof, but such provision shall be fully severable and
this Plan shall be construed and enforced as if the illegal or invalid provision
had never been included herein. Headings and subheadings are for convenience
only and not to be conclusive with respect to construction of this Plan.
12.7 GOVERNING LAW. All questions arising with respect to the
provisions of this Plan shall be determined by application of the laws of the
Commonwealth of Pennsylvania, except as may be required by applicable federal
law.
12.8 OTHER DEFERRALS. The Committee may permit selected Participants
to elect to defer payment of Awards in accordance with procedures established by
the Committee including, without limitation, procedures intended to defer
taxation on such deferrals until receipt (including procedures designed to avoid
incurrence of liability under Section 16(b) of the Exchange Act). Any deferred
payment, whether elected by the Participant or specified by an Agreement or by
the Committee, may require forfeiture in accordance with stated events, as
determined by the Committee.
ARTICLE XIII
AMENDMENT AND TERMINATION
13.1 AMENDMENTS; SUSPENSION; TERMINATION. The Board may at any time
amend, suspend (and if suspended, may reinstate) or terminate this Plan;
provided, however, that after the shareholders have approved this Plan in
accordance with Section 14.1, the Board may not, without approval of the
shareholders of the Company, amend this Plan so as to (a) increase the number of
shares of Common Stock subject to this Plan except as permitted in Article XI or
(b) reduce the exercise price for shares of Common Stock covered by Stock
Options granted hereunder below the applicable price specified in Article VII of
this Plan or (c) materially increase benefits under this Plan (within the
meaning of Rule 16b-3 of the Securities and Exchange Commission as in effect
prior to August 15, 1996); and provided further, that the Board may not modify,
impair or cancel any outstanding Award in a manner that materially and adversely
affects a Participant without the consent of such Participant.
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ARTICLE XIV
DATE OF PLAN ADOPTION
14.1 DATE OF PLAN ADOPTION. This Plan has been adopted by the Board
effective December 3, 1996, subject to shareholder approval. Options may be
granted under the Plan prior to such shareholder approval, but if the requisite
shareholder approval is not obtained, then the Plan shall become null and void
ab initio and of no further force or effect and such Awards shall be canceled.
This Plan shall continue in effect with respect to Awards granted before
termination of this Plan and until such Awards have been settled, terminated or
forfeited.
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